Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement make no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement

(Incorporated in Hong Kong with limited liability)

(Stock Code 966)

(1) MAJOR ACQUISITION AND CONNECTED TRANSACTION ACQUISITION OF ASSETS FROM CONTROLLING SHAREHOLDER AND

ISSUE OF CONSIDERATION SHARES

(2) PROPOSED INCREASE IN AUTHORIZED SHARE CAPITAL

(3) RESUMPTION OF TRADING

Financial advisers to the Company

Financial advisers to TPG and TPG (HK)

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

- 2 -

The Board is pleased to announce that on 27 May 2013 the Company as purchaser entered into the Framework Agreement with TPG and TPG(HK) as vendors pursuant to which the Company has conditionally agreed to acquire the Acquisition Targets at the aggregate consideration of RMB10581367500 (equivalent to HK$13277495800) assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets which shall be satisfied by the issue of Consideration Shares at the Issue Price of HK$1539 per Consideration Share As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules The EGM will be convened for the purpose of considering and if thought fit approving (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing approximately 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM A circular containing among other things further information of the Acquisition and the Acquisition Targets and the notice convening the EGM will be despatched as soon as practicable and is expected to be despatched on or before 18 June 2013 At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 The Acquisition is subject to the fulfilment of a number of conditions precedent therefore the Acquisition may or may not proceed Shareholders and potential investors are advised to exercise caution when dealing in the Shares 1 INTRODUCTION On 19 April 2013 the Company announced that TPG had received the joint approval in principle from the MOF and the CIRC in relation to the Restructuring Proposal of the TPG Group As part of the Restructuring Proposal it was contemplated that TPG would inject certain assets and liabilities of TPG and TPG(HK) to the Company the consideration for which would be satisfied by the issuance of new shares of the Company The Board is pleased to announce that on 27 May 2013 the Company entered into the Framework Agreement with TPG and TPG(HK) pursuant to which TPG and TPG(HK) have agreed to sell and the Company has agreed to purchase the Acquisition Targets

- 3 -

2 FRAMEWORK AGREEMENT (A) Principal terms of the Framework Agreement Date 27 May 2013

(i) TPG (ii) TPG(HK) as vendors

Parties

(iii) The Company as purchaser

Subject matter The parties agreed that on and subject to the terms and conditions of the Framework Agreement TPG and TPG(HK) shall transfer and the Company (andor its designated wholly-owned subsidiaries) shall acquire the Acquisition Targets Information on the Acquisition Targets are set out in the section headed ldquo3 Information on the Acquisition Targetsrdquo of this announcement

Consideration The total consideration for the sale and purchase of the Acquisition Targets under the Framework Agreement shall be RMB10581367500 (equivalent to HK$13277495800) assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets of which (a) RMB7011311200 (equivalent to HK$8797790500) shall be the

consideration for the sale and purchase of the Tranche A Targets (b) assuming that Tranche B Consideration is adjusted by the maximum of

Post-Agreement Capital Increase Amount RMB1870144000 (equivalent to HK$2346656000) shall be the consideration for the sale and purchase of the Tranche B Targets

(c) subject to adjustment due to segregation of Segregated Targets if any RMB1699912300 (equivalent to HK$2133049300) shall be the consideration for the sale and purchase of the Tranche C Targets

The Consideration shall be satisfied by the allotment and issue by the Company of Consideration Shares at the issue price of HK$1539 per Consideration Share to TPG and TPG(HK) or such person(s) as any of them may direct

Conditions Precedent to the Framework Agreement

Completion of the Acquisition shall be conditional upon the fulfilment of the following conditions (i) the Framework Agreement the transactions contemplated thereunder and

the allotment and issue of not more than 862735270 Consideration Shares having been approved by the Independent Shareholders at the EGM in accordance with the requirements of the Listing Rules

(ii) the approval for the listing of and permission to deal in the Consideration

Shares having been granted by the Listing Committee of the Stock Exchange and

(iii) where applicable the Framework Agreement and the transactions

contemplated thereunder having been approved by relevant departments and commissions of the PRC government including the MOF the CIRC the MOFCOM and the CSRC

and where applicable conditions precedent set out in the Specific Agreements

- 4 -

Specific Agreements

TPG TPG(HK) and the Company further agreed to enter into Specific Agreements relating to the Acquisition Targets each of which will set out (i) where applicable additional conditions precedent which only apply to the subject matter of the Specific Agreement (being approval and consent by governmental departments and regulatory authorities which are necessary for the transfer of shares or equity interest in the relevant jurisdiction) and (ii) the registration notification and filing procedures necessary for the transfer of the subject matter of the Specific Agreement Where the Specific Agreement sets out additional conditions precedent the transfer of the subject matter of that Specific Agreement would be subject to the fulfilment of all conditions precedent set out in both the Framework Agreement and that Specific Agreement The condition(s) precedent to each Specific Agreement is(are) unrelated to and independent of the condition(s) precedent to the other Specific Agreements If the condition(s) precedent to any one Specific Agreement has not been fulfilled the fulfilment of condition(s) precedent to other Specific Agreements would not be affected The consents and approvals required under each Specific Agreement are independent of the consents and approvals required under other Specific Agreements

CP Long Stop Date

The parties agree to use their respective best endeavours to procure the fulfilment of all conditions precedent to the Framework Agreement and (where applicable) the Specific Agreements on or before 30 June 2014 or such other date as agreed by all parties in writing (the ldquoCP Long Stop Daterdquo) In the event that any of the conditions precedent under the Framework Agreement have not been fulfilled or satisfied by the CP Long Stop Date TPG TPG(HK) and the Company shall negotiate as to whether to extend the CP Long Stop Date or to terminate the Framework Agreement If the parties fail to reach an agreement within 7 working days after the CP Long Stop Date the Framework Agreement shall be terminated with effect from the expiry of the aforesaid 7-working day period after the CP Long Stop Date In the event that any of the conditions precedent under one or more Specific Agreements have not been fulfilled or satisfied by the CP Long Stop Date the parties to the relevant Specific Agreement(s) shall extend the CP Long Stop Date in respect of the subject matter of the Specific Agreement(s) to such date as the relevant parties shall agree

Completion The parties agreed that subject to the fulfilment of all conditions precedent to the Framework Agreement and the relevant Specific Agreement completion of the sale and purchase of the Acquisition Targets shall take place in three tranches as follows (i) on the Tranche A Completion Date the Company shall issue and allot

571656306 Consideration Shares to TPG(HK) as consideration for the Tranche A Targets

- 5 -

(ii) on the Tranche B Completion Date the Company shall issue and allot

130958519 Consideration Shares to TPG(HK) as consideration for the Tranche B Targets unless where Post-Agreement Capital Increase Adjustment is applicable in which case the Company shall issue and allot such number of Consideration Shares equivalent to the Adjusted Tranche B Consideration being 152479270 Shares and

(iii) on the Tranche C Completion Date the Company shall issue and allot

138599694 Consideration Shares to TPG(HK) as consideration for the Tranche C Targets

The Tranche A Completion the Tranche B Completion and the Tranche C Completion shall be independent of each other On the Tranche A Completion Date the parties may proceed with Tranche A Completion even if the completion of the other two tranches has not yet occurred and same for Tranche B Completion and Tranche C Completion

Completion Long Stop Date

Subject to the fulfilment of all conditions precedent to the Framework Agreement and the relevant Specific Agreement the parties agree to use their respective best endeavours to procure the Completion to take place on or before 31 December 2014 or such earlier date as agreed by all parties in writing (the ldquoCompletion Long Stop Daterdquo) Despite that the completion of each tranche of Acquisition Targets is independent of each other the Completion of the entire Acquisition shall take place when the sale and purchase of all three tranches of Acquisition Targets have taken place In the event that any of Tranche A Completion Tranche B Completion or Tranche C Completion has not taken place by the Completion Long Stop Date the sale and purchase of Acquisition Targets in the other tranches which have already been completed shall not be affected Subject to the right of TPG and TPG(HK) to segregate the Overseas PampC Targets from Tranche C Targets (details of which are disclosed in the paragraph headed ldquo(C) Adjustment to the Consideration ndash Segregation of Overseas PampC Targetsrdquo) the parties shall extend the Completion Long Stop Date in respect of the outstanding tranches of Acquisition Targets to such date as the parties shall agree Please refer to the section headed ldquo3 Information on the Acquisition Targetsrdquo for the rationale of the completion mechanism

(B) Basis for the Consideration The Consideration was determined after armrsquos length negotiations between the parties and with reference to various relevant factors including price comparisons (merger and public market comparables public market prices of the Shares both current and historical) financial valuations (historical financial information combined net asset value life insurance appraisal valuations -- embedded value and new business value) the prospects for the industry (nature of the relevant businesses future prospects of the relevant industries and market growth potential) macroeconomic conditions (general economic trends prevailing commercial and business conditions in which the Target Companies operate) and the strategic rationale and benefits of the Acquisition

- 6 -

The Consideration comprises the following Tranche A Targets Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

TPL 2505 equity interests

7011311200 8797790500 571656306 663

Sub-total for Tranche A Targets 7011311200 8797790500 571656306 663 Tranche B Targets Name of Target Company

Interest to be acquired Consideration

(RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate

Consideration(Note 1)

TPI 3879 equity interests 1422624300 1785108400 115991450 134 Post-Agreement Capital

Increase to TPI (Note 2) 193950000 243368400 15813410 18

TPAM 20 equity interests 122776100 154059400 10010358 12 Post-Agreement Capital

Increase to TPAM (Note 2) 70000000 87836000 5707341 07

TPP 4 equity interests 60793600 76283800 4956711 06Sub-total for Tranche B Targets (Note 2) 1870144000 2346656000 152479270 177 Tranche C Targets (i) Overseas PampC insurance business Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

TP Macau 100 issued share capital

368580700 462494900 30051652 35

TP Singapore 100 issued share capital

843108100 1057931700 68741502 80

TP UK 100 issued share capital

235212900 295145100 19177716 22

TP Indonesia 55 issued share capital

35997200 45169300 2934975 03

Sub-total for Overseas PampC Targets

1482898900 1860741000 120905845 140

- 7 -

(ii) Other Target Companies Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1) (a) Securities broking

TPFH 100 issued share capital

(b) Property investment business

TPIH 100 issued share capital

Dragon Jade 100 equity interests

Ming Lee 100 issued share capital

Pacific Asia Walkman Mano Prospect Inc and Sarley

100 issued share capital

(c) Financial Support Service TPFAS 100 equity

interests TPFSC 100 equity

interests

(d) Others TP Japan (Insurance agency)

100 issued share capital

Savills TPML (Property management)

25 of issued share capital

CIG Trustees (Internal trustee)

100 issued share capital

Action Profit SZTPI and Toplap (Note 3)

(Inactive Companies)

100 issued share capitalequity interest

34326100(Note 3)

43072400 2798725 03

Description of Target Assets

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

Target Assets (i) Properties 168108700 210942700 13706480 16(ii) Others (Note 4) 14578600 18293200 1188644 01

Sub-total for Target Assets 182687300 229235900 14895124 17

Sub-total for Tranche C Targets 1699912300 2133049300 138599694 160 Grand Total 10581367500 13277495800 862735270 1000

- 8 -

Notes 1 The percentage shown is calculated by the consideration attributable to the relevant Acquisition Target

over the total Consideration assuming that the Tranche B Consideration is adjusted by the maximum Post-Agreement Capital Increase Amount (ie RMB263950000) Please refer to the paragraph headed ldquo(C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo below for further details of the Post-Agreement Capital Increase Adjustment

2 Assuming that TPG has paid the full amount of capital increase agreed to be contributed and the relevant capital inspection procedures have been completed

3 The consideration of these Target Companies is based on their respective net assets value and also taking into account the below factors

(a) the disposal of Tellon Development Limited (ldquoTellonrdquo together with its subsidiary associates and

available-for-sale investments under the segment of other businesses ldquoTellon Subgrouprdquo) by TPIH to TPG (HK) pursuant to an agreement dated 28 December 2012 and

(b) upon completion of the acquisition of TPIH Dragon Jade Ming Lee and TP Japan on the one hand

and the acquisition of the net accounts payable by TPG and TPG(HK) to these Target Companies (which form part of Target Assets) on the other hand the outstanding balances of these net accounts payable will be eliminated in the consolidated accounts of the Enlarged Group

4 Other Target Assets comprise accounts payable and accounts receivable between the Target Companies

on the one hand and TPG or TPG(HK) on the other hand as well as computer equipment office facilities furniture fixtures and fittings In considering the consideration attributable to these Target Assets the parties have taken into account that the outstanding balances of the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan will be eliminated in the consolidated accounts of the Enlarged Group

(C) Adjustment to the Consideration Post-Agreement Capital Increase Adjustment Prior to the date of the Framework Agreement the shareholders of TPI and TPAM (including the Company and TPG) have agreed to increase the registered capital of TPI and TPAM by additional capital to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The purpose of such capital increase is to fulfil the operation needs of TPI and TPAM The parties have agreed that if prior to the Tranche B Completion Date TPG has actually paid the agreed amount of capital increase in respect of TPI andor TPAM and (where applicable) the capital inspection procedures of which have been completed the Tranche B Consideration shall be increased by the amount of capital increase which has actually been paid by TPG in respect of TPI andor TPAM (the ldquoPost-Agreement Capital Increase Amountrdquo) In such event the parties further agreed that the Tranche B Consideration shall be increased by the Post-Agreement Capital Increase Amount TPG agreed to contribute RMB193950000 and RMB70000000 towards the registered capital of TPI and TPAM respectively therefore the maximum amount of the Post-Agreement Capital Increase Amount shall be RMB263950000 (equivalent to HK$331204400) The Company expects that prior to the Tranche B Completion Date TPG will pay the agreed capital increase amount and the relevant capital inspection procedures of TPI and TPAM will be completed therefore the Board is of the view that the Tranche B Consideration is likely to be adjusted by the maximum of the Post-Agreement Capital Increase Amount As the increase in the registered capital of TPI and TPAM will enhance their financial position the Company will also benefit from the capital contribution to be made by TPG upon acquiring the relevant Target Interests The Board thus considers that the above adjustment mechanism is fair and reasonable

- 9 -

Segregation of Overseas PampC Targets The transfer of shareholding in insurance companies is often subject to approval and consent of governmental departments or regulatory authorities of the relevant jurisdiction and specific requirements on filings and registration The Company has engaged legal advisers in Macau Singapore UK and Indonesia to ascertain the approvals and consents and procedural requirements necessary for the effective transfer of shareholding of insurance companies incorporated in those jurisdictions In the event that the necessary filing and registration procedures in respect of any of the Overseas PampC Targets have not yet been completed or fulfilled in accordance with the relevant requirements by the Completion Long Stop Date TPG and TPG(HK) shall have the right (but not an obligation) to segregate any of the Overseas PampC Targets the filing and registration procedures of which have not yet been completed (the ldquoSegregated Targetsrdquo) from the TPG Target Interests andor TPG(HK) Target Interests (as the case may be) and the consideration for the sale and purchase of the Segregated Targets shall be deducted from the Consideration If TPG and TPG(HK) elect to exercise such right of segregation TPG and TPG(HK) shall before the Completion Long Stop Date notify the Company of the segregation and the consideration to be deducted and the parties shall proceed to complete the sale and purchase of other Acquisition Targets of the Tranche C Targets as soon as practicable thereafter The parties further agreed that the segregation of the Segregated Targets shall not affect the completion of the sale and purchase of other Tranche C Targets nor affect the completion of the sale and purchase of the Tranche A Targets or the Tranche B Targets As the Company is not familiar with the procedural requirements for the transfer of shareholding in the Overseas PampC Targets the above segregation right provides the parties with the flexibility to segregate those Target Interests and complete the sale and purchase of other Tranche C Targets within the contemplated timeframe After the segregation of the Segregated Targets TPG TPG(HK) and the Company will enter into supplemental agreements for the sale and purchase of the Segregated Targets and will continue to proceed with the procedures necessary for the transfer of the Segregated Targets The Board considers that the above option for segregation is fair and reasonable (D) The Issue Price

The Issue Price of the Consideration Shares of HK$1539 was arrived at after armrsquos length negotiations between the parties with reference to among other things the recent trend of the Share price performance and the prevailing market price of the Shares The following table illustrates the comparison between the Issue Price and the historical price per Share on the date of this announcement the Last Trading Date and various periods as quoted on the Stock Exchange

Date Period

Closing price per Share Average closing price per Share for the

corresponding period Premium of Issue Price (HK$) () Last Trading Date 1236 245

Last 10 trading days 1262 219

Last 30 trading days 1282 200

Last 60 trading days 1343 146

Last 180 trading days 1356 135

Last twelve months 1313 172

Current year 1436 72

- 10 -

Having considered the Issue Price is higher than the closing price of the Last Trading Date and average closing prices of the abovementioned periods the Board is of the view that the Issue Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole (E) The Consideration Shares The Consideration shall be satisfied by the allotment and issue by the Company of Consideration Shares at the issue price of HK$1539 per Consideration Share to TPG and TPG(HK) or such person(s) as any of them may direct For the purpose of issuing the Consideration Shares the parties have agreed that the exchange rate shall be HK$100=RMB079694 (approximately equivalent to RMB100 = HK$125480 for reference only) being the mid-price of Renminbi to Hong Kong Dollars buying and selling rates announced by the Peoplersquos Bank of China on 24 May 2013 being the Last Trading Date The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets) will be 862735270 representing approximately 506 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 336 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and TPG and TPG(HK) exercise their right to segregate all Overseas PampC Targets) will be 741829425 representing approximately 435 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 303 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The following table illustrates the shareholding structure of the Company as at the date of this announcement and immediately following Completion

Name of Shareholder

As at the date of this announcement

Immediately following Completion (assuming Tranche B Consideration is increased by

the maximum of the Post-Agreement Capital Increase Amount and no

Segregated Targets)

Immediately following Completion (assuming Tranche B Consideration is increased by the maximum of the

Post-Agreement Capital Increase Amount and all Overseas PampC

Targets are segregated) No of Shares

heldApproximate

No of Shares

heldApproximate

No of Shares

held Approximate

TPG(HK) 908689405 5327 1771424675 6896 1650518830 6743 Other Shareholders

797185687 4673 797185687 3104 797185687 3257

Total 1705875092 10000 2568610362 10000 2447704517 10000 The parties have agreed that all Consideration Shares (including the Consideration Shares representing consideration for the sale and purchase of the TPG Target Interests and TPG Target Assets) shall be issued and allotted to TPG(HK) The Consideration Shares will be issued under the specific mandate to be approved at the EGM The Consideration Shares when allotted and issued will rank pari passu in all respects with all the Shares then in issue There are no restrictions on the subsequent transfer of the Consideration Shares by TPG(HK)

- 11 -

An application will be made by the Company to the Stock Exchange for the listing of and permission to deal in the Consideration Shares The Acquisition and the issue of the Consideration Shares will not result in any change in control of the Company 3 INFORMATION ON THE ACQUISITION TARGETS (A) Overview of the Acquisition Targets TPG is a long-established leading insurance group of the PRC Apart from holding a controlling stake in the Company TPG also owns PampC companies operating overseas and various companies covering a wide range of operations (including property investment and financial support services) as well as minority shareholdings in the major operating subsidiaries of the Group As part of the Restructuring Proposal which has been approved in principle by the MOF and the CIRC in 2013 TPG contemplated to inject its unlisted assets into the Group in consideration of new shares of the Company To materialize the detailed terms of the injection the parties entered into the Framework Agreement on 27 May 2013 The Acquisition Targets cover the unlisted assets of TPG including equity interests in a total of 25 Target Companies incorporated and operating in different jurisdictions as well as Target Assets of various nature and situated at various locations Having considered that the time required for obtaining relevant approval and consents and completing relevant registration and filing procedures in respect of different Acquisition Targets vary to a very large extent the parties have agreed to split the Acquisition Targets into three tranches each of which may proceed to completion on its own upon fulfilment of all necessary conditions As a result the sale and purchase of Tranche A Targets and Tranche B Targets (being additional equity interests of existing non-wholly-owned subsidiaries of the Company which are incorporated and operating in the PRC representing in aggregate 840 of the Consideration for all Acquisition Targets) may be completed ahead of the Tranche C Targets (which include equity interests in overseas PampC companies securities broking companies property investment companies financial support service companies and the Target Assets) While the completion mechanism of splitting into three tranches expedites the completion of Tranche A Targets and Tranche B Targets the Board wishes to emphasize that TPG TPG(HK) and the Company consider the Acquisition as a single package and the negotiation of the terms and conditions of the Framework Agreement (including the Consideration) was also made on aggregate basis It is the mutual commercial intention of TPG and the Company that TPG and TPG(HK) will sell and the Company will purchase all Acquisition Targets on and subject to the terms of the Framework Agreement and the Specific Agreements The completion mechanism of splitting into three tranches merely serves to facilitate settlement and completion of the Acquisition Once the Framework Agreement (and where applicable the Specific Agreements containing additional conditions precedent) become unconditional the parties will use their best endeavours to complete the sale and purchase of all Acquisition Targets as soon as practicable

- 12 -

The following table sets out certain historical financial data relating to the Target Companies extracted from the Accountantsrsquo Report which will be set out in the circular to be despatched to the Shareholders For the 12 months ended 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Results RMB Million RMB Million RMB MillionTPL(Note) Profit before taxation 44752 50646 96588Profit after taxation 70430 64338 83951 TPI Profit before taxation 20271 14387 2627Profit after taxation 19482 14100 4637 TPP Loss before taxation (10462) (16083) (15399)Loss after taxation (10462) (16083) (15399) TPAM Profit before taxation 3093 2842 1190Profit after taxation 2347 1956 850 Other Target Companies Profit before taxation 83016 180275 64425Profit after taxation 68799 149049 52221 As at 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Position RMB Million RMB Million RMB MillionTPL(Note) Total assets 16890567 13260184 11201330Total liabilities 15880301 12470585 10252722 TPI Total assets 1052214 851886 711918Total liabilities 878897 749885 621733 TPP Total assets 260801 184789 82415Total liabilities 205717 119863 26112 TPAM Total assets 24686 19648 17238Total liabilities 7131 4435 3980 Other Target Companies Total assets 1252045 1120776 1199482Total liabilities 692635 637989 780242

Note Consist of consolidated financial data relating to TPL and its subsidiaries

- 13 -

As at 31 December 2012 the total carrying amount of the Target Assets was RMB54377 million and the associated total liabilities amounted to RMB243470 million In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports The management discussion and analysis of the Tranche C Targets with continuing operating activities are set out in the appendix to this announcement for the information of the Shareholders (B) Segmental information on the Acquisition Targets (1) Tranche A Targets

Tranche A Targets consist solely of the 2505 equity interest of TPL and represent 663 of the aggregate Consideration TPL is one of the major existing non-wholly-owned subsidiaries of the Company TPL is engaged in the business of life insurance in the PRC As at 31 December 2012 the audited Net Assets Value (ldquoNAVrdquo) of TPL was RMB1010042 million (equivalent to approximately HK$1245655 million) and the embedded value (ldquoEVrdquo) of TPL was RMB23747 million (equivalent to approximately HK$29286 million)

Business Scope

Percentage of equity interest to be acquired

NAV as at 31

December 2012

NAV as at 31

December 2012 to be transacted

EV as at 31 December

2012

EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1010042 253016 23747 5949

Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPL contributed additional capital in the amount of RMB2500 million into TPL by way of cash Such capital contribution was completed in March 2013 If such additional capital were incorporated the adjusted NAV and embedded value of TPL as at 31 December 2012 would be as follows

Business Scope

Percentage of equity interest to be acquired

Adjusted NAV

as at 31 December

2012

Adjusted NAV

as at 31 December 2012 to be transacted

Adjusted EV as at 31 December

2012

Adjusted EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1260042 315641 26247 6575

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 2 -

The Board is pleased to announce that on 27 May 2013 the Company as purchaser entered into the Framework Agreement with TPG and TPG(HK) as vendors pursuant to which the Company has conditionally agreed to acquire the Acquisition Targets at the aggregate consideration of RMB10581367500 (equivalent to HK$13277495800) assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets which shall be satisfied by the issue of Consideration Shares at the Issue Price of HK$1539 per Consideration Share As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules The EGM will be convened for the purpose of considering and if thought fit approving (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing approximately 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM A circular containing among other things further information of the Acquisition and the Acquisition Targets and the notice convening the EGM will be despatched as soon as practicable and is expected to be despatched on or before 18 June 2013 At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 The Acquisition is subject to the fulfilment of a number of conditions precedent therefore the Acquisition may or may not proceed Shareholders and potential investors are advised to exercise caution when dealing in the Shares 1 INTRODUCTION On 19 April 2013 the Company announced that TPG had received the joint approval in principle from the MOF and the CIRC in relation to the Restructuring Proposal of the TPG Group As part of the Restructuring Proposal it was contemplated that TPG would inject certain assets and liabilities of TPG and TPG(HK) to the Company the consideration for which would be satisfied by the issuance of new shares of the Company The Board is pleased to announce that on 27 May 2013 the Company entered into the Framework Agreement with TPG and TPG(HK) pursuant to which TPG and TPG(HK) have agreed to sell and the Company has agreed to purchase the Acquisition Targets

- 3 -

2 FRAMEWORK AGREEMENT (A) Principal terms of the Framework Agreement Date 27 May 2013

(i) TPG (ii) TPG(HK) as vendors

Parties

(iii) The Company as purchaser

Subject matter The parties agreed that on and subject to the terms and conditions of the Framework Agreement TPG and TPG(HK) shall transfer and the Company (andor its designated wholly-owned subsidiaries) shall acquire the Acquisition Targets Information on the Acquisition Targets are set out in the section headed ldquo3 Information on the Acquisition Targetsrdquo of this announcement

Consideration The total consideration for the sale and purchase of the Acquisition Targets under the Framework Agreement shall be RMB10581367500 (equivalent to HK$13277495800) assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets of which (a) RMB7011311200 (equivalent to HK$8797790500) shall be the

consideration for the sale and purchase of the Tranche A Targets (b) assuming that Tranche B Consideration is adjusted by the maximum of

Post-Agreement Capital Increase Amount RMB1870144000 (equivalent to HK$2346656000) shall be the consideration for the sale and purchase of the Tranche B Targets

(c) subject to adjustment due to segregation of Segregated Targets if any RMB1699912300 (equivalent to HK$2133049300) shall be the consideration for the sale and purchase of the Tranche C Targets

The Consideration shall be satisfied by the allotment and issue by the Company of Consideration Shares at the issue price of HK$1539 per Consideration Share to TPG and TPG(HK) or such person(s) as any of them may direct

Conditions Precedent to the Framework Agreement

Completion of the Acquisition shall be conditional upon the fulfilment of the following conditions (i) the Framework Agreement the transactions contemplated thereunder and

the allotment and issue of not more than 862735270 Consideration Shares having been approved by the Independent Shareholders at the EGM in accordance with the requirements of the Listing Rules

(ii) the approval for the listing of and permission to deal in the Consideration

Shares having been granted by the Listing Committee of the Stock Exchange and

(iii) where applicable the Framework Agreement and the transactions

contemplated thereunder having been approved by relevant departments and commissions of the PRC government including the MOF the CIRC the MOFCOM and the CSRC

and where applicable conditions precedent set out in the Specific Agreements

- 4 -

Specific Agreements

TPG TPG(HK) and the Company further agreed to enter into Specific Agreements relating to the Acquisition Targets each of which will set out (i) where applicable additional conditions precedent which only apply to the subject matter of the Specific Agreement (being approval and consent by governmental departments and regulatory authorities which are necessary for the transfer of shares or equity interest in the relevant jurisdiction) and (ii) the registration notification and filing procedures necessary for the transfer of the subject matter of the Specific Agreement Where the Specific Agreement sets out additional conditions precedent the transfer of the subject matter of that Specific Agreement would be subject to the fulfilment of all conditions precedent set out in both the Framework Agreement and that Specific Agreement The condition(s) precedent to each Specific Agreement is(are) unrelated to and independent of the condition(s) precedent to the other Specific Agreements If the condition(s) precedent to any one Specific Agreement has not been fulfilled the fulfilment of condition(s) precedent to other Specific Agreements would not be affected The consents and approvals required under each Specific Agreement are independent of the consents and approvals required under other Specific Agreements

CP Long Stop Date

The parties agree to use their respective best endeavours to procure the fulfilment of all conditions precedent to the Framework Agreement and (where applicable) the Specific Agreements on or before 30 June 2014 or such other date as agreed by all parties in writing (the ldquoCP Long Stop Daterdquo) In the event that any of the conditions precedent under the Framework Agreement have not been fulfilled or satisfied by the CP Long Stop Date TPG TPG(HK) and the Company shall negotiate as to whether to extend the CP Long Stop Date or to terminate the Framework Agreement If the parties fail to reach an agreement within 7 working days after the CP Long Stop Date the Framework Agreement shall be terminated with effect from the expiry of the aforesaid 7-working day period after the CP Long Stop Date In the event that any of the conditions precedent under one or more Specific Agreements have not been fulfilled or satisfied by the CP Long Stop Date the parties to the relevant Specific Agreement(s) shall extend the CP Long Stop Date in respect of the subject matter of the Specific Agreement(s) to such date as the relevant parties shall agree

Completion The parties agreed that subject to the fulfilment of all conditions precedent to the Framework Agreement and the relevant Specific Agreement completion of the sale and purchase of the Acquisition Targets shall take place in three tranches as follows (i) on the Tranche A Completion Date the Company shall issue and allot

571656306 Consideration Shares to TPG(HK) as consideration for the Tranche A Targets

- 5 -

(ii) on the Tranche B Completion Date the Company shall issue and allot

130958519 Consideration Shares to TPG(HK) as consideration for the Tranche B Targets unless where Post-Agreement Capital Increase Adjustment is applicable in which case the Company shall issue and allot such number of Consideration Shares equivalent to the Adjusted Tranche B Consideration being 152479270 Shares and

(iii) on the Tranche C Completion Date the Company shall issue and allot

138599694 Consideration Shares to TPG(HK) as consideration for the Tranche C Targets

The Tranche A Completion the Tranche B Completion and the Tranche C Completion shall be independent of each other On the Tranche A Completion Date the parties may proceed with Tranche A Completion even if the completion of the other two tranches has not yet occurred and same for Tranche B Completion and Tranche C Completion

Completion Long Stop Date

Subject to the fulfilment of all conditions precedent to the Framework Agreement and the relevant Specific Agreement the parties agree to use their respective best endeavours to procure the Completion to take place on or before 31 December 2014 or such earlier date as agreed by all parties in writing (the ldquoCompletion Long Stop Daterdquo) Despite that the completion of each tranche of Acquisition Targets is independent of each other the Completion of the entire Acquisition shall take place when the sale and purchase of all three tranches of Acquisition Targets have taken place In the event that any of Tranche A Completion Tranche B Completion or Tranche C Completion has not taken place by the Completion Long Stop Date the sale and purchase of Acquisition Targets in the other tranches which have already been completed shall not be affected Subject to the right of TPG and TPG(HK) to segregate the Overseas PampC Targets from Tranche C Targets (details of which are disclosed in the paragraph headed ldquo(C) Adjustment to the Consideration ndash Segregation of Overseas PampC Targetsrdquo) the parties shall extend the Completion Long Stop Date in respect of the outstanding tranches of Acquisition Targets to such date as the parties shall agree Please refer to the section headed ldquo3 Information on the Acquisition Targetsrdquo for the rationale of the completion mechanism

(B) Basis for the Consideration The Consideration was determined after armrsquos length negotiations between the parties and with reference to various relevant factors including price comparisons (merger and public market comparables public market prices of the Shares both current and historical) financial valuations (historical financial information combined net asset value life insurance appraisal valuations -- embedded value and new business value) the prospects for the industry (nature of the relevant businesses future prospects of the relevant industries and market growth potential) macroeconomic conditions (general economic trends prevailing commercial and business conditions in which the Target Companies operate) and the strategic rationale and benefits of the Acquisition

- 6 -

The Consideration comprises the following Tranche A Targets Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

TPL 2505 equity interests

7011311200 8797790500 571656306 663

Sub-total for Tranche A Targets 7011311200 8797790500 571656306 663 Tranche B Targets Name of Target Company

Interest to be acquired Consideration

(RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate

Consideration(Note 1)

TPI 3879 equity interests 1422624300 1785108400 115991450 134 Post-Agreement Capital

Increase to TPI (Note 2) 193950000 243368400 15813410 18

TPAM 20 equity interests 122776100 154059400 10010358 12 Post-Agreement Capital

Increase to TPAM (Note 2) 70000000 87836000 5707341 07

TPP 4 equity interests 60793600 76283800 4956711 06Sub-total for Tranche B Targets (Note 2) 1870144000 2346656000 152479270 177 Tranche C Targets (i) Overseas PampC insurance business Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

TP Macau 100 issued share capital

368580700 462494900 30051652 35

TP Singapore 100 issued share capital

843108100 1057931700 68741502 80

TP UK 100 issued share capital

235212900 295145100 19177716 22

TP Indonesia 55 issued share capital

35997200 45169300 2934975 03

Sub-total for Overseas PampC Targets

1482898900 1860741000 120905845 140

- 7 -

(ii) Other Target Companies Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1) (a) Securities broking

TPFH 100 issued share capital

(b) Property investment business

TPIH 100 issued share capital

Dragon Jade 100 equity interests

Ming Lee 100 issued share capital

Pacific Asia Walkman Mano Prospect Inc and Sarley

100 issued share capital

(c) Financial Support Service TPFAS 100 equity

interests TPFSC 100 equity

interests

(d) Others TP Japan (Insurance agency)

100 issued share capital

Savills TPML (Property management)

25 of issued share capital

CIG Trustees (Internal trustee)

100 issued share capital

Action Profit SZTPI and Toplap (Note 3)

(Inactive Companies)

100 issued share capitalequity interest

34326100(Note 3)

43072400 2798725 03

Description of Target Assets

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

Target Assets (i) Properties 168108700 210942700 13706480 16(ii) Others (Note 4) 14578600 18293200 1188644 01

Sub-total for Target Assets 182687300 229235900 14895124 17

Sub-total for Tranche C Targets 1699912300 2133049300 138599694 160 Grand Total 10581367500 13277495800 862735270 1000

- 8 -

Notes 1 The percentage shown is calculated by the consideration attributable to the relevant Acquisition Target

over the total Consideration assuming that the Tranche B Consideration is adjusted by the maximum Post-Agreement Capital Increase Amount (ie RMB263950000) Please refer to the paragraph headed ldquo(C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo below for further details of the Post-Agreement Capital Increase Adjustment

2 Assuming that TPG has paid the full amount of capital increase agreed to be contributed and the relevant capital inspection procedures have been completed

3 The consideration of these Target Companies is based on their respective net assets value and also taking into account the below factors

(a) the disposal of Tellon Development Limited (ldquoTellonrdquo together with its subsidiary associates and

available-for-sale investments under the segment of other businesses ldquoTellon Subgrouprdquo) by TPIH to TPG (HK) pursuant to an agreement dated 28 December 2012 and

(b) upon completion of the acquisition of TPIH Dragon Jade Ming Lee and TP Japan on the one hand

and the acquisition of the net accounts payable by TPG and TPG(HK) to these Target Companies (which form part of Target Assets) on the other hand the outstanding balances of these net accounts payable will be eliminated in the consolidated accounts of the Enlarged Group

4 Other Target Assets comprise accounts payable and accounts receivable between the Target Companies

on the one hand and TPG or TPG(HK) on the other hand as well as computer equipment office facilities furniture fixtures and fittings In considering the consideration attributable to these Target Assets the parties have taken into account that the outstanding balances of the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan will be eliminated in the consolidated accounts of the Enlarged Group

(C) Adjustment to the Consideration Post-Agreement Capital Increase Adjustment Prior to the date of the Framework Agreement the shareholders of TPI and TPAM (including the Company and TPG) have agreed to increase the registered capital of TPI and TPAM by additional capital to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The purpose of such capital increase is to fulfil the operation needs of TPI and TPAM The parties have agreed that if prior to the Tranche B Completion Date TPG has actually paid the agreed amount of capital increase in respect of TPI andor TPAM and (where applicable) the capital inspection procedures of which have been completed the Tranche B Consideration shall be increased by the amount of capital increase which has actually been paid by TPG in respect of TPI andor TPAM (the ldquoPost-Agreement Capital Increase Amountrdquo) In such event the parties further agreed that the Tranche B Consideration shall be increased by the Post-Agreement Capital Increase Amount TPG agreed to contribute RMB193950000 and RMB70000000 towards the registered capital of TPI and TPAM respectively therefore the maximum amount of the Post-Agreement Capital Increase Amount shall be RMB263950000 (equivalent to HK$331204400) The Company expects that prior to the Tranche B Completion Date TPG will pay the agreed capital increase amount and the relevant capital inspection procedures of TPI and TPAM will be completed therefore the Board is of the view that the Tranche B Consideration is likely to be adjusted by the maximum of the Post-Agreement Capital Increase Amount As the increase in the registered capital of TPI and TPAM will enhance their financial position the Company will also benefit from the capital contribution to be made by TPG upon acquiring the relevant Target Interests The Board thus considers that the above adjustment mechanism is fair and reasonable

- 9 -

Segregation of Overseas PampC Targets The transfer of shareholding in insurance companies is often subject to approval and consent of governmental departments or regulatory authorities of the relevant jurisdiction and specific requirements on filings and registration The Company has engaged legal advisers in Macau Singapore UK and Indonesia to ascertain the approvals and consents and procedural requirements necessary for the effective transfer of shareholding of insurance companies incorporated in those jurisdictions In the event that the necessary filing and registration procedures in respect of any of the Overseas PampC Targets have not yet been completed or fulfilled in accordance with the relevant requirements by the Completion Long Stop Date TPG and TPG(HK) shall have the right (but not an obligation) to segregate any of the Overseas PampC Targets the filing and registration procedures of which have not yet been completed (the ldquoSegregated Targetsrdquo) from the TPG Target Interests andor TPG(HK) Target Interests (as the case may be) and the consideration for the sale and purchase of the Segregated Targets shall be deducted from the Consideration If TPG and TPG(HK) elect to exercise such right of segregation TPG and TPG(HK) shall before the Completion Long Stop Date notify the Company of the segregation and the consideration to be deducted and the parties shall proceed to complete the sale and purchase of other Acquisition Targets of the Tranche C Targets as soon as practicable thereafter The parties further agreed that the segregation of the Segregated Targets shall not affect the completion of the sale and purchase of other Tranche C Targets nor affect the completion of the sale and purchase of the Tranche A Targets or the Tranche B Targets As the Company is not familiar with the procedural requirements for the transfer of shareholding in the Overseas PampC Targets the above segregation right provides the parties with the flexibility to segregate those Target Interests and complete the sale and purchase of other Tranche C Targets within the contemplated timeframe After the segregation of the Segregated Targets TPG TPG(HK) and the Company will enter into supplemental agreements for the sale and purchase of the Segregated Targets and will continue to proceed with the procedures necessary for the transfer of the Segregated Targets The Board considers that the above option for segregation is fair and reasonable (D) The Issue Price

The Issue Price of the Consideration Shares of HK$1539 was arrived at after armrsquos length negotiations between the parties with reference to among other things the recent trend of the Share price performance and the prevailing market price of the Shares The following table illustrates the comparison between the Issue Price and the historical price per Share on the date of this announcement the Last Trading Date and various periods as quoted on the Stock Exchange

Date Period

Closing price per Share Average closing price per Share for the

corresponding period Premium of Issue Price (HK$) () Last Trading Date 1236 245

Last 10 trading days 1262 219

Last 30 trading days 1282 200

Last 60 trading days 1343 146

Last 180 trading days 1356 135

Last twelve months 1313 172

Current year 1436 72

- 10 -

Having considered the Issue Price is higher than the closing price of the Last Trading Date and average closing prices of the abovementioned periods the Board is of the view that the Issue Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole (E) The Consideration Shares The Consideration shall be satisfied by the allotment and issue by the Company of Consideration Shares at the issue price of HK$1539 per Consideration Share to TPG and TPG(HK) or such person(s) as any of them may direct For the purpose of issuing the Consideration Shares the parties have agreed that the exchange rate shall be HK$100=RMB079694 (approximately equivalent to RMB100 = HK$125480 for reference only) being the mid-price of Renminbi to Hong Kong Dollars buying and selling rates announced by the Peoplersquos Bank of China on 24 May 2013 being the Last Trading Date The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets) will be 862735270 representing approximately 506 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 336 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and TPG and TPG(HK) exercise their right to segregate all Overseas PampC Targets) will be 741829425 representing approximately 435 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 303 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The following table illustrates the shareholding structure of the Company as at the date of this announcement and immediately following Completion

Name of Shareholder

As at the date of this announcement

Immediately following Completion (assuming Tranche B Consideration is increased by

the maximum of the Post-Agreement Capital Increase Amount and no

Segregated Targets)

Immediately following Completion (assuming Tranche B Consideration is increased by the maximum of the

Post-Agreement Capital Increase Amount and all Overseas PampC

Targets are segregated) No of Shares

heldApproximate

No of Shares

heldApproximate

No of Shares

held Approximate

TPG(HK) 908689405 5327 1771424675 6896 1650518830 6743 Other Shareholders

797185687 4673 797185687 3104 797185687 3257

Total 1705875092 10000 2568610362 10000 2447704517 10000 The parties have agreed that all Consideration Shares (including the Consideration Shares representing consideration for the sale and purchase of the TPG Target Interests and TPG Target Assets) shall be issued and allotted to TPG(HK) The Consideration Shares will be issued under the specific mandate to be approved at the EGM The Consideration Shares when allotted and issued will rank pari passu in all respects with all the Shares then in issue There are no restrictions on the subsequent transfer of the Consideration Shares by TPG(HK)

- 11 -

An application will be made by the Company to the Stock Exchange for the listing of and permission to deal in the Consideration Shares The Acquisition and the issue of the Consideration Shares will not result in any change in control of the Company 3 INFORMATION ON THE ACQUISITION TARGETS (A) Overview of the Acquisition Targets TPG is a long-established leading insurance group of the PRC Apart from holding a controlling stake in the Company TPG also owns PampC companies operating overseas and various companies covering a wide range of operations (including property investment and financial support services) as well as minority shareholdings in the major operating subsidiaries of the Group As part of the Restructuring Proposal which has been approved in principle by the MOF and the CIRC in 2013 TPG contemplated to inject its unlisted assets into the Group in consideration of new shares of the Company To materialize the detailed terms of the injection the parties entered into the Framework Agreement on 27 May 2013 The Acquisition Targets cover the unlisted assets of TPG including equity interests in a total of 25 Target Companies incorporated and operating in different jurisdictions as well as Target Assets of various nature and situated at various locations Having considered that the time required for obtaining relevant approval and consents and completing relevant registration and filing procedures in respect of different Acquisition Targets vary to a very large extent the parties have agreed to split the Acquisition Targets into three tranches each of which may proceed to completion on its own upon fulfilment of all necessary conditions As a result the sale and purchase of Tranche A Targets and Tranche B Targets (being additional equity interests of existing non-wholly-owned subsidiaries of the Company which are incorporated and operating in the PRC representing in aggregate 840 of the Consideration for all Acquisition Targets) may be completed ahead of the Tranche C Targets (which include equity interests in overseas PampC companies securities broking companies property investment companies financial support service companies and the Target Assets) While the completion mechanism of splitting into three tranches expedites the completion of Tranche A Targets and Tranche B Targets the Board wishes to emphasize that TPG TPG(HK) and the Company consider the Acquisition as a single package and the negotiation of the terms and conditions of the Framework Agreement (including the Consideration) was also made on aggregate basis It is the mutual commercial intention of TPG and the Company that TPG and TPG(HK) will sell and the Company will purchase all Acquisition Targets on and subject to the terms of the Framework Agreement and the Specific Agreements The completion mechanism of splitting into three tranches merely serves to facilitate settlement and completion of the Acquisition Once the Framework Agreement (and where applicable the Specific Agreements containing additional conditions precedent) become unconditional the parties will use their best endeavours to complete the sale and purchase of all Acquisition Targets as soon as practicable

- 12 -

The following table sets out certain historical financial data relating to the Target Companies extracted from the Accountantsrsquo Report which will be set out in the circular to be despatched to the Shareholders For the 12 months ended 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Results RMB Million RMB Million RMB MillionTPL(Note) Profit before taxation 44752 50646 96588Profit after taxation 70430 64338 83951 TPI Profit before taxation 20271 14387 2627Profit after taxation 19482 14100 4637 TPP Loss before taxation (10462) (16083) (15399)Loss after taxation (10462) (16083) (15399) TPAM Profit before taxation 3093 2842 1190Profit after taxation 2347 1956 850 Other Target Companies Profit before taxation 83016 180275 64425Profit after taxation 68799 149049 52221 As at 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Position RMB Million RMB Million RMB MillionTPL(Note) Total assets 16890567 13260184 11201330Total liabilities 15880301 12470585 10252722 TPI Total assets 1052214 851886 711918Total liabilities 878897 749885 621733 TPP Total assets 260801 184789 82415Total liabilities 205717 119863 26112 TPAM Total assets 24686 19648 17238Total liabilities 7131 4435 3980 Other Target Companies Total assets 1252045 1120776 1199482Total liabilities 692635 637989 780242

Note Consist of consolidated financial data relating to TPL and its subsidiaries

- 13 -

As at 31 December 2012 the total carrying amount of the Target Assets was RMB54377 million and the associated total liabilities amounted to RMB243470 million In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports The management discussion and analysis of the Tranche C Targets with continuing operating activities are set out in the appendix to this announcement for the information of the Shareholders (B) Segmental information on the Acquisition Targets (1) Tranche A Targets

Tranche A Targets consist solely of the 2505 equity interest of TPL and represent 663 of the aggregate Consideration TPL is one of the major existing non-wholly-owned subsidiaries of the Company TPL is engaged in the business of life insurance in the PRC As at 31 December 2012 the audited Net Assets Value (ldquoNAVrdquo) of TPL was RMB1010042 million (equivalent to approximately HK$1245655 million) and the embedded value (ldquoEVrdquo) of TPL was RMB23747 million (equivalent to approximately HK$29286 million)

Business Scope

Percentage of equity interest to be acquired

NAV as at 31

December 2012

NAV as at 31

December 2012 to be transacted

EV as at 31 December

2012

EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1010042 253016 23747 5949

Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPL contributed additional capital in the amount of RMB2500 million into TPL by way of cash Such capital contribution was completed in March 2013 If such additional capital were incorporated the adjusted NAV and embedded value of TPL as at 31 December 2012 would be as follows

Business Scope

Percentage of equity interest to be acquired

Adjusted NAV

as at 31 December

2012

Adjusted NAV

as at 31 December 2012 to be transacted

Adjusted EV as at 31 December

2012

Adjusted EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1260042 315641 26247 6575

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 3 -

2 FRAMEWORK AGREEMENT (A) Principal terms of the Framework Agreement Date 27 May 2013

(i) TPG (ii) TPG(HK) as vendors

Parties

(iii) The Company as purchaser

Subject matter The parties agreed that on and subject to the terms and conditions of the Framework Agreement TPG and TPG(HK) shall transfer and the Company (andor its designated wholly-owned subsidiaries) shall acquire the Acquisition Targets Information on the Acquisition Targets are set out in the section headed ldquo3 Information on the Acquisition Targetsrdquo of this announcement

Consideration The total consideration for the sale and purchase of the Acquisition Targets under the Framework Agreement shall be RMB10581367500 (equivalent to HK$13277495800) assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets of which (a) RMB7011311200 (equivalent to HK$8797790500) shall be the

consideration for the sale and purchase of the Tranche A Targets (b) assuming that Tranche B Consideration is adjusted by the maximum of

Post-Agreement Capital Increase Amount RMB1870144000 (equivalent to HK$2346656000) shall be the consideration for the sale and purchase of the Tranche B Targets

(c) subject to adjustment due to segregation of Segregated Targets if any RMB1699912300 (equivalent to HK$2133049300) shall be the consideration for the sale and purchase of the Tranche C Targets

The Consideration shall be satisfied by the allotment and issue by the Company of Consideration Shares at the issue price of HK$1539 per Consideration Share to TPG and TPG(HK) or such person(s) as any of them may direct

Conditions Precedent to the Framework Agreement

Completion of the Acquisition shall be conditional upon the fulfilment of the following conditions (i) the Framework Agreement the transactions contemplated thereunder and

the allotment and issue of not more than 862735270 Consideration Shares having been approved by the Independent Shareholders at the EGM in accordance with the requirements of the Listing Rules

(ii) the approval for the listing of and permission to deal in the Consideration

Shares having been granted by the Listing Committee of the Stock Exchange and

(iii) where applicable the Framework Agreement and the transactions

contemplated thereunder having been approved by relevant departments and commissions of the PRC government including the MOF the CIRC the MOFCOM and the CSRC

and where applicable conditions precedent set out in the Specific Agreements

- 4 -

Specific Agreements

TPG TPG(HK) and the Company further agreed to enter into Specific Agreements relating to the Acquisition Targets each of which will set out (i) where applicable additional conditions precedent which only apply to the subject matter of the Specific Agreement (being approval and consent by governmental departments and regulatory authorities which are necessary for the transfer of shares or equity interest in the relevant jurisdiction) and (ii) the registration notification and filing procedures necessary for the transfer of the subject matter of the Specific Agreement Where the Specific Agreement sets out additional conditions precedent the transfer of the subject matter of that Specific Agreement would be subject to the fulfilment of all conditions precedent set out in both the Framework Agreement and that Specific Agreement The condition(s) precedent to each Specific Agreement is(are) unrelated to and independent of the condition(s) precedent to the other Specific Agreements If the condition(s) precedent to any one Specific Agreement has not been fulfilled the fulfilment of condition(s) precedent to other Specific Agreements would not be affected The consents and approvals required under each Specific Agreement are independent of the consents and approvals required under other Specific Agreements

CP Long Stop Date

The parties agree to use their respective best endeavours to procure the fulfilment of all conditions precedent to the Framework Agreement and (where applicable) the Specific Agreements on or before 30 June 2014 or such other date as agreed by all parties in writing (the ldquoCP Long Stop Daterdquo) In the event that any of the conditions precedent under the Framework Agreement have not been fulfilled or satisfied by the CP Long Stop Date TPG TPG(HK) and the Company shall negotiate as to whether to extend the CP Long Stop Date or to terminate the Framework Agreement If the parties fail to reach an agreement within 7 working days after the CP Long Stop Date the Framework Agreement shall be terminated with effect from the expiry of the aforesaid 7-working day period after the CP Long Stop Date In the event that any of the conditions precedent under one or more Specific Agreements have not been fulfilled or satisfied by the CP Long Stop Date the parties to the relevant Specific Agreement(s) shall extend the CP Long Stop Date in respect of the subject matter of the Specific Agreement(s) to such date as the relevant parties shall agree

Completion The parties agreed that subject to the fulfilment of all conditions precedent to the Framework Agreement and the relevant Specific Agreement completion of the sale and purchase of the Acquisition Targets shall take place in three tranches as follows (i) on the Tranche A Completion Date the Company shall issue and allot

571656306 Consideration Shares to TPG(HK) as consideration for the Tranche A Targets

- 5 -

(ii) on the Tranche B Completion Date the Company shall issue and allot

130958519 Consideration Shares to TPG(HK) as consideration for the Tranche B Targets unless where Post-Agreement Capital Increase Adjustment is applicable in which case the Company shall issue and allot such number of Consideration Shares equivalent to the Adjusted Tranche B Consideration being 152479270 Shares and

(iii) on the Tranche C Completion Date the Company shall issue and allot

138599694 Consideration Shares to TPG(HK) as consideration for the Tranche C Targets

The Tranche A Completion the Tranche B Completion and the Tranche C Completion shall be independent of each other On the Tranche A Completion Date the parties may proceed with Tranche A Completion even if the completion of the other two tranches has not yet occurred and same for Tranche B Completion and Tranche C Completion

Completion Long Stop Date

Subject to the fulfilment of all conditions precedent to the Framework Agreement and the relevant Specific Agreement the parties agree to use their respective best endeavours to procure the Completion to take place on or before 31 December 2014 or such earlier date as agreed by all parties in writing (the ldquoCompletion Long Stop Daterdquo) Despite that the completion of each tranche of Acquisition Targets is independent of each other the Completion of the entire Acquisition shall take place when the sale and purchase of all three tranches of Acquisition Targets have taken place In the event that any of Tranche A Completion Tranche B Completion or Tranche C Completion has not taken place by the Completion Long Stop Date the sale and purchase of Acquisition Targets in the other tranches which have already been completed shall not be affected Subject to the right of TPG and TPG(HK) to segregate the Overseas PampC Targets from Tranche C Targets (details of which are disclosed in the paragraph headed ldquo(C) Adjustment to the Consideration ndash Segregation of Overseas PampC Targetsrdquo) the parties shall extend the Completion Long Stop Date in respect of the outstanding tranches of Acquisition Targets to such date as the parties shall agree Please refer to the section headed ldquo3 Information on the Acquisition Targetsrdquo for the rationale of the completion mechanism

(B) Basis for the Consideration The Consideration was determined after armrsquos length negotiations between the parties and with reference to various relevant factors including price comparisons (merger and public market comparables public market prices of the Shares both current and historical) financial valuations (historical financial information combined net asset value life insurance appraisal valuations -- embedded value and new business value) the prospects for the industry (nature of the relevant businesses future prospects of the relevant industries and market growth potential) macroeconomic conditions (general economic trends prevailing commercial and business conditions in which the Target Companies operate) and the strategic rationale and benefits of the Acquisition

- 6 -

The Consideration comprises the following Tranche A Targets Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

TPL 2505 equity interests

7011311200 8797790500 571656306 663

Sub-total for Tranche A Targets 7011311200 8797790500 571656306 663 Tranche B Targets Name of Target Company

Interest to be acquired Consideration

(RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate

Consideration(Note 1)

TPI 3879 equity interests 1422624300 1785108400 115991450 134 Post-Agreement Capital

Increase to TPI (Note 2) 193950000 243368400 15813410 18

TPAM 20 equity interests 122776100 154059400 10010358 12 Post-Agreement Capital

Increase to TPAM (Note 2) 70000000 87836000 5707341 07

TPP 4 equity interests 60793600 76283800 4956711 06Sub-total for Tranche B Targets (Note 2) 1870144000 2346656000 152479270 177 Tranche C Targets (i) Overseas PampC insurance business Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

TP Macau 100 issued share capital

368580700 462494900 30051652 35

TP Singapore 100 issued share capital

843108100 1057931700 68741502 80

TP UK 100 issued share capital

235212900 295145100 19177716 22

TP Indonesia 55 issued share capital

35997200 45169300 2934975 03

Sub-total for Overseas PampC Targets

1482898900 1860741000 120905845 140

- 7 -

(ii) Other Target Companies Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1) (a) Securities broking

TPFH 100 issued share capital

(b) Property investment business

TPIH 100 issued share capital

Dragon Jade 100 equity interests

Ming Lee 100 issued share capital

Pacific Asia Walkman Mano Prospect Inc and Sarley

100 issued share capital

(c) Financial Support Service TPFAS 100 equity

interests TPFSC 100 equity

interests

(d) Others TP Japan (Insurance agency)

100 issued share capital

Savills TPML (Property management)

25 of issued share capital

CIG Trustees (Internal trustee)

100 issued share capital

Action Profit SZTPI and Toplap (Note 3)

(Inactive Companies)

100 issued share capitalequity interest

34326100(Note 3)

43072400 2798725 03

Description of Target Assets

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

Target Assets (i) Properties 168108700 210942700 13706480 16(ii) Others (Note 4) 14578600 18293200 1188644 01

Sub-total for Target Assets 182687300 229235900 14895124 17

Sub-total for Tranche C Targets 1699912300 2133049300 138599694 160 Grand Total 10581367500 13277495800 862735270 1000

- 8 -

Notes 1 The percentage shown is calculated by the consideration attributable to the relevant Acquisition Target

over the total Consideration assuming that the Tranche B Consideration is adjusted by the maximum Post-Agreement Capital Increase Amount (ie RMB263950000) Please refer to the paragraph headed ldquo(C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo below for further details of the Post-Agreement Capital Increase Adjustment

2 Assuming that TPG has paid the full amount of capital increase agreed to be contributed and the relevant capital inspection procedures have been completed

3 The consideration of these Target Companies is based on their respective net assets value and also taking into account the below factors

(a) the disposal of Tellon Development Limited (ldquoTellonrdquo together with its subsidiary associates and

available-for-sale investments under the segment of other businesses ldquoTellon Subgrouprdquo) by TPIH to TPG (HK) pursuant to an agreement dated 28 December 2012 and

(b) upon completion of the acquisition of TPIH Dragon Jade Ming Lee and TP Japan on the one hand

and the acquisition of the net accounts payable by TPG and TPG(HK) to these Target Companies (which form part of Target Assets) on the other hand the outstanding balances of these net accounts payable will be eliminated in the consolidated accounts of the Enlarged Group

4 Other Target Assets comprise accounts payable and accounts receivable between the Target Companies

on the one hand and TPG or TPG(HK) on the other hand as well as computer equipment office facilities furniture fixtures and fittings In considering the consideration attributable to these Target Assets the parties have taken into account that the outstanding balances of the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan will be eliminated in the consolidated accounts of the Enlarged Group

(C) Adjustment to the Consideration Post-Agreement Capital Increase Adjustment Prior to the date of the Framework Agreement the shareholders of TPI and TPAM (including the Company and TPG) have agreed to increase the registered capital of TPI and TPAM by additional capital to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The purpose of such capital increase is to fulfil the operation needs of TPI and TPAM The parties have agreed that if prior to the Tranche B Completion Date TPG has actually paid the agreed amount of capital increase in respect of TPI andor TPAM and (where applicable) the capital inspection procedures of which have been completed the Tranche B Consideration shall be increased by the amount of capital increase which has actually been paid by TPG in respect of TPI andor TPAM (the ldquoPost-Agreement Capital Increase Amountrdquo) In such event the parties further agreed that the Tranche B Consideration shall be increased by the Post-Agreement Capital Increase Amount TPG agreed to contribute RMB193950000 and RMB70000000 towards the registered capital of TPI and TPAM respectively therefore the maximum amount of the Post-Agreement Capital Increase Amount shall be RMB263950000 (equivalent to HK$331204400) The Company expects that prior to the Tranche B Completion Date TPG will pay the agreed capital increase amount and the relevant capital inspection procedures of TPI and TPAM will be completed therefore the Board is of the view that the Tranche B Consideration is likely to be adjusted by the maximum of the Post-Agreement Capital Increase Amount As the increase in the registered capital of TPI and TPAM will enhance their financial position the Company will also benefit from the capital contribution to be made by TPG upon acquiring the relevant Target Interests The Board thus considers that the above adjustment mechanism is fair and reasonable

- 9 -

Segregation of Overseas PampC Targets The transfer of shareholding in insurance companies is often subject to approval and consent of governmental departments or regulatory authorities of the relevant jurisdiction and specific requirements on filings and registration The Company has engaged legal advisers in Macau Singapore UK and Indonesia to ascertain the approvals and consents and procedural requirements necessary for the effective transfer of shareholding of insurance companies incorporated in those jurisdictions In the event that the necessary filing and registration procedures in respect of any of the Overseas PampC Targets have not yet been completed or fulfilled in accordance with the relevant requirements by the Completion Long Stop Date TPG and TPG(HK) shall have the right (but not an obligation) to segregate any of the Overseas PampC Targets the filing and registration procedures of which have not yet been completed (the ldquoSegregated Targetsrdquo) from the TPG Target Interests andor TPG(HK) Target Interests (as the case may be) and the consideration for the sale and purchase of the Segregated Targets shall be deducted from the Consideration If TPG and TPG(HK) elect to exercise such right of segregation TPG and TPG(HK) shall before the Completion Long Stop Date notify the Company of the segregation and the consideration to be deducted and the parties shall proceed to complete the sale and purchase of other Acquisition Targets of the Tranche C Targets as soon as practicable thereafter The parties further agreed that the segregation of the Segregated Targets shall not affect the completion of the sale and purchase of other Tranche C Targets nor affect the completion of the sale and purchase of the Tranche A Targets or the Tranche B Targets As the Company is not familiar with the procedural requirements for the transfer of shareholding in the Overseas PampC Targets the above segregation right provides the parties with the flexibility to segregate those Target Interests and complete the sale and purchase of other Tranche C Targets within the contemplated timeframe After the segregation of the Segregated Targets TPG TPG(HK) and the Company will enter into supplemental agreements for the sale and purchase of the Segregated Targets and will continue to proceed with the procedures necessary for the transfer of the Segregated Targets The Board considers that the above option for segregation is fair and reasonable (D) The Issue Price

The Issue Price of the Consideration Shares of HK$1539 was arrived at after armrsquos length negotiations between the parties with reference to among other things the recent trend of the Share price performance and the prevailing market price of the Shares The following table illustrates the comparison between the Issue Price and the historical price per Share on the date of this announcement the Last Trading Date and various periods as quoted on the Stock Exchange

Date Period

Closing price per Share Average closing price per Share for the

corresponding period Premium of Issue Price (HK$) () Last Trading Date 1236 245

Last 10 trading days 1262 219

Last 30 trading days 1282 200

Last 60 trading days 1343 146

Last 180 trading days 1356 135

Last twelve months 1313 172

Current year 1436 72

- 10 -

Having considered the Issue Price is higher than the closing price of the Last Trading Date and average closing prices of the abovementioned periods the Board is of the view that the Issue Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole (E) The Consideration Shares The Consideration shall be satisfied by the allotment and issue by the Company of Consideration Shares at the issue price of HK$1539 per Consideration Share to TPG and TPG(HK) or such person(s) as any of them may direct For the purpose of issuing the Consideration Shares the parties have agreed that the exchange rate shall be HK$100=RMB079694 (approximately equivalent to RMB100 = HK$125480 for reference only) being the mid-price of Renminbi to Hong Kong Dollars buying and selling rates announced by the Peoplersquos Bank of China on 24 May 2013 being the Last Trading Date The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets) will be 862735270 representing approximately 506 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 336 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and TPG and TPG(HK) exercise their right to segregate all Overseas PampC Targets) will be 741829425 representing approximately 435 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 303 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The following table illustrates the shareholding structure of the Company as at the date of this announcement and immediately following Completion

Name of Shareholder

As at the date of this announcement

Immediately following Completion (assuming Tranche B Consideration is increased by

the maximum of the Post-Agreement Capital Increase Amount and no

Segregated Targets)

Immediately following Completion (assuming Tranche B Consideration is increased by the maximum of the

Post-Agreement Capital Increase Amount and all Overseas PampC

Targets are segregated) No of Shares

heldApproximate

No of Shares

heldApproximate

No of Shares

held Approximate

TPG(HK) 908689405 5327 1771424675 6896 1650518830 6743 Other Shareholders

797185687 4673 797185687 3104 797185687 3257

Total 1705875092 10000 2568610362 10000 2447704517 10000 The parties have agreed that all Consideration Shares (including the Consideration Shares representing consideration for the sale and purchase of the TPG Target Interests and TPG Target Assets) shall be issued and allotted to TPG(HK) The Consideration Shares will be issued under the specific mandate to be approved at the EGM The Consideration Shares when allotted and issued will rank pari passu in all respects with all the Shares then in issue There are no restrictions on the subsequent transfer of the Consideration Shares by TPG(HK)

- 11 -

An application will be made by the Company to the Stock Exchange for the listing of and permission to deal in the Consideration Shares The Acquisition and the issue of the Consideration Shares will not result in any change in control of the Company 3 INFORMATION ON THE ACQUISITION TARGETS (A) Overview of the Acquisition Targets TPG is a long-established leading insurance group of the PRC Apart from holding a controlling stake in the Company TPG also owns PampC companies operating overseas and various companies covering a wide range of operations (including property investment and financial support services) as well as minority shareholdings in the major operating subsidiaries of the Group As part of the Restructuring Proposal which has been approved in principle by the MOF and the CIRC in 2013 TPG contemplated to inject its unlisted assets into the Group in consideration of new shares of the Company To materialize the detailed terms of the injection the parties entered into the Framework Agreement on 27 May 2013 The Acquisition Targets cover the unlisted assets of TPG including equity interests in a total of 25 Target Companies incorporated and operating in different jurisdictions as well as Target Assets of various nature and situated at various locations Having considered that the time required for obtaining relevant approval and consents and completing relevant registration and filing procedures in respect of different Acquisition Targets vary to a very large extent the parties have agreed to split the Acquisition Targets into three tranches each of which may proceed to completion on its own upon fulfilment of all necessary conditions As a result the sale and purchase of Tranche A Targets and Tranche B Targets (being additional equity interests of existing non-wholly-owned subsidiaries of the Company which are incorporated and operating in the PRC representing in aggregate 840 of the Consideration for all Acquisition Targets) may be completed ahead of the Tranche C Targets (which include equity interests in overseas PampC companies securities broking companies property investment companies financial support service companies and the Target Assets) While the completion mechanism of splitting into three tranches expedites the completion of Tranche A Targets and Tranche B Targets the Board wishes to emphasize that TPG TPG(HK) and the Company consider the Acquisition as a single package and the negotiation of the terms and conditions of the Framework Agreement (including the Consideration) was also made on aggregate basis It is the mutual commercial intention of TPG and the Company that TPG and TPG(HK) will sell and the Company will purchase all Acquisition Targets on and subject to the terms of the Framework Agreement and the Specific Agreements The completion mechanism of splitting into three tranches merely serves to facilitate settlement and completion of the Acquisition Once the Framework Agreement (and where applicable the Specific Agreements containing additional conditions precedent) become unconditional the parties will use their best endeavours to complete the sale and purchase of all Acquisition Targets as soon as practicable

- 12 -

The following table sets out certain historical financial data relating to the Target Companies extracted from the Accountantsrsquo Report which will be set out in the circular to be despatched to the Shareholders For the 12 months ended 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Results RMB Million RMB Million RMB MillionTPL(Note) Profit before taxation 44752 50646 96588Profit after taxation 70430 64338 83951 TPI Profit before taxation 20271 14387 2627Profit after taxation 19482 14100 4637 TPP Loss before taxation (10462) (16083) (15399)Loss after taxation (10462) (16083) (15399) TPAM Profit before taxation 3093 2842 1190Profit after taxation 2347 1956 850 Other Target Companies Profit before taxation 83016 180275 64425Profit after taxation 68799 149049 52221 As at 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Position RMB Million RMB Million RMB MillionTPL(Note) Total assets 16890567 13260184 11201330Total liabilities 15880301 12470585 10252722 TPI Total assets 1052214 851886 711918Total liabilities 878897 749885 621733 TPP Total assets 260801 184789 82415Total liabilities 205717 119863 26112 TPAM Total assets 24686 19648 17238Total liabilities 7131 4435 3980 Other Target Companies Total assets 1252045 1120776 1199482Total liabilities 692635 637989 780242

Note Consist of consolidated financial data relating to TPL and its subsidiaries

- 13 -

As at 31 December 2012 the total carrying amount of the Target Assets was RMB54377 million and the associated total liabilities amounted to RMB243470 million In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports The management discussion and analysis of the Tranche C Targets with continuing operating activities are set out in the appendix to this announcement for the information of the Shareholders (B) Segmental information on the Acquisition Targets (1) Tranche A Targets

Tranche A Targets consist solely of the 2505 equity interest of TPL and represent 663 of the aggregate Consideration TPL is one of the major existing non-wholly-owned subsidiaries of the Company TPL is engaged in the business of life insurance in the PRC As at 31 December 2012 the audited Net Assets Value (ldquoNAVrdquo) of TPL was RMB1010042 million (equivalent to approximately HK$1245655 million) and the embedded value (ldquoEVrdquo) of TPL was RMB23747 million (equivalent to approximately HK$29286 million)

Business Scope

Percentage of equity interest to be acquired

NAV as at 31

December 2012

NAV as at 31

December 2012 to be transacted

EV as at 31 December

2012

EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1010042 253016 23747 5949

Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPL contributed additional capital in the amount of RMB2500 million into TPL by way of cash Such capital contribution was completed in March 2013 If such additional capital were incorporated the adjusted NAV and embedded value of TPL as at 31 December 2012 would be as follows

Business Scope

Percentage of equity interest to be acquired

Adjusted NAV

as at 31 December

2012

Adjusted NAV

as at 31 December 2012 to be transacted

Adjusted EV as at 31 December

2012

Adjusted EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1260042 315641 26247 6575

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 4 -

Specific Agreements

TPG TPG(HK) and the Company further agreed to enter into Specific Agreements relating to the Acquisition Targets each of which will set out (i) where applicable additional conditions precedent which only apply to the subject matter of the Specific Agreement (being approval and consent by governmental departments and regulatory authorities which are necessary for the transfer of shares or equity interest in the relevant jurisdiction) and (ii) the registration notification and filing procedures necessary for the transfer of the subject matter of the Specific Agreement Where the Specific Agreement sets out additional conditions precedent the transfer of the subject matter of that Specific Agreement would be subject to the fulfilment of all conditions precedent set out in both the Framework Agreement and that Specific Agreement The condition(s) precedent to each Specific Agreement is(are) unrelated to and independent of the condition(s) precedent to the other Specific Agreements If the condition(s) precedent to any one Specific Agreement has not been fulfilled the fulfilment of condition(s) precedent to other Specific Agreements would not be affected The consents and approvals required under each Specific Agreement are independent of the consents and approvals required under other Specific Agreements

CP Long Stop Date

The parties agree to use their respective best endeavours to procure the fulfilment of all conditions precedent to the Framework Agreement and (where applicable) the Specific Agreements on or before 30 June 2014 or such other date as agreed by all parties in writing (the ldquoCP Long Stop Daterdquo) In the event that any of the conditions precedent under the Framework Agreement have not been fulfilled or satisfied by the CP Long Stop Date TPG TPG(HK) and the Company shall negotiate as to whether to extend the CP Long Stop Date or to terminate the Framework Agreement If the parties fail to reach an agreement within 7 working days after the CP Long Stop Date the Framework Agreement shall be terminated with effect from the expiry of the aforesaid 7-working day period after the CP Long Stop Date In the event that any of the conditions precedent under one or more Specific Agreements have not been fulfilled or satisfied by the CP Long Stop Date the parties to the relevant Specific Agreement(s) shall extend the CP Long Stop Date in respect of the subject matter of the Specific Agreement(s) to such date as the relevant parties shall agree

Completion The parties agreed that subject to the fulfilment of all conditions precedent to the Framework Agreement and the relevant Specific Agreement completion of the sale and purchase of the Acquisition Targets shall take place in three tranches as follows (i) on the Tranche A Completion Date the Company shall issue and allot

571656306 Consideration Shares to TPG(HK) as consideration for the Tranche A Targets

- 5 -

(ii) on the Tranche B Completion Date the Company shall issue and allot

130958519 Consideration Shares to TPG(HK) as consideration for the Tranche B Targets unless where Post-Agreement Capital Increase Adjustment is applicable in which case the Company shall issue and allot such number of Consideration Shares equivalent to the Adjusted Tranche B Consideration being 152479270 Shares and

(iii) on the Tranche C Completion Date the Company shall issue and allot

138599694 Consideration Shares to TPG(HK) as consideration for the Tranche C Targets

The Tranche A Completion the Tranche B Completion and the Tranche C Completion shall be independent of each other On the Tranche A Completion Date the parties may proceed with Tranche A Completion even if the completion of the other two tranches has not yet occurred and same for Tranche B Completion and Tranche C Completion

Completion Long Stop Date

Subject to the fulfilment of all conditions precedent to the Framework Agreement and the relevant Specific Agreement the parties agree to use their respective best endeavours to procure the Completion to take place on or before 31 December 2014 or such earlier date as agreed by all parties in writing (the ldquoCompletion Long Stop Daterdquo) Despite that the completion of each tranche of Acquisition Targets is independent of each other the Completion of the entire Acquisition shall take place when the sale and purchase of all three tranches of Acquisition Targets have taken place In the event that any of Tranche A Completion Tranche B Completion or Tranche C Completion has not taken place by the Completion Long Stop Date the sale and purchase of Acquisition Targets in the other tranches which have already been completed shall not be affected Subject to the right of TPG and TPG(HK) to segregate the Overseas PampC Targets from Tranche C Targets (details of which are disclosed in the paragraph headed ldquo(C) Adjustment to the Consideration ndash Segregation of Overseas PampC Targetsrdquo) the parties shall extend the Completion Long Stop Date in respect of the outstanding tranches of Acquisition Targets to such date as the parties shall agree Please refer to the section headed ldquo3 Information on the Acquisition Targetsrdquo for the rationale of the completion mechanism

(B) Basis for the Consideration The Consideration was determined after armrsquos length negotiations between the parties and with reference to various relevant factors including price comparisons (merger and public market comparables public market prices of the Shares both current and historical) financial valuations (historical financial information combined net asset value life insurance appraisal valuations -- embedded value and new business value) the prospects for the industry (nature of the relevant businesses future prospects of the relevant industries and market growth potential) macroeconomic conditions (general economic trends prevailing commercial and business conditions in which the Target Companies operate) and the strategic rationale and benefits of the Acquisition

- 6 -

The Consideration comprises the following Tranche A Targets Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

TPL 2505 equity interests

7011311200 8797790500 571656306 663

Sub-total for Tranche A Targets 7011311200 8797790500 571656306 663 Tranche B Targets Name of Target Company

Interest to be acquired Consideration

(RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate

Consideration(Note 1)

TPI 3879 equity interests 1422624300 1785108400 115991450 134 Post-Agreement Capital

Increase to TPI (Note 2) 193950000 243368400 15813410 18

TPAM 20 equity interests 122776100 154059400 10010358 12 Post-Agreement Capital

Increase to TPAM (Note 2) 70000000 87836000 5707341 07

TPP 4 equity interests 60793600 76283800 4956711 06Sub-total for Tranche B Targets (Note 2) 1870144000 2346656000 152479270 177 Tranche C Targets (i) Overseas PampC insurance business Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

TP Macau 100 issued share capital

368580700 462494900 30051652 35

TP Singapore 100 issued share capital

843108100 1057931700 68741502 80

TP UK 100 issued share capital

235212900 295145100 19177716 22

TP Indonesia 55 issued share capital

35997200 45169300 2934975 03

Sub-total for Overseas PampC Targets

1482898900 1860741000 120905845 140

- 7 -

(ii) Other Target Companies Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1) (a) Securities broking

TPFH 100 issued share capital

(b) Property investment business

TPIH 100 issued share capital

Dragon Jade 100 equity interests

Ming Lee 100 issued share capital

Pacific Asia Walkman Mano Prospect Inc and Sarley

100 issued share capital

(c) Financial Support Service TPFAS 100 equity

interests TPFSC 100 equity

interests

(d) Others TP Japan (Insurance agency)

100 issued share capital

Savills TPML (Property management)

25 of issued share capital

CIG Trustees (Internal trustee)

100 issued share capital

Action Profit SZTPI and Toplap (Note 3)

(Inactive Companies)

100 issued share capitalequity interest

34326100(Note 3)

43072400 2798725 03

Description of Target Assets

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

Target Assets (i) Properties 168108700 210942700 13706480 16(ii) Others (Note 4) 14578600 18293200 1188644 01

Sub-total for Target Assets 182687300 229235900 14895124 17

Sub-total for Tranche C Targets 1699912300 2133049300 138599694 160 Grand Total 10581367500 13277495800 862735270 1000

- 8 -

Notes 1 The percentage shown is calculated by the consideration attributable to the relevant Acquisition Target

over the total Consideration assuming that the Tranche B Consideration is adjusted by the maximum Post-Agreement Capital Increase Amount (ie RMB263950000) Please refer to the paragraph headed ldquo(C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo below for further details of the Post-Agreement Capital Increase Adjustment

2 Assuming that TPG has paid the full amount of capital increase agreed to be contributed and the relevant capital inspection procedures have been completed

3 The consideration of these Target Companies is based on their respective net assets value and also taking into account the below factors

(a) the disposal of Tellon Development Limited (ldquoTellonrdquo together with its subsidiary associates and

available-for-sale investments under the segment of other businesses ldquoTellon Subgrouprdquo) by TPIH to TPG (HK) pursuant to an agreement dated 28 December 2012 and

(b) upon completion of the acquisition of TPIH Dragon Jade Ming Lee and TP Japan on the one hand

and the acquisition of the net accounts payable by TPG and TPG(HK) to these Target Companies (which form part of Target Assets) on the other hand the outstanding balances of these net accounts payable will be eliminated in the consolidated accounts of the Enlarged Group

4 Other Target Assets comprise accounts payable and accounts receivable between the Target Companies

on the one hand and TPG or TPG(HK) on the other hand as well as computer equipment office facilities furniture fixtures and fittings In considering the consideration attributable to these Target Assets the parties have taken into account that the outstanding balances of the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan will be eliminated in the consolidated accounts of the Enlarged Group

(C) Adjustment to the Consideration Post-Agreement Capital Increase Adjustment Prior to the date of the Framework Agreement the shareholders of TPI and TPAM (including the Company and TPG) have agreed to increase the registered capital of TPI and TPAM by additional capital to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The purpose of such capital increase is to fulfil the operation needs of TPI and TPAM The parties have agreed that if prior to the Tranche B Completion Date TPG has actually paid the agreed amount of capital increase in respect of TPI andor TPAM and (where applicable) the capital inspection procedures of which have been completed the Tranche B Consideration shall be increased by the amount of capital increase which has actually been paid by TPG in respect of TPI andor TPAM (the ldquoPost-Agreement Capital Increase Amountrdquo) In such event the parties further agreed that the Tranche B Consideration shall be increased by the Post-Agreement Capital Increase Amount TPG agreed to contribute RMB193950000 and RMB70000000 towards the registered capital of TPI and TPAM respectively therefore the maximum amount of the Post-Agreement Capital Increase Amount shall be RMB263950000 (equivalent to HK$331204400) The Company expects that prior to the Tranche B Completion Date TPG will pay the agreed capital increase amount and the relevant capital inspection procedures of TPI and TPAM will be completed therefore the Board is of the view that the Tranche B Consideration is likely to be adjusted by the maximum of the Post-Agreement Capital Increase Amount As the increase in the registered capital of TPI and TPAM will enhance their financial position the Company will also benefit from the capital contribution to be made by TPG upon acquiring the relevant Target Interests The Board thus considers that the above adjustment mechanism is fair and reasonable

- 9 -

Segregation of Overseas PampC Targets The transfer of shareholding in insurance companies is often subject to approval and consent of governmental departments or regulatory authorities of the relevant jurisdiction and specific requirements on filings and registration The Company has engaged legal advisers in Macau Singapore UK and Indonesia to ascertain the approvals and consents and procedural requirements necessary for the effective transfer of shareholding of insurance companies incorporated in those jurisdictions In the event that the necessary filing and registration procedures in respect of any of the Overseas PampC Targets have not yet been completed or fulfilled in accordance with the relevant requirements by the Completion Long Stop Date TPG and TPG(HK) shall have the right (but not an obligation) to segregate any of the Overseas PampC Targets the filing and registration procedures of which have not yet been completed (the ldquoSegregated Targetsrdquo) from the TPG Target Interests andor TPG(HK) Target Interests (as the case may be) and the consideration for the sale and purchase of the Segregated Targets shall be deducted from the Consideration If TPG and TPG(HK) elect to exercise such right of segregation TPG and TPG(HK) shall before the Completion Long Stop Date notify the Company of the segregation and the consideration to be deducted and the parties shall proceed to complete the sale and purchase of other Acquisition Targets of the Tranche C Targets as soon as practicable thereafter The parties further agreed that the segregation of the Segregated Targets shall not affect the completion of the sale and purchase of other Tranche C Targets nor affect the completion of the sale and purchase of the Tranche A Targets or the Tranche B Targets As the Company is not familiar with the procedural requirements for the transfer of shareholding in the Overseas PampC Targets the above segregation right provides the parties with the flexibility to segregate those Target Interests and complete the sale and purchase of other Tranche C Targets within the contemplated timeframe After the segregation of the Segregated Targets TPG TPG(HK) and the Company will enter into supplemental agreements for the sale and purchase of the Segregated Targets and will continue to proceed with the procedures necessary for the transfer of the Segregated Targets The Board considers that the above option for segregation is fair and reasonable (D) The Issue Price

The Issue Price of the Consideration Shares of HK$1539 was arrived at after armrsquos length negotiations between the parties with reference to among other things the recent trend of the Share price performance and the prevailing market price of the Shares The following table illustrates the comparison between the Issue Price and the historical price per Share on the date of this announcement the Last Trading Date and various periods as quoted on the Stock Exchange

Date Period

Closing price per Share Average closing price per Share for the

corresponding period Premium of Issue Price (HK$) () Last Trading Date 1236 245

Last 10 trading days 1262 219

Last 30 trading days 1282 200

Last 60 trading days 1343 146

Last 180 trading days 1356 135

Last twelve months 1313 172

Current year 1436 72

- 10 -

Having considered the Issue Price is higher than the closing price of the Last Trading Date and average closing prices of the abovementioned periods the Board is of the view that the Issue Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole (E) The Consideration Shares The Consideration shall be satisfied by the allotment and issue by the Company of Consideration Shares at the issue price of HK$1539 per Consideration Share to TPG and TPG(HK) or such person(s) as any of them may direct For the purpose of issuing the Consideration Shares the parties have agreed that the exchange rate shall be HK$100=RMB079694 (approximately equivalent to RMB100 = HK$125480 for reference only) being the mid-price of Renminbi to Hong Kong Dollars buying and selling rates announced by the Peoplersquos Bank of China on 24 May 2013 being the Last Trading Date The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets) will be 862735270 representing approximately 506 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 336 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and TPG and TPG(HK) exercise their right to segregate all Overseas PampC Targets) will be 741829425 representing approximately 435 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 303 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The following table illustrates the shareholding structure of the Company as at the date of this announcement and immediately following Completion

Name of Shareholder

As at the date of this announcement

Immediately following Completion (assuming Tranche B Consideration is increased by

the maximum of the Post-Agreement Capital Increase Amount and no

Segregated Targets)

Immediately following Completion (assuming Tranche B Consideration is increased by the maximum of the

Post-Agreement Capital Increase Amount and all Overseas PampC

Targets are segregated) No of Shares

heldApproximate

No of Shares

heldApproximate

No of Shares

held Approximate

TPG(HK) 908689405 5327 1771424675 6896 1650518830 6743 Other Shareholders

797185687 4673 797185687 3104 797185687 3257

Total 1705875092 10000 2568610362 10000 2447704517 10000 The parties have agreed that all Consideration Shares (including the Consideration Shares representing consideration for the sale and purchase of the TPG Target Interests and TPG Target Assets) shall be issued and allotted to TPG(HK) The Consideration Shares will be issued under the specific mandate to be approved at the EGM The Consideration Shares when allotted and issued will rank pari passu in all respects with all the Shares then in issue There are no restrictions on the subsequent transfer of the Consideration Shares by TPG(HK)

- 11 -

An application will be made by the Company to the Stock Exchange for the listing of and permission to deal in the Consideration Shares The Acquisition and the issue of the Consideration Shares will not result in any change in control of the Company 3 INFORMATION ON THE ACQUISITION TARGETS (A) Overview of the Acquisition Targets TPG is a long-established leading insurance group of the PRC Apart from holding a controlling stake in the Company TPG also owns PampC companies operating overseas and various companies covering a wide range of operations (including property investment and financial support services) as well as minority shareholdings in the major operating subsidiaries of the Group As part of the Restructuring Proposal which has been approved in principle by the MOF and the CIRC in 2013 TPG contemplated to inject its unlisted assets into the Group in consideration of new shares of the Company To materialize the detailed terms of the injection the parties entered into the Framework Agreement on 27 May 2013 The Acquisition Targets cover the unlisted assets of TPG including equity interests in a total of 25 Target Companies incorporated and operating in different jurisdictions as well as Target Assets of various nature and situated at various locations Having considered that the time required for obtaining relevant approval and consents and completing relevant registration and filing procedures in respect of different Acquisition Targets vary to a very large extent the parties have agreed to split the Acquisition Targets into three tranches each of which may proceed to completion on its own upon fulfilment of all necessary conditions As a result the sale and purchase of Tranche A Targets and Tranche B Targets (being additional equity interests of existing non-wholly-owned subsidiaries of the Company which are incorporated and operating in the PRC representing in aggregate 840 of the Consideration for all Acquisition Targets) may be completed ahead of the Tranche C Targets (which include equity interests in overseas PampC companies securities broking companies property investment companies financial support service companies and the Target Assets) While the completion mechanism of splitting into three tranches expedites the completion of Tranche A Targets and Tranche B Targets the Board wishes to emphasize that TPG TPG(HK) and the Company consider the Acquisition as a single package and the negotiation of the terms and conditions of the Framework Agreement (including the Consideration) was also made on aggregate basis It is the mutual commercial intention of TPG and the Company that TPG and TPG(HK) will sell and the Company will purchase all Acquisition Targets on and subject to the terms of the Framework Agreement and the Specific Agreements The completion mechanism of splitting into three tranches merely serves to facilitate settlement and completion of the Acquisition Once the Framework Agreement (and where applicable the Specific Agreements containing additional conditions precedent) become unconditional the parties will use their best endeavours to complete the sale and purchase of all Acquisition Targets as soon as practicable

- 12 -

The following table sets out certain historical financial data relating to the Target Companies extracted from the Accountantsrsquo Report which will be set out in the circular to be despatched to the Shareholders For the 12 months ended 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Results RMB Million RMB Million RMB MillionTPL(Note) Profit before taxation 44752 50646 96588Profit after taxation 70430 64338 83951 TPI Profit before taxation 20271 14387 2627Profit after taxation 19482 14100 4637 TPP Loss before taxation (10462) (16083) (15399)Loss after taxation (10462) (16083) (15399) TPAM Profit before taxation 3093 2842 1190Profit after taxation 2347 1956 850 Other Target Companies Profit before taxation 83016 180275 64425Profit after taxation 68799 149049 52221 As at 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Position RMB Million RMB Million RMB MillionTPL(Note) Total assets 16890567 13260184 11201330Total liabilities 15880301 12470585 10252722 TPI Total assets 1052214 851886 711918Total liabilities 878897 749885 621733 TPP Total assets 260801 184789 82415Total liabilities 205717 119863 26112 TPAM Total assets 24686 19648 17238Total liabilities 7131 4435 3980 Other Target Companies Total assets 1252045 1120776 1199482Total liabilities 692635 637989 780242

Note Consist of consolidated financial data relating to TPL and its subsidiaries

- 13 -

As at 31 December 2012 the total carrying amount of the Target Assets was RMB54377 million and the associated total liabilities amounted to RMB243470 million In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports The management discussion and analysis of the Tranche C Targets with continuing operating activities are set out in the appendix to this announcement for the information of the Shareholders (B) Segmental information on the Acquisition Targets (1) Tranche A Targets

Tranche A Targets consist solely of the 2505 equity interest of TPL and represent 663 of the aggregate Consideration TPL is one of the major existing non-wholly-owned subsidiaries of the Company TPL is engaged in the business of life insurance in the PRC As at 31 December 2012 the audited Net Assets Value (ldquoNAVrdquo) of TPL was RMB1010042 million (equivalent to approximately HK$1245655 million) and the embedded value (ldquoEVrdquo) of TPL was RMB23747 million (equivalent to approximately HK$29286 million)

Business Scope

Percentage of equity interest to be acquired

NAV as at 31

December 2012

NAV as at 31

December 2012 to be transacted

EV as at 31 December

2012

EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1010042 253016 23747 5949

Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPL contributed additional capital in the amount of RMB2500 million into TPL by way of cash Such capital contribution was completed in March 2013 If such additional capital were incorporated the adjusted NAV and embedded value of TPL as at 31 December 2012 would be as follows

Business Scope

Percentage of equity interest to be acquired

Adjusted NAV

as at 31 December

2012

Adjusted NAV

as at 31 December 2012 to be transacted

Adjusted EV as at 31 December

2012

Adjusted EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1260042 315641 26247 6575

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 5 -

(ii) on the Tranche B Completion Date the Company shall issue and allot

130958519 Consideration Shares to TPG(HK) as consideration for the Tranche B Targets unless where Post-Agreement Capital Increase Adjustment is applicable in which case the Company shall issue and allot such number of Consideration Shares equivalent to the Adjusted Tranche B Consideration being 152479270 Shares and

(iii) on the Tranche C Completion Date the Company shall issue and allot

138599694 Consideration Shares to TPG(HK) as consideration for the Tranche C Targets

The Tranche A Completion the Tranche B Completion and the Tranche C Completion shall be independent of each other On the Tranche A Completion Date the parties may proceed with Tranche A Completion even if the completion of the other two tranches has not yet occurred and same for Tranche B Completion and Tranche C Completion

Completion Long Stop Date

Subject to the fulfilment of all conditions precedent to the Framework Agreement and the relevant Specific Agreement the parties agree to use their respective best endeavours to procure the Completion to take place on or before 31 December 2014 or such earlier date as agreed by all parties in writing (the ldquoCompletion Long Stop Daterdquo) Despite that the completion of each tranche of Acquisition Targets is independent of each other the Completion of the entire Acquisition shall take place when the sale and purchase of all three tranches of Acquisition Targets have taken place In the event that any of Tranche A Completion Tranche B Completion or Tranche C Completion has not taken place by the Completion Long Stop Date the sale and purchase of Acquisition Targets in the other tranches which have already been completed shall not be affected Subject to the right of TPG and TPG(HK) to segregate the Overseas PampC Targets from Tranche C Targets (details of which are disclosed in the paragraph headed ldquo(C) Adjustment to the Consideration ndash Segregation of Overseas PampC Targetsrdquo) the parties shall extend the Completion Long Stop Date in respect of the outstanding tranches of Acquisition Targets to such date as the parties shall agree Please refer to the section headed ldquo3 Information on the Acquisition Targetsrdquo for the rationale of the completion mechanism

(B) Basis for the Consideration The Consideration was determined after armrsquos length negotiations between the parties and with reference to various relevant factors including price comparisons (merger and public market comparables public market prices of the Shares both current and historical) financial valuations (historical financial information combined net asset value life insurance appraisal valuations -- embedded value and new business value) the prospects for the industry (nature of the relevant businesses future prospects of the relevant industries and market growth potential) macroeconomic conditions (general economic trends prevailing commercial and business conditions in which the Target Companies operate) and the strategic rationale and benefits of the Acquisition

- 6 -

The Consideration comprises the following Tranche A Targets Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

TPL 2505 equity interests

7011311200 8797790500 571656306 663

Sub-total for Tranche A Targets 7011311200 8797790500 571656306 663 Tranche B Targets Name of Target Company

Interest to be acquired Consideration

(RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate

Consideration(Note 1)

TPI 3879 equity interests 1422624300 1785108400 115991450 134 Post-Agreement Capital

Increase to TPI (Note 2) 193950000 243368400 15813410 18

TPAM 20 equity interests 122776100 154059400 10010358 12 Post-Agreement Capital

Increase to TPAM (Note 2) 70000000 87836000 5707341 07

TPP 4 equity interests 60793600 76283800 4956711 06Sub-total for Tranche B Targets (Note 2) 1870144000 2346656000 152479270 177 Tranche C Targets (i) Overseas PampC insurance business Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

TP Macau 100 issued share capital

368580700 462494900 30051652 35

TP Singapore 100 issued share capital

843108100 1057931700 68741502 80

TP UK 100 issued share capital

235212900 295145100 19177716 22

TP Indonesia 55 issued share capital

35997200 45169300 2934975 03

Sub-total for Overseas PampC Targets

1482898900 1860741000 120905845 140

- 7 -

(ii) Other Target Companies Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1) (a) Securities broking

TPFH 100 issued share capital

(b) Property investment business

TPIH 100 issued share capital

Dragon Jade 100 equity interests

Ming Lee 100 issued share capital

Pacific Asia Walkman Mano Prospect Inc and Sarley

100 issued share capital

(c) Financial Support Service TPFAS 100 equity

interests TPFSC 100 equity

interests

(d) Others TP Japan (Insurance agency)

100 issued share capital

Savills TPML (Property management)

25 of issued share capital

CIG Trustees (Internal trustee)

100 issued share capital

Action Profit SZTPI and Toplap (Note 3)

(Inactive Companies)

100 issued share capitalequity interest

34326100(Note 3)

43072400 2798725 03

Description of Target Assets

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

Target Assets (i) Properties 168108700 210942700 13706480 16(ii) Others (Note 4) 14578600 18293200 1188644 01

Sub-total for Target Assets 182687300 229235900 14895124 17

Sub-total for Tranche C Targets 1699912300 2133049300 138599694 160 Grand Total 10581367500 13277495800 862735270 1000

- 8 -

Notes 1 The percentage shown is calculated by the consideration attributable to the relevant Acquisition Target

over the total Consideration assuming that the Tranche B Consideration is adjusted by the maximum Post-Agreement Capital Increase Amount (ie RMB263950000) Please refer to the paragraph headed ldquo(C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo below for further details of the Post-Agreement Capital Increase Adjustment

2 Assuming that TPG has paid the full amount of capital increase agreed to be contributed and the relevant capital inspection procedures have been completed

3 The consideration of these Target Companies is based on their respective net assets value and also taking into account the below factors

(a) the disposal of Tellon Development Limited (ldquoTellonrdquo together with its subsidiary associates and

available-for-sale investments under the segment of other businesses ldquoTellon Subgrouprdquo) by TPIH to TPG (HK) pursuant to an agreement dated 28 December 2012 and

(b) upon completion of the acquisition of TPIH Dragon Jade Ming Lee and TP Japan on the one hand

and the acquisition of the net accounts payable by TPG and TPG(HK) to these Target Companies (which form part of Target Assets) on the other hand the outstanding balances of these net accounts payable will be eliminated in the consolidated accounts of the Enlarged Group

4 Other Target Assets comprise accounts payable and accounts receivable between the Target Companies

on the one hand and TPG or TPG(HK) on the other hand as well as computer equipment office facilities furniture fixtures and fittings In considering the consideration attributable to these Target Assets the parties have taken into account that the outstanding balances of the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan will be eliminated in the consolidated accounts of the Enlarged Group

(C) Adjustment to the Consideration Post-Agreement Capital Increase Adjustment Prior to the date of the Framework Agreement the shareholders of TPI and TPAM (including the Company and TPG) have agreed to increase the registered capital of TPI and TPAM by additional capital to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The purpose of such capital increase is to fulfil the operation needs of TPI and TPAM The parties have agreed that if prior to the Tranche B Completion Date TPG has actually paid the agreed amount of capital increase in respect of TPI andor TPAM and (where applicable) the capital inspection procedures of which have been completed the Tranche B Consideration shall be increased by the amount of capital increase which has actually been paid by TPG in respect of TPI andor TPAM (the ldquoPost-Agreement Capital Increase Amountrdquo) In such event the parties further agreed that the Tranche B Consideration shall be increased by the Post-Agreement Capital Increase Amount TPG agreed to contribute RMB193950000 and RMB70000000 towards the registered capital of TPI and TPAM respectively therefore the maximum amount of the Post-Agreement Capital Increase Amount shall be RMB263950000 (equivalent to HK$331204400) The Company expects that prior to the Tranche B Completion Date TPG will pay the agreed capital increase amount and the relevant capital inspection procedures of TPI and TPAM will be completed therefore the Board is of the view that the Tranche B Consideration is likely to be adjusted by the maximum of the Post-Agreement Capital Increase Amount As the increase in the registered capital of TPI and TPAM will enhance their financial position the Company will also benefit from the capital contribution to be made by TPG upon acquiring the relevant Target Interests The Board thus considers that the above adjustment mechanism is fair and reasonable

- 9 -

Segregation of Overseas PampC Targets The transfer of shareholding in insurance companies is often subject to approval and consent of governmental departments or regulatory authorities of the relevant jurisdiction and specific requirements on filings and registration The Company has engaged legal advisers in Macau Singapore UK and Indonesia to ascertain the approvals and consents and procedural requirements necessary for the effective transfer of shareholding of insurance companies incorporated in those jurisdictions In the event that the necessary filing and registration procedures in respect of any of the Overseas PampC Targets have not yet been completed or fulfilled in accordance with the relevant requirements by the Completion Long Stop Date TPG and TPG(HK) shall have the right (but not an obligation) to segregate any of the Overseas PampC Targets the filing and registration procedures of which have not yet been completed (the ldquoSegregated Targetsrdquo) from the TPG Target Interests andor TPG(HK) Target Interests (as the case may be) and the consideration for the sale and purchase of the Segregated Targets shall be deducted from the Consideration If TPG and TPG(HK) elect to exercise such right of segregation TPG and TPG(HK) shall before the Completion Long Stop Date notify the Company of the segregation and the consideration to be deducted and the parties shall proceed to complete the sale and purchase of other Acquisition Targets of the Tranche C Targets as soon as practicable thereafter The parties further agreed that the segregation of the Segregated Targets shall not affect the completion of the sale and purchase of other Tranche C Targets nor affect the completion of the sale and purchase of the Tranche A Targets or the Tranche B Targets As the Company is not familiar with the procedural requirements for the transfer of shareholding in the Overseas PampC Targets the above segregation right provides the parties with the flexibility to segregate those Target Interests and complete the sale and purchase of other Tranche C Targets within the contemplated timeframe After the segregation of the Segregated Targets TPG TPG(HK) and the Company will enter into supplemental agreements for the sale and purchase of the Segregated Targets and will continue to proceed with the procedures necessary for the transfer of the Segregated Targets The Board considers that the above option for segregation is fair and reasonable (D) The Issue Price

The Issue Price of the Consideration Shares of HK$1539 was arrived at after armrsquos length negotiations between the parties with reference to among other things the recent trend of the Share price performance and the prevailing market price of the Shares The following table illustrates the comparison between the Issue Price and the historical price per Share on the date of this announcement the Last Trading Date and various periods as quoted on the Stock Exchange

Date Period

Closing price per Share Average closing price per Share for the

corresponding period Premium of Issue Price (HK$) () Last Trading Date 1236 245

Last 10 trading days 1262 219

Last 30 trading days 1282 200

Last 60 trading days 1343 146

Last 180 trading days 1356 135

Last twelve months 1313 172

Current year 1436 72

- 10 -

Having considered the Issue Price is higher than the closing price of the Last Trading Date and average closing prices of the abovementioned periods the Board is of the view that the Issue Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole (E) The Consideration Shares The Consideration shall be satisfied by the allotment and issue by the Company of Consideration Shares at the issue price of HK$1539 per Consideration Share to TPG and TPG(HK) or such person(s) as any of them may direct For the purpose of issuing the Consideration Shares the parties have agreed that the exchange rate shall be HK$100=RMB079694 (approximately equivalent to RMB100 = HK$125480 for reference only) being the mid-price of Renminbi to Hong Kong Dollars buying and selling rates announced by the Peoplersquos Bank of China on 24 May 2013 being the Last Trading Date The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets) will be 862735270 representing approximately 506 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 336 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and TPG and TPG(HK) exercise their right to segregate all Overseas PampC Targets) will be 741829425 representing approximately 435 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 303 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The following table illustrates the shareholding structure of the Company as at the date of this announcement and immediately following Completion

Name of Shareholder

As at the date of this announcement

Immediately following Completion (assuming Tranche B Consideration is increased by

the maximum of the Post-Agreement Capital Increase Amount and no

Segregated Targets)

Immediately following Completion (assuming Tranche B Consideration is increased by the maximum of the

Post-Agreement Capital Increase Amount and all Overseas PampC

Targets are segregated) No of Shares

heldApproximate

No of Shares

heldApproximate

No of Shares

held Approximate

TPG(HK) 908689405 5327 1771424675 6896 1650518830 6743 Other Shareholders

797185687 4673 797185687 3104 797185687 3257

Total 1705875092 10000 2568610362 10000 2447704517 10000 The parties have agreed that all Consideration Shares (including the Consideration Shares representing consideration for the sale and purchase of the TPG Target Interests and TPG Target Assets) shall be issued and allotted to TPG(HK) The Consideration Shares will be issued under the specific mandate to be approved at the EGM The Consideration Shares when allotted and issued will rank pari passu in all respects with all the Shares then in issue There are no restrictions on the subsequent transfer of the Consideration Shares by TPG(HK)

- 11 -

An application will be made by the Company to the Stock Exchange for the listing of and permission to deal in the Consideration Shares The Acquisition and the issue of the Consideration Shares will not result in any change in control of the Company 3 INFORMATION ON THE ACQUISITION TARGETS (A) Overview of the Acquisition Targets TPG is a long-established leading insurance group of the PRC Apart from holding a controlling stake in the Company TPG also owns PampC companies operating overseas and various companies covering a wide range of operations (including property investment and financial support services) as well as minority shareholdings in the major operating subsidiaries of the Group As part of the Restructuring Proposal which has been approved in principle by the MOF and the CIRC in 2013 TPG contemplated to inject its unlisted assets into the Group in consideration of new shares of the Company To materialize the detailed terms of the injection the parties entered into the Framework Agreement on 27 May 2013 The Acquisition Targets cover the unlisted assets of TPG including equity interests in a total of 25 Target Companies incorporated and operating in different jurisdictions as well as Target Assets of various nature and situated at various locations Having considered that the time required for obtaining relevant approval and consents and completing relevant registration and filing procedures in respect of different Acquisition Targets vary to a very large extent the parties have agreed to split the Acquisition Targets into three tranches each of which may proceed to completion on its own upon fulfilment of all necessary conditions As a result the sale and purchase of Tranche A Targets and Tranche B Targets (being additional equity interests of existing non-wholly-owned subsidiaries of the Company which are incorporated and operating in the PRC representing in aggregate 840 of the Consideration for all Acquisition Targets) may be completed ahead of the Tranche C Targets (which include equity interests in overseas PampC companies securities broking companies property investment companies financial support service companies and the Target Assets) While the completion mechanism of splitting into three tranches expedites the completion of Tranche A Targets and Tranche B Targets the Board wishes to emphasize that TPG TPG(HK) and the Company consider the Acquisition as a single package and the negotiation of the terms and conditions of the Framework Agreement (including the Consideration) was also made on aggregate basis It is the mutual commercial intention of TPG and the Company that TPG and TPG(HK) will sell and the Company will purchase all Acquisition Targets on and subject to the terms of the Framework Agreement and the Specific Agreements The completion mechanism of splitting into three tranches merely serves to facilitate settlement and completion of the Acquisition Once the Framework Agreement (and where applicable the Specific Agreements containing additional conditions precedent) become unconditional the parties will use their best endeavours to complete the sale and purchase of all Acquisition Targets as soon as practicable

- 12 -

The following table sets out certain historical financial data relating to the Target Companies extracted from the Accountantsrsquo Report which will be set out in the circular to be despatched to the Shareholders For the 12 months ended 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Results RMB Million RMB Million RMB MillionTPL(Note) Profit before taxation 44752 50646 96588Profit after taxation 70430 64338 83951 TPI Profit before taxation 20271 14387 2627Profit after taxation 19482 14100 4637 TPP Loss before taxation (10462) (16083) (15399)Loss after taxation (10462) (16083) (15399) TPAM Profit before taxation 3093 2842 1190Profit after taxation 2347 1956 850 Other Target Companies Profit before taxation 83016 180275 64425Profit after taxation 68799 149049 52221 As at 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Position RMB Million RMB Million RMB MillionTPL(Note) Total assets 16890567 13260184 11201330Total liabilities 15880301 12470585 10252722 TPI Total assets 1052214 851886 711918Total liabilities 878897 749885 621733 TPP Total assets 260801 184789 82415Total liabilities 205717 119863 26112 TPAM Total assets 24686 19648 17238Total liabilities 7131 4435 3980 Other Target Companies Total assets 1252045 1120776 1199482Total liabilities 692635 637989 780242

Note Consist of consolidated financial data relating to TPL and its subsidiaries

- 13 -

As at 31 December 2012 the total carrying amount of the Target Assets was RMB54377 million and the associated total liabilities amounted to RMB243470 million In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports The management discussion and analysis of the Tranche C Targets with continuing operating activities are set out in the appendix to this announcement for the information of the Shareholders (B) Segmental information on the Acquisition Targets (1) Tranche A Targets

Tranche A Targets consist solely of the 2505 equity interest of TPL and represent 663 of the aggregate Consideration TPL is one of the major existing non-wholly-owned subsidiaries of the Company TPL is engaged in the business of life insurance in the PRC As at 31 December 2012 the audited Net Assets Value (ldquoNAVrdquo) of TPL was RMB1010042 million (equivalent to approximately HK$1245655 million) and the embedded value (ldquoEVrdquo) of TPL was RMB23747 million (equivalent to approximately HK$29286 million)

Business Scope

Percentage of equity interest to be acquired

NAV as at 31

December 2012

NAV as at 31

December 2012 to be transacted

EV as at 31 December

2012

EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1010042 253016 23747 5949

Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPL contributed additional capital in the amount of RMB2500 million into TPL by way of cash Such capital contribution was completed in March 2013 If such additional capital were incorporated the adjusted NAV and embedded value of TPL as at 31 December 2012 would be as follows

Business Scope

Percentage of equity interest to be acquired

Adjusted NAV

as at 31 December

2012

Adjusted NAV

as at 31 December 2012 to be transacted

Adjusted EV as at 31 December

2012

Adjusted EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1260042 315641 26247 6575

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 6 -

The Consideration comprises the following Tranche A Targets Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

TPL 2505 equity interests

7011311200 8797790500 571656306 663

Sub-total for Tranche A Targets 7011311200 8797790500 571656306 663 Tranche B Targets Name of Target Company

Interest to be acquired Consideration

(RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate

Consideration(Note 1)

TPI 3879 equity interests 1422624300 1785108400 115991450 134 Post-Agreement Capital

Increase to TPI (Note 2) 193950000 243368400 15813410 18

TPAM 20 equity interests 122776100 154059400 10010358 12 Post-Agreement Capital

Increase to TPAM (Note 2) 70000000 87836000 5707341 07

TPP 4 equity interests 60793600 76283800 4956711 06Sub-total for Tranche B Targets (Note 2) 1870144000 2346656000 152479270 177 Tranche C Targets (i) Overseas PampC insurance business Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

TP Macau 100 issued share capital

368580700 462494900 30051652 35

TP Singapore 100 issued share capital

843108100 1057931700 68741502 80

TP UK 100 issued share capital

235212900 295145100 19177716 22

TP Indonesia 55 issued share capital

35997200 45169300 2934975 03

Sub-total for Overseas PampC Targets

1482898900 1860741000 120905845 140

- 7 -

(ii) Other Target Companies Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1) (a) Securities broking

TPFH 100 issued share capital

(b) Property investment business

TPIH 100 issued share capital

Dragon Jade 100 equity interests

Ming Lee 100 issued share capital

Pacific Asia Walkman Mano Prospect Inc and Sarley

100 issued share capital

(c) Financial Support Service TPFAS 100 equity

interests TPFSC 100 equity

interests

(d) Others TP Japan (Insurance agency)

100 issued share capital

Savills TPML (Property management)

25 of issued share capital

CIG Trustees (Internal trustee)

100 issued share capital

Action Profit SZTPI and Toplap (Note 3)

(Inactive Companies)

100 issued share capitalequity interest

34326100(Note 3)

43072400 2798725 03

Description of Target Assets

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

Target Assets (i) Properties 168108700 210942700 13706480 16(ii) Others (Note 4) 14578600 18293200 1188644 01

Sub-total for Target Assets 182687300 229235900 14895124 17

Sub-total for Tranche C Targets 1699912300 2133049300 138599694 160 Grand Total 10581367500 13277495800 862735270 1000

- 8 -

Notes 1 The percentage shown is calculated by the consideration attributable to the relevant Acquisition Target

over the total Consideration assuming that the Tranche B Consideration is adjusted by the maximum Post-Agreement Capital Increase Amount (ie RMB263950000) Please refer to the paragraph headed ldquo(C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo below for further details of the Post-Agreement Capital Increase Adjustment

2 Assuming that TPG has paid the full amount of capital increase agreed to be contributed and the relevant capital inspection procedures have been completed

3 The consideration of these Target Companies is based on their respective net assets value and also taking into account the below factors

(a) the disposal of Tellon Development Limited (ldquoTellonrdquo together with its subsidiary associates and

available-for-sale investments under the segment of other businesses ldquoTellon Subgrouprdquo) by TPIH to TPG (HK) pursuant to an agreement dated 28 December 2012 and

(b) upon completion of the acquisition of TPIH Dragon Jade Ming Lee and TP Japan on the one hand

and the acquisition of the net accounts payable by TPG and TPG(HK) to these Target Companies (which form part of Target Assets) on the other hand the outstanding balances of these net accounts payable will be eliminated in the consolidated accounts of the Enlarged Group

4 Other Target Assets comprise accounts payable and accounts receivable between the Target Companies

on the one hand and TPG or TPG(HK) on the other hand as well as computer equipment office facilities furniture fixtures and fittings In considering the consideration attributable to these Target Assets the parties have taken into account that the outstanding balances of the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan will be eliminated in the consolidated accounts of the Enlarged Group

(C) Adjustment to the Consideration Post-Agreement Capital Increase Adjustment Prior to the date of the Framework Agreement the shareholders of TPI and TPAM (including the Company and TPG) have agreed to increase the registered capital of TPI and TPAM by additional capital to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The purpose of such capital increase is to fulfil the operation needs of TPI and TPAM The parties have agreed that if prior to the Tranche B Completion Date TPG has actually paid the agreed amount of capital increase in respect of TPI andor TPAM and (where applicable) the capital inspection procedures of which have been completed the Tranche B Consideration shall be increased by the amount of capital increase which has actually been paid by TPG in respect of TPI andor TPAM (the ldquoPost-Agreement Capital Increase Amountrdquo) In such event the parties further agreed that the Tranche B Consideration shall be increased by the Post-Agreement Capital Increase Amount TPG agreed to contribute RMB193950000 and RMB70000000 towards the registered capital of TPI and TPAM respectively therefore the maximum amount of the Post-Agreement Capital Increase Amount shall be RMB263950000 (equivalent to HK$331204400) The Company expects that prior to the Tranche B Completion Date TPG will pay the agreed capital increase amount and the relevant capital inspection procedures of TPI and TPAM will be completed therefore the Board is of the view that the Tranche B Consideration is likely to be adjusted by the maximum of the Post-Agreement Capital Increase Amount As the increase in the registered capital of TPI and TPAM will enhance their financial position the Company will also benefit from the capital contribution to be made by TPG upon acquiring the relevant Target Interests The Board thus considers that the above adjustment mechanism is fair and reasonable

- 9 -

Segregation of Overseas PampC Targets The transfer of shareholding in insurance companies is often subject to approval and consent of governmental departments or regulatory authorities of the relevant jurisdiction and specific requirements on filings and registration The Company has engaged legal advisers in Macau Singapore UK and Indonesia to ascertain the approvals and consents and procedural requirements necessary for the effective transfer of shareholding of insurance companies incorporated in those jurisdictions In the event that the necessary filing and registration procedures in respect of any of the Overseas PampC Targets have not yet been completed or fulfilled in accordance with the relevant requirements by the Completion Long Stop Date TPG and TPG(HK) shall have the right (but not an obligation) to segregate any of the Overseas PampC Targets the filing and registration procedures of which have not yet been completed (the ldquoSegregated Targetsrdquo) from the TPG Target Interests andor TPG(HK) Target Interests (as the case may be) and the consideration for the sale and purchase of the Segregated Targets shall be deducted from the Consideration If TPG and TPG(HK) elect to exercise such right of segregation TPG and TPG(HK) shall before the Completion Long Stop Date notify the Company of the segregation and the consideration to be deducted and the parties shall proceed to complete the sale and purchase of other Acquisition Targets of the Tranche C Targets as soon as practicable thereafter The parties further agreed that the segregation of the Segregated Targets shall not affect the completion of the sale and purchase of other Tranche C Targets nor affect the completion of the sale and purchase of the Tranche A Targets or the Tranche B Targets As the Company is not familiar with the procedural requirements for the transfer of shareholding in the Overseas PampC Targets the above segregation right provides the parties with the flexibility to segregate those Target Interests and complete the sale and purchase of other Tranche C Targets within the contemplated timeframe After the segregation of the Segregated Targets TPG TPG(HK) and the Company will enter into supplemental agreements for the sale and purchase of the Segregated Targets and will continue to proceed with the procedures necessary for the transfer of the Segregated Targets The Board considers that the above option for segregation is fair and reasonable (D) The Issue Price

The Issue Price of the Consideration Shares of HK$1539 was arrived at after armrsquos length negotiations between the parties with reference to among other things the recent trend of the Share price performance and the prevailing market price of the Shares The following table illustrates the comparison between the Issue Price and the historical price per Share on the date of this announcement the Last Trading Date and various periods as quoted on the Stock Exchange

Date Period

Closing price per Share Average closing price per Share for the

corresponding period Premium of Issue Price (HK$) () Last Trading Date 1236 245

Last 10 trading days 1262 219

Last 30 trading days 1282 200

Last 60 trading days 1343 146

Last 180 trading days 1356 135

Last twelve months 1313 172

Current year 1436 72

- 10 -

Having considered the Issue Price is higher than the closing price of the Last Trading Date and average closing prices of the abovementioned periods the Board is of the view that the Issue Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole (E) The Consideration Shares The Consideration shall be satisfied by the allotment and issue by the Company of Consideration Shares at the issue price of HK$1539 per Consideration Share to TPG and TPG(HK) or such person(s) as any of them may direct For the purpose of issuing the Consideration Shares the parties have agreed that the exchange rate shall be HK$100=RMB079694 (approximately equivalent to RMB100 = HK$125480 for reference only) being the mid-price of Renminbi to Hong Kong Dollars buying and selling rates announced by the Peoplersquos Bank of China on 24 May 2013 being the Last Trading Date The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets) will be 862735270 representing approximately 506 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 336 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and TPG and TPG(HK) exercise their right to segregate all Overseas PampC Targets) will be 741829425 representing approximately 435 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 303 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The following table illustrates the shareholding structure of the Company as at the date of this announcement and immediately following Completion

Name of Shareholder

As at the date of this announcement

Immediately following Completion (assuming Tranche B Consideration is increased by

the maximum of the Post-Agreement Capital Increase Amount and no

Segregated Targets)

Immediately following Completion (assuming Tranche B Consideration is increased by the maximum of the

Post-Agreement Capital Increase Amount and all Overseas PampC

Targets are segregated) No of Shares

heldApproximate

No of Shares

heldApproximate

No of Shares

held Approximate

TPG(HK) 908689405 5327 1771424675 6896 1650518830 6743 Other Shareholders

797185687 4673 797185687 3104 797185687 3257

Total 1705875092 10000 2568610362 10000 2447704517 10000 The parties have agreed that all Consideration Shares (including the Consideration Shares representing consideration for the sale and purchase of the TPG Target Interests and TPG Target Assets) shall be issued and allotted to TPG(HK) The Consideration Shares will be issued under the specific mandate to be approved at the EGM The Consideration Shares when allotted and issued will rank pari passu in all respects with all the Shares then in issue There are no restrictions on the subsequent transfer of the Consideration Shares by TPG(HK)

- 11 -

An application will be made by the Company to the Stock Exchange for the listing of and permission to deal in the Consideration Shares The Acquisition and the issue of the Consideration Shares will not result in any change in control of the Company 3 INFORMATION ON THE ACQUISITION TARGETS (A) Overview of the Acquisition Targets TPG is a long-established leading insurance group of the PRC Apart from holding a controlling stake in the Company TPG also owns PampC companies operating overseas and various companies covering a wide range of operations (including property investment and financial support services) as well as minority shareholdings in the major operating subsidiaries of the Group As part of the Restructuring Proposal which has been approved in principle by the MOF and the CIRC in 2013 TPG contemplated to inject its unlisted assets into the Group in consideration of new shares of the Company To materialize the detailed terms of the injection the parties entered into the Framework Agreement on 27 May 2013 The Acquisition Targets cover the unlisted assets of TPG including equity interests in a total of 25 Target Companies incorporated and operating in different jurisdictions as well as Target Assets of various nature and situated at various locations Having considered that the time required for obtaining relevant approval and consents and completing relevant registration and filing procedures in respect of different Acquisition Targets vary to a very large extent the parties have agreed to split the Acquisition Targets into three tranches each of which may proceed to completion on its own upon fulfilment of all necessary conditions As a result the sale and purchase of Tranche A Targets and Tranche B Targets (being additional equity interests of existing non-wholly-owned subsidiaries of the Company which are incorporated and operating in the PRC representing in aggregate 840 of the Consideration for all Acquisition Targets) may be completed ahead of the Tranche C Targets (which include equity interests in overseas PampC companies securities broking companies property investment companies financial support service companies and the Target Assets) While the completion mechanism of splitting into three tranches expedites the completion of Tranche A Targets and Tranche B Targets the Board wishes to emphasize that TPG TPG(HK) and the Company consider the Acquisition as a single package and the negotiation of the terms and conditions of the Framework Agreement (including the Consideration) was also made on aggregate basis It is the mutual commercial intention of TPG and the Company that TPG and TPG(HK) will sell and the Company will purchase all Acquisition Targets on and subject to the terms of the Framework Agreement and the Specific Agreements The completion mechanism of splitting into three tranches merely serves to facilitate settlement and completion of the Acquisition Once the Framework Agreement (and where applicable the Specific Agreements containing additional conditions precedent) become unconditional the parties will use their best endeavours to complete the sale and purchase of all Acquisition Targets as soon as practicable

- 12 -

The following table sets out certain historical financial data relating to the Target Companies extracted from the Accountantsrsquo Report which will be set out in the circular to be despatched to the Shareholders For the 12 months ended 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Results RMB Million RMB Million RMB MillionTPL(Note) Profit before taxation 44752 50646 96588Profit after taxation 70430 64338 83951 TPI Profit before taxation 20271 14387 2627Profit after taxation 19482 14100 4637 TPP Loss before taxation (10462) (16083) (15399)Loss after taxation (10462) (16083) (15399) TPAM Profit before taxation 3093 2842 1190Profit after taxation 2347 1956 850 Other Target Companies Profit before taxation 83016 180275 64425Profit after taxation 68799 149049 52221 As at 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Position RMB Million RMB Million RMB MillionTPL(Note) Total assets 16890567 13260184 11201330Total liabilities 15880301 12470585 10252722 TPI Total assets 1052214 851886 711918Total liabilities 878897 749885 621733 TPP Total assets 260801 184789 82415Total liabilities 205717 119863 26112 TPAM Total assets 24686 19648 17238Total liabilities 7131 4435 3980 Other Target Companies Total assets 1252045 1120776 1199482Total liabilities 692635 637989 780242

Note Consist of consolidated financial data relating to TPL and its subsidiaries

- 13 -

As at 31 December 2012 the total carrying amount of the Target Assets was RMB54377 million and the associated total liabilities amounted to RMB243470 million In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports The management discussion and analysis of the Tranche C Targets with continuing operating activities are set out in the appendix to this announcement for the information of the Shareholders (B) Segmental information on the Acquisition Targets (1) Tranche A Targets

Tranche A Targets consist solely of the 2505 equity interest of TPL and represent 663 of the aggregate Consideration TPL is one of the major existing non-wholly-owned subsidiaries of the Company TPL is engaged in the business of life insurance in the PRC As at 31 December 2012 the audited Net Assets Value (ldquoNAVrdquo) of TPL was RMB1010042 million (equivalent to approximately HK$1245655 million) and the embedded value (ldquoEVrdquo) of TPL was RMB23747 million (equivalent to approximately HK$29286 million)

Business Scope

Percentage of equity interest to be acquired

NAV as at 31

December 2012

NAV as at 31

December 2012 to be transacted

EV as at 31 December

2012

EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1010042 253016 23747 5949

Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPL contributed additional capital in the amount of RMB2500 million into TPL by way of cash Such capital contribution was completed in March 2013 If such additional capital were incorporated the adjusted NAV and embedded value of TPL as at 31 December 2012 would be as follows

Business Scope

Percentage of equity interest to be acquired

Adjusted NAV

as at 31 December

2012

Adjusted NAV

as at 31 December 2012 to be transacted

Adjusted EV as at 31 December

2012

Adjusted EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1260042 315641 26247 6575

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 7 -

(ii) Other Target Companies Name of Target Company

Interest to be acquired

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1) (a) Securities broking

TPFH 100 issued share capital

(b) Property investment business

TPIH 100 issued share capital

Dragon Jade 100 equity interests

Ming Lee 100 issued share capital

Pacific Asia Walkman Mano Prospect Inc and Sarley

100 issued share capital

(c) Financial Support Service TPFAS 100 equity

interests TPFSC 100 equity

interests

(d) Others TP Japan (Insurance agency)

100 issued share capital

Savills TPML (Property management)

25 of issued share capital

CIG Trustees (Internal trustee)

100 issued share capital

Action Profit SZTPI and Toplap (Note 3)

(Inactive Companies)

100 issued share capitalequity interest

34326100(Note 3)

43072400 2798725 03

Description of Target Assets

Consideration (RMB)

Consideration (Equivalent to

HK$)

Number of Consideration

Shares

to aggregate Consideration

(Note 1)

Target Assets (i) Properties 168108700 210942700 13706480 16(ii) Others (Note 4) 14578600 18293200 1188644 01

Sub-total for Target Assets 182687300 229235900 14895124 17

Sub-total for Tranche C Targets 1699912300 2133049300 138599694 160 Grand Total 10581367500 13277495800 862735270 1000

- 8 -

Notes 1 The percentage shown is calculated by the consideration attributable to the relevant Acquisition Target

over the total Consideration assuming that the Tranche B Consideration is adjusted by the maximum Post-Agreement Capital Increase Amount (ie RMB263950000) Please refer to the paragraph headed ldquo(C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo below for further details of the Post-Agreement Capital Increase Adjustment

2 Assuming that TPG has paid the full amount of capital increase agreed to be contributed and the relevant capital inspection procedures have been completed

3 The consideration of these Target Companies is based on their respective net assets value and also taking into account the below factors

(a) the disposal of Tellon Development Limited (ldquoTellonrdquo together with its subsidiary associates and

available-for-sale investments under the segment of other businesses ldquoTellon Subgrouprdquo) by TPIH to TPG (HK) pursuant to an agreement dated 28 December 2012 and

(b) upon completion of the acquisition of TPIH Dragon Jade Ming Lee and TP Japan on the one hand

and the acquisition of the net accounts payable by TPG and TPG(HK) to these Target Companies (which form part of Target Assets) on the other hand the outstanding balances of these net accounts payable will be eliminated in the consolidated accounts of the Enlarged Group

4 Other Target Assets comprise accounts payable and accounts receivable between the Target Companies

on the one hand and TPG or TPG(HK) on the other hand as well as computer equipment office facilities furniture fixtures and fittings In considering the consideration attributable to these Target Assets the parties have taken into account that the outstanding balances of the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan will be eliminated in the consolidated accounts of the Enlarged Group

(C) Adjustment to the Consideration Post-Agreement Capital Increase Adjustment Prior to the date of the Framework Agreement the shareholders of TPI and TPAM (including the Company and TPG) have agreed to increase the registered capital of TPI and TPAM by additional capital to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The purpose of such capital increase is to fulfil the operation needs of TPI and TPAM The parties have agreed that if prior to the Tranche B Completion Date TPG has actually paid the agreed amount of capital increase in respect of TPI andor TPAM and (where applicable) the capital inspection procedures of which have been completed the Tranche B Consideration shall be increased by the amount of capital increase which has actually been paid by TPG in respect of TPI andor TPAM (the ldquoPost-Agreement Capital Increase Amountrdquo) In such event the parties further agreed that the Tranche B Consideration shall be increased by the Post-Agreement Capital Increase Amount TPG agreed to contribute RMB193950000 and RMB70000000 towards the registered capital of TPI and TPAM respectively therefore the maximum amount of the Post-Agreement Capital Increase Amount shall be RMB263950000 (equivalent to HK$331204400) The Company expects that prior to the Tranche B Completion Date TPG will pay the agreed capital increase amount and the relevant capital inspection procedures of TPI and TPAM will be completed therefore the Board is of the view that the Tranche B Consideration is likely to be adjusted by the maximum of the Post-Agreement Capital Increase Amount As the increase in the registered capital of TPI and TPAM will enhance their financial position the Company will also benefit from the capital contribution to be made by TPG upon acquiring the relevant Target Interests The Board thus considers that the above adjustment mechanism is fair and reasonable

- 9 -

Segregation of Overseas PampC Targets The transfer of shareholding in insurance companies is often subject to approval and consent of governmental departments or regulatory authorities of the relevant jurisdiction and specific requirements on filings and registration The Company has engaged legal advisers in Macau Singapore UK and Indonesia to ascertain the approvals and consents and procedural requirements necessary for the effective transfer of shareholding of insurance companies incorporated in those jurisdictions In the event that the necessary filing and registration procedures in respect of any of the Overseas PampC Targets have not yet been completed or fulfilled in accordance with the relevant requirements by the Completion Long Stop Date TPG and TPG(HK) shall have the right (but not an obligation) to segregate any of the Overseas PampC Targets the filing and registration procedures of which have not yet been completed (the ldquoSegregated Targetsrdquo) from the TPG Target Interests andor TPG(HK) Target Interests (as the case may be) and the consideration for the sale and purchase of the Segregated Targets shall be deducted from the Consideration If TPG and TPG(HK) elect to exercise such right of segregation TPG and TPG(HK) shall before the Completion Long Stop Date notify the Company of the segregation and the consideration to be deducted and the parties shall proceed to complete the sale and purchase of other Acquisition Targets of the Tranche C Targets as soon as practicable thereafter The parties further agreed that the segregation of the Segregated Targets shall not affect the completion of the sale and purchase of other Tranche C Targets nor affect the completion of the sale and purchase of the Tranche A Targets or the Tranche B Targets As the Company is not familiar with the procedural requirements for the transfer of shareholding in the Overseas PampC Targets the above segregation right provides the parties with the flexibility to segregate those Target Interests and complete the sale and purchase of other Tranche C Targets within the contemplated timeframe After the segregation of the Segregated Targets TPG TPG(HK) and the Company will enter into supplemental agreements for the sale and purchase of the Segregated Targets and will continue to proceed with the procedures necessary for the transfer of the Segregated Targets The Board considers that the above option for segregation is fair and reasonable (D) The Issue Price

The Issue Price of the Consideration Shares of HK$1539 was arrived at after armrsquos length negotiations between the parties with reference to among other things the recent trend of the Share price performance and the prevailing market price of the Shares The following table illustrates the comparison between the Issue Price and the historical price per Share on the date of this announcement the Last Trading Date and various periods as quoted on the Stock Exchange

Date Period

Closing price per Share Average closing price per Share for the

corresponding period Premium of Issue Price (HK$) () Last Trading Date 1236 245

Last 10 trading days 1262 219

Last 30 trading days 1282 200

Last 60 trading days 1343 146

Last 180 trading days 1356 135

Last twelve months 1313 172

Current year 1436 72

- 10 -

Having considered the Issue Price is higher than the closing price of the Last Trading Date and average closing prices of the abovementioned periods the Board is of the view that the Issue Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole (E) The Consideration Shares The Consideration shall be satisfied by the allotment and issue by the Company of Consideration Shares at the issue price of HK$1539 per Consideration Share to TPG and TPG(HK) or such person(s) as any of them may direct For the purpose of issuing the Consideration Shares the parties have agreed that the exchange rate shall be HK$100=RMB079694 (approximately equivalent to RMB100 = HK$125480 for reference only) being the mid-price of Renminbi to Hong Kong Dollars buying and selling rates announced by the Peoplersquos Bank of China on 24 May 2013 being the Last Trading Date The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets) will be 862735270 representing approximately 506 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 336 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and TPG and TPG(HK) exercise their right to segregate all Overseas PampC Targets) will be 741829425 representing approximately 435 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 303 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The following table illustrates the shareholding structure of the Company as at the date of this announcement and immediately following Completion

Name of Shareholder

As at the date of this announcement

Immediately following Completion (assuming Tranche B Consideration is increased by

the maximum of the Post-Agreement Capital Increase Amount and no

Segregated Targets)

Immediately following Completion (assuming Tranche B Consideration is increased by the maximum of the

Post-Agreement Capital Increase Amount and all Overseas PampC

Targets are segregated) No of Shares

heldApproximate

No of Shares

heldApproximate

No of Shares

held Approximate

TPG(HK) 908689405 5327 1771424675 6896 1650518830 6743 Other Shareholders

797185687 4673 797185687 3104 797185687 3257

Total 1705875092 10000 2568610362 10000 2447704517 10000 The parties have agreed that all Consideration Shares (including the Consideration Shares representing consideration for the sale and purchase of the TPG Target Interests and TPG Target Assets) shall be issued and allotted to TPG(HK) The Consideration Shares will be issued under the specific mandate to be approved at the EGM The Consideration Shares when allotted and issued will rank pari passu in all respects with all the Shares then in issue There are no restrictions on the subsequent transfer of the Consideration Shares by TPG(HK)

- 11 -

An application will be made by the Company to the Stock Exchange for the listing of and permission to deal in the Consideration Shares The Acquisition and the issue of the Consideration Shares will not result in any change in control of the Company 3 INFORMATION ON THE ACQUISITION TARGETS (A) Overview of the Acquisition Targets TPG is a long-established leading insurance group of the PRC Apart from holding a controlling stake in the Company TPG also owns PampC companies operating overseas and various companies covering a wide range of operations (including property investment and financial support services) as well as minority shareholdings in the major operating subsidiaries of the Group As part of the Restructuring Proposal which has been approved in principle by the MOF and the CIRC in 2013 TPG contemplated to inject its unlisted assets into the Group in consideration of new shares of the Company To materialize the detailed terms of the injection the parties entered into the Framework Agreement on 27 May 2013 The Acquisition Targets cover the unlisted assets of TPG including equity interests in a total of 25 Target Companies incorporated and operating in different jurisdictions as well as Target Assets of various nature and situated at various locations Having considered that the time required for obtaining relevant approval and consents and completing relevant registration and filing procedures in respect of different Acquisition Targets vary to a very large extent the parties have agreed to split the Acquisition Targets into three tranches each of which may proceed to completion on its own upon fulfilment of all necessary conditions As a result the sale and purchase of Tranche A Targets and Tranche B Targets (being additional equity interests of existing non-wholly-owned subsidiaries of the Company which are incorporated and operating in the PRC representing in aggregate 840 of the Consideration for all Acquisition Targets) may be completed ahead of the Tranche C Targets (which include equity interests in overseas PampC companies securities broking companies property investment companies financial support service companies and the Target Assets) While the completion mechanism of splitting into three tranches expedites the completion of Tranche A Targets and Tranche B Targets the Board wishes to emphasize that TPG TPG(HK) and the Company consider the Acquisition as a single package and the negotiation of the terms and conditions of the Framework Agreement (including the Consideration) was also made on aggregate basis It is the mutual commercial intention of TPG and the Company that TPG and TPG(HK) will sell and the Company will purchase all Acquisition Targets on and subject to the terms of the Framework Agreement and the Specific Agreements The completion mechanism of splitting into three tranches merely serves to facilitate settlement and completion of the Acquisition Once the Framework Agreement (and where applicable the Specific Agreements containing additional conditions precedent) become unconditional the parties will use their best endeavours to complete the sale and purchase of all Acquisition Targets as soon as practicable

- 12 -

The following table sets out certain historical financial data relating to the Target Companies extracted from the Accountantsrsquo Report which will be set out in the circular to be despatched to the Shareholders For the 12 months ended 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Results RMB Million RMB Million RMB MillionTPL(Note) Profit before taxation 44752 50646 96588Profit after taxation 70430 64338 83951 TPI Profit before taxation 20271 14387 2627Profit after taxation 19482 14100 4637 TPP Loss before taxation (10462) (16083) (15399)Loss after taxation (10462) (16083) (15399) TPAM Profit before taxation 3093 2842 1190Profit after taxation 2347 1956 850 Other Target Companies Profit before taxation 83016 180275 64425Profit after taxation 68799 149049 52221 As at 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Position RMB Million RMB Million RMB MillionTPL(Note) Total assets 16890567 13260184 11201330Total liabilities 15880301 12470585 10252722 TPI Total assets 1052214 851886 711918Total liabilities 878897 749885 621733 TPP Total assets 260801 184789 82415Total liabilities 205717 119863 26112 TPAM Total assets 24686 19648 17238Total liabilities 7131 4435 3980 Other Target Companies Total assets 1252045 1120776 1199482Total liabilities 692635 637989 780242

Note Consist of consolidated financial data relating to TPL and its subsidiaries

- 13 -

As at 31 December 2012 the total carrying amount of the Target Assets was RMB54377 million and the associated total liabilities amounted to RMB243470 million In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports The management discussion and analysis of the Tranche C Targets with continuing operating activities are set out in the appendix to this announcement for the information of the Shareholders (B) Segmental information on the Acquisition Targets (1) Tranche A Targets

Tranche A Targets consist solely of the 2505 equity interest of TPL and represent 663 of the aggregate Consideration TPL is one of the major existing non-wholly-owned subsidiaries of the Company TPL is engaged in the business of life insurance in the PRC As at 31 December 2012 the audited Net Assets Value (ldquoNAVrdquo) of TPL was RMB1010042 million (equivalent to approximately HK$1245655 million) and the embedded value (ldquoEVrdquo) of TPL was RMB23747 million (equivalent to approximately HK$29286 million)

Business Scope

Percentage of equity interest to be acquired

NAV as at 31

December 2012

NAV as at 31

December 2012 to be transacted

EV as at 31 December

2012

EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1010042 253016 23747 5949

Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPL contributed additional capital in the amount of RMB2500 million into TPL by way of cash Such capital contribution was completed in March 2013 If such additional capital were incorporated the adjusted NAV and embedded value of TPL as at 31 December 2012 would be as follows

Business Scope

Percentage of equity interest to be acquired

Adjusted NAV

as at 31 December

2012

Adjusted NAV

as at 31 December 2012 to be transacted

Adjusted EV as at 31 December

2012

Adjusted EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1260042 315641 26247 6575

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 8 -

Notes 1 The percentage shown is calculated by the consideration attributable to the relevant Acquisition Target

over the total Consideration assuming that the Tranche B Consideration is adjusted by the maximum Post-Agreement Capital Increase Amount (ie RMB263950000) Please refer to the paragraph headed ldquo(C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo below for further details of the Post-Agreement Capital Increase Adjustment

2 Assuming that TPG has paid the full amount of capital increase agreed to be contributed and the relevant capital inspection procedures have been completed

3 The consideration of these Target Companies is based on their respective net assets value and also taking into account the below factors

(a) the disposal of Tellon Development Limited (ldquoTellonrdquo together with its subsidiary associates and

available-for-sale investments under the segment of other businesses ldquoTellon Subgrouprdquo) by TPIH to TPG (HK) pursuant to an agreement dated 28 December 2012 and

(b) upon completion of the acquisition of TPIH Dragon Jade Ming Lee and TP Japan on the one hand

and the acquisition of the net accounts payable by TPG and TPG(HK) to these Target Companies (which form part of Target Assets) on the other hand the outstanding balances of these net accounts payable will be eliminated in the consolidated accounts of the Enlarged Group

4 Other Target Assets comprise accounts payable and accounts receivable between the Target Companies

on the one hand and TPG or TPG(HK) on the other hand as well as computer equipment office facilities furniture fixtures and fittings In considering the consideration attributable to these Target Assets the parties have taken into account that the outstanding balances of the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan will be eliminated in the consolidated accounts of the Enlarged Group

(C) Adjustment to the Consideration Post-Agreement Capital Increase Adjustment Prior to the date of the Framework Agreement the shareholders of TPI and TPAM (including the Company and TPG) have agreed to increase the registered capital of TPI and TPAM by additional capital to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The purpose of such capital increase is to fulfil the operation needs of TPI and TPAM The parties have agreed that if prior to the Tranche B Completion Date TPG has actually paid the agreed amount of capital increase in respect of TPI andor TPAM and (where applicable) the capital inspection procedures of which have been completed the Tranche B Consideration shall be increased by the amount of capital increase which has actually been paid by TPG in respect of TPI andor TPAM (the ldquoPost-Agreement Capital Increase Amountrdquo) In such event the parties further agreed that the Tranche B Consideration shall be increased by the Post-Agreement Capital Increase Amount TPG agreed to contribute RMB193950000 and RMB70000000 towards the registered capital of TPI and TPAM respectively therefore the maximum amount of the Post-Agreement Capital Increase Amount shall be RMB263950000 (equivalent to HK$331204400) The Company expects that prior to the Tranche B Completion Date TPG will pay the agreed capital increase amount and the relevant capital inspection procedures of TPI and TPAM will be completed therefore the Board is of the view that the Tranche B Consideration is likely to be adjusted by the maximum of the Post-Agreement Capital Increase Amount As the increase in the registered capital of TPI and TPAM will enhance their financial position the Company will also benefit from the capital contribution to be made by TPG upon acquiring the relevant Target Interests The Board thus considers that the above adjustment mechanism is fair and reasonable

- 9 -

Segregation of Overseas PampC Targets The transfer of shareholding in insurance companies is often subject to approval and consent of governmental departments or regulatory authorities of the relevant jurisdiction and specific requirements on filings and registration The Company has engaged legal advisers in Macau Singapore UK and Indonesia to ascertain the approvals and consents and procedural requirements necessary for the effective transfer of shareholding of insurance companies incorporated in those jurisdictions In the event that the necessary filing and registration procedures in respect of any of the Overseas PampC Targets have not yet been completed or fulfilled in accordance with the relevant requirements by the Completion Long Stop Date TPG and TPG(HK) shall have the right (but not an obligation) to segregate any of the Overseas PampC Targets the filing and registration procedures of which have not yet been completed (the ldquoSegregated Targetsrdquo) from the TPG Target Interests andor TPG(HK) Target Interests (as the case may be) and the consideration for the sale and purchase of the Segregated Targets shall be deducted from the Consideration If TPG and TPG(HK) elect to exercise such right of segregation TPG and TPG(HK) shall before the Completion Long Stop Date notify the Company of the segregation and the consideration to be deducted and the parties shall proceed to complete the sale and purchase of other Acquisition Targets of the Tranche C Targets as soon as practicable thereafter The parties further agreed that the segregation of the Segregated Targets shall not affect the completion of the sale and purchase of other Tranche C Targets nor affect the completion of the sale and purchase of the Tranche A Targets or the Tranche B Targets As the Company is not familiar with the procedural requirements for the transfer of shareholding in the Overseas PampC Targets the above segregation right provides the parties with the flexibility to segregate those Target Interests and complete the sale and purchase of other Tranche C Targets within the contemplated timeframe After the segregation of the Segregated Targets TPG TPG(HK) and the Company will enter into supplemental agreements for the sale and purchase of the Segregated Targets and will continue to proceed with the procedures necessary for the transfer of the Segregated Targets The Board considers that the above option for segregation is fair and reasonable (D) The Issue Price

The Issue Price of the Consideration Shares of HK$1539 was arrived at after armrsquos length negotiations between the parties with reference to among other things the recent trend of the Share price performance and the prevailing market price of the Shares The following table illustrates the comparison between the Issue Price and the historical price per Share on the date of this announcement the Last Trading Date and various periods as quoted on the Stock Exchange

Date Period

Closing price per Share Average closing price per Share for the

corresponding period Premium of Issue Price (HK$) () Last Trading Date 1236 245

Last 10 trading days 1262 219

Last 30 trading days 1282 200

Last 60 trading days 1343 146

Last 180 trading days 1356 135

Last twelve months 1313 172

Current year 1436 72

- 10 -

Having considered the Issue Price is higher than the closing price of the Last Trading Date and average closing prices of the abovementioned periods the Board is of the view that the Issue Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole (E) The Consideration Shares The Consideration shall be satisfied by the allotment and issue by the Company of Consideration Shares at the issue price of HK$1539 per Consideration Share to TPG and TPG(HK) or such person(s) as any of them may direct For the purpose of issuing the Consideration Shares the parties have agreed that the exchange rate shall be HK$100=RMB079694 (approximately equivalent to RMB100 = HK$125480 for reference only) being the mid-price of Renminbi to Hong Kong Dollars buying and selling rates announced by the Peoplersquos Bank of China on 24 May 2013 being the Last Trading Date The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets) will be 862735270 representing approximately 506 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 336 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and TPG and TPG(HK) exercise their right to segregate all Overseas PampC Targets) will be 741829425 representing approximately 435 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 303 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The following table illustrates the shareholding structure of the Company as at the date of this announcement and immediately following Completion

Name of Shareholder

As at the date of this announcement

Immediately following Completion (assuming Tranche B Consideration is increased by

the maximum of the Post-Agreement Capital Increase Amount and no

Segregated Targets)

Immediately following Completion (assuming Tranche B Consideration is increased by the maximum of the

Post-Agreement Capital Increase Amount and all Overseas PampC

Targets are segregated) No of Shares

heldApproximate

No of Shares

heldApproximate

No of Shares

held Approximate

TPG(HK) 908689405 5327 1771424675 6896 1650518830 6743 Other Shareholders

797185687 4673 797185687 3104 797185687 3257

Total 1705875092 10000 2568610362 10000 2447704517 10000 The parties have agreed that all Consideration Shares (including the Consideration Shares representing consideration for the sale and purchase of the TPG Target Interests and TPG Target Assets) shall be issued and allotted to TPG(HK) The Consideration Shares will be issued under the specific mandate to be approved at the EGM The Consideration Shares when allotted and issued will rank pari passu in all respects with all the Shares then in issue There are no restrictions on the subsequent transfer of the Consideration Shares by TPG(HK)

- 11 -

An application will be made by the Company to the Stock Exchange for the listing of and permission to deal in the Consideration Shares The Acquisition and the issue of the Consideration Shares will not result in any change in control of the Company 3 INFORMATION ON THE ACQUISITION TARGETS (A) Overview of the Acquisition Targets TPG is a long-established leading insurance group of the PRC Apart from holding a controlling stake in the Company TPG also owns PampC companies operating overseas and various companies covering a wide range of operations (including property investment and financial support services) as well as minority shareholdings in the major operating subsidiaries of the Group As part of the Restructuring Proposal which has been approved in principle by the MOF and the CIRC in 2013 TPG contemplated to inject its unlisted assets into the Group in consideration of new shares of the Company To materialize the detailed terms of the injection the parties entered into the Framework Agreement on 27 May 2013 The Acquisition Targets cover the unlisted assets of TPG including equity interests in a total of 25 Target Companies incorporated and operating in different jurisdictions as well as Target Assets of various nature and situated at various locations Having considered that the time required for obtaining relevant approval and consents and completing relevant registration and filing procedures in respect of different Acquisition Targets vary to a very large extent the parties have agreed to split the Acquisition Targets into three tranches each of which may proceed to completion on its own upon fulfilment of all necessary conditions As a result the sale and purchase of Tranche A Targets and Tranche B Targets (being additional equity interests of existing non-wholly-owned subsidiaries of the Company which are incorporated and operating in the PRC representing in aggregate 840 of the Consideration for all Acquisition Targets) may be completed ahead of the Tranche C Targets (which include equity interests in overseas PampC companies securities broking companies property investment companies financial support service companies and the Target Assets) While the completion mechanism of splitting into three tranches expedites the completion of Tranche A Targets and Tranche B Targets the Board wishes to emphasize that TPG TPG(HK) and the Company consider the Acquisition as a single package and the negotiation of the terms and conditions of the Framework Agreement (including the Consideration) was also made on aggregate basis It is the mutual commercial intention of TPG and the Company that TPG and TPG(HK) will sell and the Company will purchase all Acquisition Targets on and subject to the terms of the Framework Agreement and the Specific Agreements The completion mechanism of splitting into three tranches merely serves to facilitate settlement and completion of the Acquisition Once the Framework Agreement (and where applicable the Specific Agreements containing additional conditions precedent) become unconditional the parties will use their best endeavours to complete the sale and purchase of all Acquisition Targets as soon as practicable

- 12 -

The following table sets out certain historical financial data relating to the Target Companies extracted from the Accountantsrsquo Report which will be set out in the circular to be despatched to the Shareholders For the 12 months ended 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Results RMB Million RMB Million RMB MillionTPL(Note) Profit before taxation 44752 50646 96588Profit after taxation 70430 64338 83951 TPI Profit before taxation 20271 14387 2627Profit after taxation 19482 14100 4637 TPP Loss before taxation (10462) (16083) (15399)Loss after taxation (10462) (16083) (15399) TPAM Profit before taxation 3093 2842 1190Profit after taxation 2347 1956 850 Other Target Companies Profit before taxation 83016 180275 64425Profit after taxation 68799 149049 52221 As at 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Position RMB Million RMB Million RMB MillionTPL(Note) Total assets 16890567 13260184 11201330Total liabilities 15880301 12470585 10252722 TPI Total assets 1052214 851886 711918Total liabilities 878897 749885 621733 TPP Total assets 260801 184789 82415Total liabilities 205717 119863 26112 TPAM Total assets 24686 19648 17238Total liabilities 7131 4435 3980 Other Target Companies Total assets 1252045 1120776 1199482Total liabilities 692635 637989 780242

Note Consist of consolidated financial data relating to TPL and its subsidiaries

- 13 -

As at 31 December 2012 the total carrying amount of the Target Assets was RMB54377 million and the associated total liabilities amounted to RMB243470 million In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports The management discussion and analysis of the Tranche C Targets with continuing operating activities are set out in the appendix to this announcement for the information of the Shareholders (B) Segmental information on the Acquisition Targets (1) Tranche A Targets

Tranche A Targets consist solely of the 2505 equity interest of TPL and represent 663 of the aggregate Consideration TPL is one of the major existing non-wholly-owned subsidiaries of the Company TPL is engaged in the business of life insurance in the PRC As at 31 December 2012 the audited Net Assets Value (ldquoNAVrdquo) of TPL was RMB1010042 million (equivalent to approximately HK$1245655 million) and the embedded value (ldquoEVrdquo) of TPL was RMB23747 million (equivalent to approximately HK$29286 million)

Business Scope

Percentage of equity interest to be acquired

NAV as at 31

December 2012

NAV as at 31

December 2012 to be transacted

EV as at 31 December

2012

EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1010042 253016 23747 5949

Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPL contributed additional capital in the amount of RMB2500 million into TPL by way of cash Such capital contribution was completed in March 2013 If such additional capital were incorporated the adjusted NAV and embedded value of TPL as at 31 December 2012 would be as follows

Business Scope

Percentage of equity interest to be acquired

Adjusted NAV

as at 31 December

2012

Adjusted NAV

as at 31 December 2012 to be transacted

Adjusted EV as at 31 December

2012

Adjusted EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1260042 315641 26247 6575

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 9 -

Segregation of Overseas PampC Targets The transfer of shareholding in insurance companies is often subject to approval and consent of governmental departments or regulatory authorities of the relevant jurisdiction and specific requirements on filings and registration The Company has engaged legal advisers in Macau Singapore UK and Indonesia to ascertain the approvals and consents and procedural requirements necessary for the effective transfer of shareholding of insurance companies incorporated in those jurisdictions In the event that the necessary filing and registration procedures in respect of any of the Overseas PampC Targets have not yet been completed or fulfilled in accordance with the relevant requirements by the Completion Long Stop Date TPG and TPG(HK) shall have the right (but not an obligation) to segregate any of the Overseas PampC Targets the filing and registration procedures of which have not yet been completed (the ldquoSegregated Targetsrdquo) from the TPG Target Interests andor TPG(HK) Target Interests (as the case may be) and the consideration for the sale and purchase of the Segregated Targets shall be deducted from the Consideration If TPG and TPG(HK) elect to exercise such right of segregation TPG and TPG(HK) shall before the Completion Long Stop Date notify the Company of the segregation and the consideration to be deducted and the parties shall proceed to complete the sale and purchase of other Acquisition Targets of the Tranche C Targets as soon as practicable thereafter The parties further agreed that the segregation of the Segregated Targets shall not affect the completion of the sale and purchase of other Tranche C Targets nor affect the completion of the sale and purchase of the Tranche A Targets or the Tranche B Targets As the Company is not familiar with the procedural requirements for the transfer of shareholding in the Overseas PampC Targets the above segregation right provides the parties with the flexibility to segregate those Target Interests and complete the sale and purchase of other Tranche C Targets within the contemplated timeframe After the segregation of the Segregated Targets TPG TPG(HK) and the Company will enter into supplemental agreements for the sale and purchase of the Segregated Targets and will continue to proceed with the procedures necessary for the transfer of the Segregated Targets The Board considers that the above option for segregation is fair and reasonable (D) The Issue Price

The Issue Price of the Consideration Shares of HK$1539 was arrived at after armrsquos length negotiations between the parties with reference to among other things the recent trend of the Share price performance and the prevailing market price of the Shares The following table illustrates the comparison between the Issue Price and the historical price per Share on the date of this announcement the Last Trading Date and various periods as quoted on the Stock Exchange

Date Period

Closing price per Share Average closing price per Share for the

corresponding period Premium of Issue Price (HK$) () Last Trading Date 1236 245

Last 10 trading days 1262 219

Last 30 trading days 1282 200

Last 60 trading days 1343 146

Last 180 trading days 1356 135

Last twelve months 1313 172

Current year 1436 72

- 10 -

Having considered the Issue Price is higher than the closing price of the Last Trading Date and average closing prices of the abovementioned periods the Board is of the view that the Issue Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole (E) The Consideration Shares The Consideration shall be satisfied by the allotment and issue by the Company of Consideration Shares at the issue price of HK$1539 per Consideration Share to TPG and TPG(HK) or such person(s) as any of them may direct For the purpose of issuing the Consideration Shares the parties have agreed that the exchange rate shall be HK$100=RMB079694 (approximately equivalent to RMB100 = HK$125480 for reference only) being the mid-price of Renminbi to Hong Kong Dollars buying and selling rates announced by the Peoplersquos Bank of China on 24 May 2013 being the Last Trading Date The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets) will be 862735270 representing approximately 506 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 336 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and TPG and TPG(HK) exercise their right to segregate all Overseas PampC Targets) will be 741829425 representing approximately 435 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 303 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The following table illustrates the shareholding structure of the Company as at the date of this announcement and immediately following Completion

Name of Shareholder

As at the date of this announcement

Immediately following Completion (assuming Tranche B Consideration is increased by

the maximum of the Post-Agreement Capital Increase Amount and no

Segregated Targets)

Immediately following Completion (assuming Tranche B Consideration is increased by the maximum of the

Post-Agreement Capital Increase Amount and all Overseas PampC

Targets are segregated) No of Shares

heldApproximate

No of Shares

heldApproximate

No of Shares

held Approximate

TPG(HK) 908689405 5327 1771424675 6896 1650518830 6743 Other Shareholders

797185687 4673 797185687 3104 797185687 3257

Total 1705875092 10000 2568610362 10000 2447704517 10000 The parties have agreed that all Consideration Shares (including the Consideration Shares representing consideration for the sale and purchase of the TPG Target Interests and TPG Target Assets) shall be issued and allotted to TPG(HK) The Consideration Shares will be issued under the specific mandate to be approved at the EGM The Consideration Shares when allotted and issued will rank pari passu in all respects with all the Shares then in issue There are no restrictions on the subsequent transfer of the Consideration Shares by TPG(HK)

- 11 -

An application will be made by the Company to the Stock Exchange for the listing of and permission to deal in the Consideration Shares The Acquisition and the issue of the Consideration Shares will not result in any change in control of the Company 3 INFORMATION ON THE ACQUISITION TARGETS (A) Overview of the Acquisition Targets TPG is a long-established leading insurance group of the PRC Apart from holding a controlling stake in the Company TPG also owns PampC companies operating overseas and various companies covering a wide range of operations (including property investment and financial support services) as well as minority shareholdings in the major operating subsidiaries of the Group As part of the Restructuring Proposal which has been approved in principle by the MOF and the CIRC in 2013 TPG contemplated to inject its unlisted assets into the Group in consideration of new shares of the Company To materialize the detailed terms of the injection the parties entered into the Framework Agreement on 27 May 2013 The Acquisition Targets cover the unlisted assets of TPG including equity interests in a total of 25 Target Companies incorporated and operating in different jurisdictions as well as Target Assets of various nature and situated at various locations Having considered that the time required for obtaining relevant approval and consents and completing relevant registration and filing procedures in respect of different Acquisition Targets vary to a very large extent the parties have agreed to split the Acquisition Targets into three tranches each of which may proceed to completion on its own upon fulfilment of all necessary conditions As a result the sale and purchase of Tranche A Targets and Tranche B Targets (being additional equity interests of existing non-wholly-owned subsidiaries of the Company which are incorporated and operating in the PRC representing in aggregate 840 of the Consideration for all Acquisition Targets) may be completed ahead of the Tranche C Targets (which include equity interests in overseas PampC companies securities broking companies property investment companies financial support service companies and the Target Assets) While the completion mechanism of splitting into three tranches expedites the completion of Tranche A Targets and Tranche B Targets the Board wishes to emphasize that TPG TPG(HK) and the Company consider the Acquisition as a single package and the negotiation of the terms and conditions of the Framework Agreement (including the Consideration) was also made on aggregate basis It is the mutual commercial intention of TPG and the Company that TPG and TPG(HK) will sell and the Company will purchase all Acquisition Targets on and subject to the terms of the Framework Agreement and the Specific Agreements The completion mechanism of splitting into three tranches merely serves to facilitate settlement and completion of the Acquisition Once the Framework Agreement (and where applicable the Specific Agreements containing additional conditions precedent) become unconditional the parties will use their best endeavours to complete the sale and purchase of all Acquisition Targets as soon as practicable

- 12 -

The following table sets out certain historical financial data relating to the Target Companies extracted from the Accountantsrsquo Report which will be set out in the circular to be despatched to the Shareholders For the 12 months ended 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Results RMB Million RMB Million RMB MillionTPL(Note) Profit before taxation 44752 50646 96588Profit after taxation 70430 64338 83951 TPI Profit before taxation 20271 14387 2627Profit after taxation 19482 14100 4637 TPP Loss before taxation (10462) (16083) (15399)Loss after taxation (10462) (16083) (15399) TPAM Profit before taxation 3093 2842 1190Profit after taxation 2347 1956 850 Other Target Companies Profit before taxation 83016 180275 64425Profit after taxation 68799 149049 52221 As at 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Position RMB Million RMB Million RMB MillionTPL(Note) Total assets 16890567 13260184 11201330Total liabilities 15880301 12470585 10252722 TPI Total assets 1052214 851886 711918Total liabilities 878897 749885 621733 TPP Total assets 260801 184789 82415Total liabilities 205717 119863 26112 TPAM Total assets 24686 19648 17238Total liabilities 7131 4435 3980 Other Target Companies Total assets 1252045 1120776 1199482Total liabilities 692635 637989 780242

Note Consist of consolidated financial data relating to TPL and its subsidiaries

- 13 -

As at 31 December 2012 the total carrying amount of the Target Assets was RMB54377 million and the associated total liabilities amounted to RMB243470 million In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports The management discussion and analysis of the Tranche C Targets with continuing operating activities are set out in the appendix to this announcement for the information of the Shareholders (B) Segmental information on the Acquisition Targets (1) Tranche A Targets

Tranche A Targets consist solely of the 2505 equity interest of TPL and represent 663 of the aggregate Consideration TPL is one of the major existing non-wholly-owned subsidiaries of the Company TPL is engaged in the business of life insurance in the PRC As at 31 December 2012 the audited Net Assets Value (ldquoNAVrdquo) of TPL was RMB1010042 million (equivalent to approximately HK$1245655 million) and the embedded value (ldquoEVrdquo) of TPL was RMB23747 million (equivalent to approximately HK$29286 million)

Business Scope

Percentage of equity interest to be acquired

NAV as at 31

December 2012

NAV as at 31

December 2012 to be transacted

EV as at 31 December

2012

EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1010042 253016 23747 5949

Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPL contributed additional capital in the amount of RMB2500 million into TPL by way of cash Such capital contribution was completed in March 2013 If such additional capital were incorporated the adjusted NAV and embedded value of TPL as at 31 December 2012 would be as follows

Business Scope

Percentage of equity interest to be acquired

Adjusted NAV

as at 31 December

2012

Adjusted NAV

as at 31 December 2012 to be transacted

Adjusted EV as at 31 December

2012

Adjusted EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1260042 315641 26247 6575

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 10 -

Having considered the Issue Price is higher than the closing price of the Last Trading Date and average closing prices of the abovementioned periods the Board is of the view that the Issue Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole (E) The Consideration Shares The Consideration shall be satisfied by the allotment and issue by the Company of Consideration Shares at the issue price of HK$1539 per Consideration Share to TPG and TPG(HK) or such person(s) as any of them may direct For the purpose of issuing the Consideration Shares the parties have agreed that the exchange rate shall be HK$100=RMB079694 (approximately equivalent to RMB100 = HK$125480 for reference only) being the mid-price of Renminbi to Hong Kong Dollars buying and selling rates announced by the Peoplersquos Bank of China on 24 May 2013 being the Last Trading Date The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets) will be 862735270 representing approximately 506 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 336 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The maximum number of Consideration Shares to be issued for the Acquisition (assuming that the Tranche B Consideration is adjusted by the maximum of the Post-Agreement Capital Increase Amount and TPG and TPG(HK) exercise their right to segregate all Overseas PampC Targets) will be 741829425 representing approximately 435 of the issued share capital of the Company of 1705875092 Shares as at the date of this announcement and approximately 303 of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares The following table illustrates the shareholding structure of the Company as at the date of this announcement and immediately following Completion

Name of Shareholder

As at the date of this announcement

Immediately following Completion (assuming Tranche B Consideration is increased by

the maximum of the Post-Agreement Capital Increase Amount and no

Segregated Targets)

Immediately following Completion (assuming Tranche B Consideration is increased by the maximum of the

Post-Agreement Capital Increase Amount and all Overseas PampC

Targets are segregated) No of Shares

heldApproximate

No of Shares

heldApproximate

No of Shares

held Approximate

TPG(HK) 908689405 5327 1771424675 6896 1650518830 6743 Other Shareholders

797185687 4673 797185687 3104 797185687 3257

Total 1705875092 10000 2568610362 10000 2447704517 10000 The parties have agreed that all Consideration Shares (including the Consideration Shares representing consideration for the sale and purchase of the TPG Target Interests and TPG Target Assets) shall be issued and allotted to TPG(HK) The Consideration Shares will be issued under the specific mandate to be approved at the EGM The Consideration Shares when allotted and issued will rank pari passu in all respects with all the Shares then in issue There are no restrictions on the subsequent transfer of the Consideration Shares by TPG(HK)

- 11 -

An application will be made by the Company to the Stock Exchange for the listing of and permission to deal in the Consideration Shares The Acquisition and the issue of the Consideration Shares will not result in any change in control of the Company 3 INFORMATION ON THE ACQUISITION TARGETS (A) Overview of the Acquisition Targets TPG is a long-established leading insurance group of the PRC Apart from holding a controlling stake in the Company TPG also owns PampC companies operating overseas and various companies covering a wide range of operations (including property investment and financial support services) as well as minority shareholdings in the major operating subsidiaries of the Group As part of the Restructuring Proposal which has been approved in principle by the MOF and the CIRC in 2013 TPG contemplated to inject its unlisted assets into the Group in consideration of new shares of the Company To materialize the detailed terms of the injection the parties entered into the Framework Agreement on 27 May 2013 The Acquisition Targets cover the unlisted assets of TPG including equity interests in a total of 25 Target Companies incorporated and operating in different jurisdictions as well as Target Assets of various nature and situated at various locations Having considered that the time required for obtaining relevant approval and consents and completing relevant registration and filing procedures in respect of different Acquisition Targets vary to a very large extent the parties have agreed to split the Acquisition Targets into three tranches each of which may proceed to completion on its own upon fulfilment of all necessary conditions As a result the sale and purchase of Tranche A Targets and Tranche B Targets (being additional equity interests of existing non-wholly-owned subsidiaries of the Company which are incorporated and operating in the PRC representing in aggregate 840 of the Consideration for all Acquisition Targets) may be completed ahead of the Tranche C Targets (which include equity interests in overseas PampC companies securities broking companies property investment companies financial support service companies and the Target Assets) While the completion mechanism of splitting into three tranches expedites the completion of Tranche A Targets and Tranche B Targets the Board wishes to emphasize that TPG TPG(HK) and the Company consider the Acquisition as a single package and the negotiation of the terms and conditions of the Framework Agreement (including the Consideration) was also made on aggregate basis It is the mutual commercial intention of TPG and the Company that TPG and TPG(HK) will sell and the Company will purchase all Acquisition Targets on and subject to the terms of the Framework Agreement and the Specific Agreements The completion mechanism of splitting into three tranches merely serves to facilitate settlement and completion of the Acquisition Once the Framework Agreement (and where applicable the Specific Agreements containing additional conditions precedent) become unconditional the parties will use their best endeavours to complete the sale and purchase of all Acquisition Targets as soon as practicable

- 12 -

The following table sets out certain historical financial data relating to the Target Companies extracted from the Accountantsrsquo Report which will be set out in the circular to be despatched to the Shareholders For the 12 months ended 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Results RMB Million RMB Million RMB MillionTPL(Note) Profit before taxation 44752 50646 96588Profit after taxation 70430 64338 83951 TPI Profit before taxation 20271 14387 2627Profit after taxation 19482 14100 4637 TPP Loss before taxation (10462) (16083) (15399)Loss after taxation (10462) (16083) (15399) TPAM Profit before taxation 3093 2842 1190Profit after taxation 2347 1956 850 Other Target Companies Profit before taxation 83016 180275 64425Profit after taxation 68799 149049 52221 As at 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Position RMB Million RMB Million RMB MillionTPL(Note) Total assets 16890567 13260184 11201330Total liabilities 15880301 12470585 10252722 TPI Total assets 1052214 851886 711918Total liabilities 878897 749885 621733 TPP Total assets 260801 184789 82415Total liabilities 205717 119863 26112 TPAM Total assets 24686 19648 17238Total liabilities 7131 4435 3980 Other Target Companies Total assets 1252045 1120776 1199482Total liabilities 692635 637989 780242

Note Consist of consolidated financial data relating to TPL and its subsidiaries

- 13 -

As at 31 December 2012 the total carrying amount of the Target Assets was RMB54377 million and the associated total liabilities amounted to RMB243470 million In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports The management discussion and analysis of the Tranche C Targets with continuing operating activities are set out in the appendix to this announcement for the information of the Shareholders (B) Segmental information on the Acquisition Targets (1) Tranche A Targets

Tranche A Targets consist solely of the 2505 equity interest of TPL and represent 663 of the aggregate Consideration TPL is one of the major existing non-wholly-owned subsidiaries of the Company TPL is engaged in the business of life insurance in the PRC As at 31 December 2012 the audited Net Assets Value (ldquoNAVrdquo) of TPL was RMB1010042 million (equivalent to approximately HK$1245655 million) and the embedded value (ldquoEVrdquo) of TPL was RMB23747 million (equivalent to approximately HK$29286 million)

Business Scope

Percentage of equity interest to be acquired

NAV as at 31

December 2012

NAV as at 31

December 2012 to be transacted

EV as at 31 December

2012

EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1010042 253016 23747 5949

Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPL contributed additional capital in the amount of RMB2500 million into TPL by way of cash Such capital contribution was completed in March 2013 If such additional capital were incorporated the adjusted NAV and embedded value of TPL as at 31 December 2012 would be as follows

Business Scope

Percentage of equity interest to be acquired

Adjusted NAV

as at 31 December

2012

Adjusted NAV

as at 31 December 2012 to be transacted

Adjusted EV as at 31 December

2012

Adjusted EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1260042 315641 26247 6575

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 11 -

An application will be made by the Company to the Stock Exchange for the listing of and permission to deal in the Consideration Shares The Acquisition and the issue of the Consideration Shares will not result in any change in control of the Company 3 INFORMATION ON THE ACQUISITION TARGETS (A) Overview of the Acquisition Targets TPG is a long-established leading insurance group of the PRC Apart from holding a controlling stake in the Company TPG also owns PampC companies operating overseas and various companies covering a wide range of operations (including property investment and financial support services) as well as minority shareholdings in the major operating subsidiaries of the Group As part of the Restructuring Proposal which has been approved in principle by the MOF and the CIRC in 2013 TPG contemplated to inject its unlisted assets into the Group in consideration of new shares of the Company To materialize the detailed terms of the injection the parties entered into the Framework Agreement on 27 May 2013 The Acquisition Targets cover the unlisted assets of TPG including equity interests in a total of 25 Target Companies incorporated and operating in different jurisdictions as well as Target Assets of various nature and situated at various locations Having considered that the time required for obtaining relevant approval and consents and completing relevant registration and filing procedures in respect of different Acquisition Targets vary to a very large extent the parties have agreed to split the Acquisition Targets into three tranches each of which may proceed to completion on its own upon fulfilment of all necessary conditions As a result the sale and purchase of Tranche A Targets and Tranche B Targets (being additional equity interests of existing non-wholly-owned subsidiaries of the Company which are incorporated and operating in the PRC representing in aggregate 840 of the Consideration for all Acquisition Targets) may be completed ahead of the Tranche C Targets (which include equity interests in overseas PampC companies securities broking companies property investment companies financial support service companies and the Target Assets) While the completion mechanism of splitting into three tranches expedites the completion of Tranche A Targets and Tranche B Targets the Board wishes to emphasize that TPG TPG(HK) and the Company consider the Acquisition as a single package and the negotiation of the terms and conditions of the Framework Agreement (including the Consideration) was also made on aggregate basis It is the mutual commercial intention of TPG and the Company that TPG and TPG(HK) will sell and the Company will purchase all Acquisition Targets on and subject to the terms of the Framework Agreement and the Specific Agreements The completion mechanism of splitting into three tranches merely serves to facilitate settlement and completion of the Acquisition Once the Framework Agreement (and where applicable the Specific Agreements containing additional conditions precedent) become unconditional the parties will use their best endeavours to complete the sale and purchase of all Acquisition Targets as soon as practicable

- 12 -

The following table sets out certain historical financial data relating to the Target Companies extracted from the Accountantsrsquo Report which will be set out in the circular to be despatched to the Shareholders For the 12 months ended 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Results RMB Million RMB Million RMB MillionTPL(Note) Profit before taxation 44752 50646 96588Profit after taxation 70430 64338 83951 TPI Profit before taxation 20271 14387 2627Profit after taxation 19482 14100 4637 TPP Loss before taxation (10462) (16083) (15399)Loss after taxation (10462) (16083) (15399) TPAM Profit before taxation 3093 2842 1190Profit after taxation 2347 1956 850 Other Target Companies Profit before taxation 83016 180275 64425Profit after taxation 68799 149049 52221 As at 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Position RMB Million RMB Million RMB MillionTPL(Note) Total assets 16890567 13260184 11201330Total liabilities 15880301 12470585 10252722 TPI Total assets 1052214 851886 711918Total liabilities 878897 749885 621733 TPP Total assets 260801 184789 82415Total liabilities 205717 119863 26112 TPAM Total assets 24686 19648 17238Total liabilities 7131 4435 3980 Other Target Companies Total assets 1252045 1120776 1199482Total liabilities 692635 637989 780242

Note Consist of consolidated financial data relating to TPL and its subsidiaries

- 13 -

As at 31 December 2012 the total carrying amount of the Target Assets was RMB54377 million and the associated total liabilities amounted to RMB243470 million In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports The management discussion and analysis of the Tranche C Targets with continuing operating activities are set out in the appendix to this announcement for the information of the Shareholders (B) Segmental information on the Acquisition Targets (1) Tranche A Targets

Tranche A Targets consist solely of the 2505 equity interest of TPL and represent 663 of the aggregate Consideration TPL is one of the major existing non-wholly-owned subsidiaries of the Company TPL is engaged in the business of life insurance in the PRC As at 31 December 2012 the audited Net Assets Value (ldquoNAVrdquo) of TPL was RMB1010042 million (equivalent to approximately HK$1245655 million) and the embedded value (ldquoEVrdquo) of TPL was RMB23747 million (equivalent to approximately HK$29286 million)

Business Scope

Percentage of equity interest to be acquired

NAV as at 31

December 2012

NAV as at 31

December 2012 to be transacted

EV as at 31 December

2012

EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1010042 253016 23747 5949

Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPL contributed additional capital in the amount of RMB2500 million into TPL by way of cash Such capital contribution was completed in March 2013 If such additional capital were incorporated the adjusted NAV and embedded value of TPL as at 31 December 2012 would be as follows

Business Scope

Percentage of equity interest to be acquired

Adjusted NAV

as at 31 December

2012

Adjusted NAV

as at 31 December 2012 to be transacted

Adjusted EV as at 31 December

2012

Adjusted EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1260042 315641 26247 6575

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 12 -

The following table sets out certain historical financial data relating to the Target Companies extracted from the Accountantsrsquo Report which will be set out in the circular to be despatched to the Shareholders For the 12 months ended 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Results RMB Million RMB Million RMB MillionTPL(Note) Profit before taxation 44752 50646 96588Profit after taxation 70430 64338 83951 TPI Profit before taxation 20271 14387 2627Profit after taxation 19482 14100 4637 TPP Loss before taxation (10462) (16083) (15399)Loss after taxation (10462) (16083) (15399) TPAM Profit before taxation 3093 2842 1190Profit after taxation 2347 1956 850 Other Target Companies Profit before taxation 83016 180275 64425Profit after taxation 68799 149049 52221 As at 31 December 2012 2011 2010 (audited) (audited) (audited)Financial Position RMB Million RMB Million RMB MillionTPL(Note) Total assets 16890567 13260184 11201330Total liabilities 15880301 12470585 10252722 TPI Total assets 1052214 851886 711918Total liabilities 878897 749885 621733 TPP Total assets 260801 184789 82415Total liabilities 205717 119863 26112 TPAM Total assets 24686 19648 17238Total liabilities 7131 4435 3980 Other Target Companies Total assets 1252045 1120776 1199482Total liabilities 692635 637989 780242

Note Consist of consolidated financial data relating to TPL and its subsidiaries

- 13 -

As at 31 December 2012 the total carrying amount of the Target Assets was RMB54377 million and the associated total liabilities amounted to RMB243470 million In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports The management discussion and analysis of the Tranche C Targets with continuing operating activities are set out in the appendix to this announcement for the information of the Shareholders (B) Segmental information on the Acquisition Targets (1) Tranche A Targets

Tranche A Targets consist solely of the 2505 equity interest of TPL and represent 663 of the aggregate Consideration TPL is one of the major existing non-wholly-owned subsidiaries of the Company TPL is engaged in the business of life insurance in the PRC As at 31 December 2012 the audited Net Assets Value (ldquoNAVrdquo) of TPL was RMB1010042 million (equivalent to approximately HK$1245655 million) and the embedded value (ldquoEVrdquo) of TPL was RMB23747 million (equivalent to approximately HK$29286 million)

Business Scope

Percentage of equity interest to be acquired

NAV as at 31

December 2012

NAV as at 31

December 2012 to be transacted

EV as at 31 December

2012

EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1010042 253016 23747 5949

Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPL contributed additional capital in the amount of RMB2500 million into TPL by way of cash Such capital contribution was completed in March 2013 If such additional capital were incorporated the adjusted NAV and embedded value of TPL as at 31 December 2012 would be as follows

Business Scope

Percentage of equity interest to be acquired

Adjusted NAV

as at 31 December

2012

Adjusted NAV

as at 31 December 2012 to be transacted

Adjusted EV as at 31 December

2012

Adjusted EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1260042 315641 26247 6575

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 13 -

As at 31 December 2012 the total carrying amount of the Target Assets was RMB54377 million and the associated total liabilities amounted to RMB243470 million In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports The management discussion and analysis of the Tranche C Targets with continuing operating activities are set out in the appendix to this announcement for the information of the Shareholders (B) Segmental information on the Acquisition Targets (1) Tranche A Targets

Tranche A Targets consist solely of the 2505 equity interest of TPL and represent 663 of the aggregate Consideration TPL is one of the major existing non-wholly-owned subsidiaries of the Company TPL is engaged in the business of life insurance in the PRC As at 31 December 2012 the audited Net Assets Value (ldquoNAVrdquo) of TPL was RMB1010042 million (equivalent to approximately HK$1245655 million) and the embedded value (ldquoEVrdquo) of TPL was RMB23747 million (equivalent to approximately HK$29286 million)

Business Scope

Percentage of equity interest to be acquired

NAV as at 31

December 2012

NAV as at 31

December 2012 to be transacted

EV as at 31 December

2012

EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1010042 253016 23747 5949

Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPL contributed additional capital in the amount of RMB2500 million into TPL by way of cash Such capital contribution was completed in March 2013 If such additional capital were incorporated the adjusted NAV and embedded value of TPL as at 31 December 2012 would be as follows

Business Scope

Percentage of equity interest to be acquired

Adjusted NAV

as at 31 December

2012

Adjusted NAV

as at 31 December 2012 to be transacted

Adjusted EV as at 31 December

2012

Adjusted EV as at 31 December 2012 to be transacted

Target Companies

RMB Million

RMB Million

RMB Million

RMB Million

A B C=BxA D E=DxA

TPL Life

Insurance 2505 1260042 315641 26247 6575

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 14 -

(2) Tranche B Targets Tranche B Targets comprise three existing non-wholly-owned subsidiaries of the Company incorporated and operating in the PRC TPI TPAM and TPP TPI is engaged in the business of PampC insurance in the PRC TPAM is mainly engaged in the provision of investment consultancy services TPP is principally engaged in corporate and personal retirement insurance and annuity businesses and group life insurance business in Mainland China Tranche B Targets together with the maximum of the Post-Agreement Capital Increase Amount represent 177 of the aggregate Consideration

Business Scope

Percentage of equity

interest to be acquired

NAV as at 31 December

2012

Adjusted NAV as at 31 December

2012

Adjusted NAV as at 31

December 2012 to be transacted

Target Companies

RMB Million RMB Million RMB Million

A B C D=CxA TPI PampC

Insurance 3879 173317 223317 (Note 1) 86625

TPAM Asset Management

2000 17555 52555 (Note 1) 10511

TPP Pension 400 55084 75084 (Note 2) 3003 Total 245956 350956 100139 Notes

1 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPI and TPAM

(including the Company and TPG) agreed to increase the registered capital of TPI and TPAM by RMB500 million in cash and RMB400 million (which composed of RMB350 million by way of cash and RMB50 million by capitalisation of retained earnings) respectively to be contributed by the existing shareholders of TPI and TPAM in proportion to their respective existing shareholdings which have not yet been fully paid or the relevant capital inspection procedures of which have not yet been completed by the date of the Framework Agreement The NAV shown in column C represents the theoretical NAV of TPI and TPAM on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

2 Subsequent to the balance sheet date of 31 December 2012 the shareholders of TPP (ie TPG and the Company) contributed additional capital in the aggregate amount of RMB200 million into TPP by way of cash Such capital contribution was completed in April 2013 The NAV shown in column C represents the theoretical NAV of TPP on the assumption that the aforesaid capital increase was completed prior to 31 December 2012

(3) Tranche C Targets

Tranche C Targets comprise (i) equity interest in Overseas PampC Targets (ii) equity interest in securities broking companies (iii) equity interest in property investment companies (iv) equity interest in financial support service companies (v) equity interest in other companies and the Target Assets including certain assets of TPG and TPG(HK) in the form of accounts receivable from the Target Companies and certain liabilities of TPG and TPG(HK) in the form of accounts payable by TPG and TPG(HK) to the Target Companies Upon completion of the acquisition of such net liabilities (as part of the Target Assets) on the one hand as well as the acquisition of the relevant Target Interests on the other hand the outstanding net accounts payable to these Target Companies assumed by the Company will be eliminated in the consolidated accounts of the Enlarged Group Tranche C Targets represent a 160 of the aggregate Consideration

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 15 -

(i) Overseas PampC Targets Overseas PampC Targets consist of insurance companies which are engaged in property and casualty operations in the Macau Singapore UK and Indonesia markets The Overseas PampC Targets have maintained profitable and longstanding operating track records and several of them have consistently commanded significant market share in their respective local markets Through the acquisition of the Overseas PampC Targets the Company will integrate the TPG Grouprsquos global overseas property and casualty insurance operations providing valuable overseas operating experience to the Enlarged Group as a whole The collective consideration for the acquisition of the Overseas PampC Targets represents 140 of the aggregate Consideration

Business Scope

Percentage of equity interest to be acquired

NAV as at 31 December 2012

NAV as at 31 December 2012

to be transacted Target Companies HK$ Million HK$ Million A B C=BxA TP Macau PampC

Insurance 10000 27337 27337

TP Singapore PampC Insurance

10000 66057 66057

TP UK PampC Insurance

10000 25203 25203

TP Indonesia PampC Insurance

5500 7877 4332

Total 126474 122929 (ii) Securities broking

Company involved in securities broking comprises TPFH TPFH operates as a financial services company providing securities broking services through its wholly-owned subsidiary covering Hong Kong-listed shares Shanghai and Shenzhen B shares as well as shares listed in Singapore and Taiwan The audited NAV of TPFH as at 31 December 2012 was HK$51744 million

(iii) Property investment business

TPIH Dragon Jade and Ming Lee are principally engaged in property investment Properties held by these Target Companies are mainly office and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream Among the properties held by these Target Companies the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC is of the highest value Historically Pacific Asia Walkman Mano and Prospect Inc have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs Sarley also has loans and receivables with TPIH and Ming Lee Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations and Sarley holds insignificant investment

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 16 -

The collective NAV to be transacted of the above property investment related companies (disregarding the net accounts payable by TPG and TPG(HK) to these Target Companies which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand) as at 31 December 2012 is HK$4651 million (including the bank loans which amounted to HK$432029 million as at 31 December 2012)

(iv) Financial Support Service

Companies involved in financial support services comprise TPFSC and TPFAS TPFSC is principally engaged in the provision of back office services for the Group and the Target Companies TPFAS is principally engaged in the provision of internal audit services for the Group and the Target Companies The collective audited NAV of TPFSC and TPFAS is HK$ 1772 million as at 31 December 2012

(v) Other companies and Target Assets

Other companies of the Tranche C Targets consist of TP Japan Savills TPML SZTPI CIG Trustees Action Profit and Toplap TP Japan operates as an insurance agency in Japan market Savills TPML is engaged in property management business SZTPI Action Profit and Toplap are inactive companies CIG Trustees is engaged primarily in the provision of internal trustee service The NAV of these companies as at 31 December 2012 after eliminating certain balances due to TPG(HK) is HK$ 5507 million The Target Assets comprise TPG Target Assets and TPG(HK) Target Assets which include - various real estate properties and car parking spaces located in Hong Kong and various real

estate properties and parking spaces located in Beijing owned by TPG and TPG(HK) with aggregate book value of approximately HK$22632 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$13445 million The details of such properties are set out below

Name of property Location Nature Usage Monthly

rent

Book Value as at

31 December 2012

Capital Value as at

28 February 2013 (Note)

HK$rsquo000

HK$ Million

HK$ Million

China Insurance Group Building

Hong Kong Commercial Leasing out tothird parties

68762 18393 18400

Citichamp Palace Haidian District Beijing

Residential Mainly leasing out to third

parties (the rest for self-use)

4275 3835 3620

Dragon Heart Court

Hong Kong Residential Own-use - 242 930

City Garden Hong Kong Car parking space

Own-use - 063 100

Caine Mansion Hong Kong Car parking space

Own-use - 056 070

Fortress Metro Tower

Hong Kong Car parking space

Own-use - 043 060

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 17 -

Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to ShareholdersFor illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- amounts receivable from and payable mainly to the subsidiaries of the Company by TPG and TPG(HK) in the net payable amount of approximately HK$660 million as at 31 December 2012 (disregarding the net accounts payable by TPG and TPG(HK) to TPIH Dragon Jade Ming Lee and TP Japan which will be eliminated in the consolidated accounts of the Enlarged Group upon completion of acquisition of 100 shareholding in these Target Companies on the one hand and the acquisition of the outstanding net accounts payable as part of the Target Assets on the other hand)

- certain electronic equipment such as computers and other office facilities furniture

fixtures and fittings with aggregate book value of approximately HK$388 million as at 31 December 2012 and aggregate acquisition cost of approximately HK$2293 million and

- certain accounts payable in respect of operating expenses to independent third parties with

aggregate book value of approximately HK$1115 million as at 31 December 2012

(C) Shareholding structure of the TPG TPG(HK) the Company and the Target Companies

Set out below are two group charts illustrating the simplified shareholding structure of TPG TPG(HK) the Company and the Target Companies as at the date of this announcement and immediately after Completion

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

As at the date of this announcement (before the Acquisitions)

TPG

100

5327

PampC Insurance

TPG (HK)

The Company

5005 100

Reinsurance Pension

Insurance

E-Commerce Business

Assets Management

100 96 80 100

Life Insurance

Reinsurance Broking and

Insurance Agency

100

Securities Broking

Non-Financial Investments

General

5005 (Note 1)

Financial Support Service

Others

Others (Note 3)

2505

TPL

6121

TPRe

TP Macau

TP Singapore

TP UK

TP Indonesia

TPP TPeC TPA (HK) TPRB

TP Japan

60

3879

100 (Note 2)

100

100

55

100

20

TPFH

TPSI

100

TPIH 100

CTPI (HK)

TPI

4

TPAM

100

100

TPFAS

TPFSC

SZTPI

Dragon Jade

Ming Lee

100

100

Action Profit 100

100

Note 1 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is 5005

Note 2 TP Macau is held as to 98 by TPG(HK) 1 by CIG Trustees and 1

by TPIH As CIG Trustees and TPIH both held such shares on trust for TPG(HK) TPG(HK) is the beneficial owner of 100 issued shares of TP Macau

Note 3 These other interests represent 100 equity interest in CIG Trustees

Mano Pacific Asia Prospect Inc Sarley Walkman 90 equity interest in Toplap and 25 equity interest in Savills TPML

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

Immediately after the Completion

Note 1 Assuming that the maximum number of 862735270 Consideration Shares are allotted and issued upon Completion

Note 2 TPSI is a wholly-owned subsidiary of TPL therefore the Companys effective interest in TPSI is

751 upon Completion Note 3 Upon Completion TP Macau will be held as to 98 by the Company (or its designated subsidiary)

1 by CIG Trustees and 1 by TPIH with CIG Trustees and TPIH both holding such shares on trust for the Company (or its designated subsidiary) the Company (or its designated subsidiary) will be the beneficial owner of 100 issued shares of TP Macau

Note 4 These other interests represent 100 equity interest in Action Profit CIG Trustees Mano Pacific

Asia Prospect Inc Sarley SZTPI Walkman 100 equity interest in Toplap (of which 90will be held directly by the Company and the remaining 10 through TPIH) and 25 equity interest in Savills TPML

100

6896

PampC Insurance

TPG (HK)

The Company

751

TPL

100

100

TPRe

Reinsurance

TP Macau

TPP

Pension Insurance

TPeC

E-Commerce Business

TPA (HK)

Assets Management

100 100 80

TPAM

Life Insurance

Reinsurance Broking and

Insurance Agency

100

80

100

100

100

55

Securities Broking

Non-Financial Investments

General

Financial Support Service

TPSI TPFSC

100 751 (Note 2)

TPIH

100

TPFAS

CTPI (HK)

TPI

100

100

TPFH

TP Indonesia

TP UK

TPRB

TP Japan

100

100

TP Singapore

TPG

Ming Lee

Dragon Jade

Others (Note 4)

Others

100

100

(Note 3)

(Note 1)

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 20 -

Upon Completion bull TPI TPP TP Singapore TP Macau TP UK TPFH TPFAS TPFSC TP Japan CIG Trustees

TPIH Dragon Jade Ming Lee Action Profit SZTPI Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap will become wholly-owned subsidiaries of the Company

bull TPL and TPAM will become non-wholly-owned subsidiaries of the Company respectively

held as to 751 and 80 by the Company with the remaining 249 in TPL and 20 in TPAM held by Ageas

bull TP Indonesia will become a non-wholly-owned subsidiary of the Company held as to 55 by

the Company and 45 by PT Megah Putra Manunggal an independent third party Savills TPML will be held as to 25 by the Company 45 by Savills Property Management Limited and 30 by China Life Insurance (Overseas) Company Limited both independent third parties The Companyrsquos interest in Savills TPML will be treated as investment in associate

There is no restriction to the subsequent sale of the Target Assets by the Company Save for pre-emption rights stipulated under the articles of association of TPL TPAM and TP Indonesia there is no restriction to the subsequent sale of the Target Interests by the Company 4 REASONS FOR AND BENEFITS OF THE ACQUISITION With the objectives of further increasing its financial strength and enhancing the Companyrsquos control of the insurance and related businesses of the Group the Company intends to acquire from TPG and TPG (HK) all of the assets relating or incidental to its insurance businesses The Board believes that the Acquisition is consistent with the business development strategy of the Company and will enable the Company to realize long-term strategic benefits including but not limited to the following A Enhance financial performance stability and scale of the Company As at the date of this announcement the Group holds an aggregate 5005 equity interest in its PRC life insurance business The Group has positioned the life insurance business as a key component of its growth strategies and TPL is the primary subsidiary in the Group operating in the life insurance business It has taken 12 years for TPL to establish its nationwide network infrastructure management and agency teams and most importantly its business model and corporate image all of which have contributed to TPLrsquos success as a respectable young insurer in the PRC market TPL ranked number seven among nearly 70 competitors in terms of gross premiums written for the year ended 31 December 2012 The Acquisition will enable the Group to further enjoy the benefits of economies of scale as TPL enters into a more mature stage of operation In addition TPL has been the most profitable subsidiary in the Group over the past five years and is now the top contributor in terms of assets profit new business value and embedded value to the Group After the Acquisition the aggregate equity interest in TPL to be held by the Company will increase from 5005 to 751 As a result the profit new business value and embedded value of the life insurance business attributable to the Shareholders will increase Apart from the PRC life insurance business the Company currently holds a 6121 equity interest in its PRC PampC business operated by TPI TPI has experienced the fastest profit growth in the Group over the past two years In recent years TPI has successfully centralized its underwriting and claims operations which makes it possible for TPI to better exercise and proactively manage its underwriting and claims operations This centralized approach has led to continuous improvements in underwriting and operating results After the Acquisition the equity interest in TPI to be held by the Company will increase from 6121 to 100 With TPI as a wholly-owned subsidiary the profit attributable to the Shareholders will also increase

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 21 -

The Acquisition will provide new sources of revenue to the Enlarged Group namely overseas insurance premiums property rental income and securities commission and brokerage fees which the Board believes will diversify and increase the net profit of the Enlarged Group and in turn will enhance the financial performance and improve earnings stability of the Enlarged Group Given the Target Companies have demonstrated stable and healthy financial results over the years the Acquisition is expected to improve the Companyrsquos profitability The Companyrsquos Rate of Equity Return (ldquoROErdquo) attributable to the Shareholders of the Enlarged Group in 2012 on a pro forma basis (assuming the Acquisition was completed on 31 December 2012) would have been 93 post the Acquisition or 25 percentage point higher than the pre-Acquisition ROE of 68 calculated based on year-end equity B Fully capture the high growth potential of the PRC insurance markets The Board believes that the PRC insurance markets have been among the fastest-growing markets worldwide with strong long-term growth potential According to the CIRC gross premiums written in 2012 in the PRC life insurance and property and casualty insurance sectors stood at RMB 995 billion and RMB 553 billion compared to RMB 495 billion and RMB 209 billion in 2007 representing a 2007-2012 compounded annual growth rate (ldquoCAGRrdquo) of 150 and 215 respectively The Acquisition will increase the Companyrsquos shareholdings in its PRC insurance subsidiaries and promote experience and knowledge sharing among its various insurance businesses thereby enabling the Company to fully capture the high growth opportunities within the PRC insurance markets a The Enlarged Group will be best positioned to fully enjoy the strong growth opportunities in

the PRC insurance markets i Life Insurance

1) Robust industry growth is being driven by increasing life expectancies in the PRC an aging population and an under-funded social security system According to the CIRC from 2007 to 2012 the gross premiums written of the PRC life insurance sector increased from RMB 495 billion to RMB 995 billion representing a CAGR of 150

2) TPL has achieved faster growth than industry averages over the past years with gross premiums written growing from HK$ 16245 million in 2007 to HK$ 44807 million in 2012 representing a CAGR of 225 during the same period The market share of TPL has increased from 32 to 37 during that period TPLrsquos value of one-year new business has grown rapidly from HK$ 603 million in 2007 to HK$ 2304 million in 2012 representing a CAGR of 307 during the same period

3) To support its long term premium and value growth TPL continues to focus on building its agency force in both quantitative and qualitative terms TPLrsquos number of agents grew from 41140 in 2007 to 57860 in 2012 while productivity (as measured by first year premium per agent and per month) improved steadily to HK$ 7931 in 2012 despite intensified competition in the market

ii PampC

1) Promising industry prospects are being driven by rapid GDP growth rising fixed asset investments and increasing auto sales According to the CIRC gross premiums written in the PRC PampC sector increased from RMB 209 billion to RMB 553 billion from 2007 to 2012 representing a CAGR of 215

2) TPI has achieved sustainable and strong growth during the past years despite the more intense market competition with gross premiums written growing from HK$ 3500 million in 2007 to HK$ 9548 million in 2012 representing a CAGR of 222 At the same time TPI has successfully committed to strengthening its underwriting performance by reducing its combined ratio from 1169 in 2007 to 998 in 2012

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 22 -

3) With our PampC business in the PRC continuing to gain economies of scale TPI is focused on expanding its sales through proactive underwriting risk selection while further leveraging its telephone and internet sales channels to achieve higher growth

b Through the Acquisition the Company will also integrate the small but well-managed and

profitable overseas PampC operations into the Enlarged Group The overseas PampC operations have solid long-term growth potential and proven track records and will strengthen the international presence and reputation of the Group Each of the overseas PampC operations have solid local management teams and will facilitate experience and knowledge sharing among the various insurance entities of the Group The solvency margin ratios of these overseas PampC insurance companies are generally healthy and these companies are able to fund their growth by cash generated from operations No material capital contributions from shareholders are expected

C Establish a more streamlined management structure and further align Shareholdersrsquo interests The Board believes that the Acquisition represents an important opportunity to align Shareholdersrsquo interests by fully capitalizing on and mobilizing the resources previously under the control of TPG but not the Group to adopt more streamlined management and operating structures With the Acquisition the Group will benefit from integrated operations through the direct control of its supporting subsidiaries It is important for the Company to own and control such critical operations Currently many important management and business operational functions are provided by entities held by TPG under service agreements entered into between such entities and the Group Key centralized services and operations provided by TPG include - operating and information technology services provided by TPFSC including centralized

underwriting and the issuance of new policies renewal and maintenance of in-force policies claims handling and settlement telephone enquiry services systems operation and maintenance and systems development and

- internal audit functions of all businesses of the Group provided by TPFAS

Certain property management services are also provided by Shenzhen Taiping Property Management Company which is a wholly-owned subsidiary of Dragon Jade Consistent development over the years has allowed the centralized support and service platform to begin reaching scale economies All of the above entities namely TPFSC TPFAS and Shenzhen Taiping Property Management Company are wholly-owned subsidiaries of TPG The Acquisition will allow the Group to obtain control of these entities resulting in direct management and supervision over these important operational functions of the Company In addition the Acquisition would allow the Group to consolidate the support operations and reduce the number of connected party transactions between the Group and TPG Decreasing the level of such related party transactions will free up significant management time and attention and allow each operating business to focus on their respective core strategies

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 23 -

D Diversify investment portfolio and potentially improve asset liability management by increasing property investments Almost all of the properties acquired through the investment property companies are for commercial and industrial uses and are located in the most economically and commercially developed areas of the PRC All of the properties are completed and held for long term and leasing purposes The largest property in the portfolio is a stake in Shanghai Taiping Finance Tower (STFT) a grade A office building located in the heart of the Lujiazui Finance and Trade Zone in the Pudong New Area of Shanghai This prime location helps to promote the Taiping brand Before the Acquisition TPL already owned six floors in STFT and indirectly held a 39 equity interest in STFT (excluding the six floors owned by TPL) Operating since 2011 STFT is currently the headquarters of TPL TPAM and TPP while the remaining floors are leased out to third parties at attractive and stable yields the occupancy rate of STFT is approximately 96 The Acquisition will help to diversify the Grouprsquos investment portfolios and provide a new and stable source of rental income revenue to the Group Post the Acquisition the Group will also have the option to transfer the ownership of certain properties to TPL which will potentially help improve the asset liability management of the insurance funds at TPL Cash received for potential transfer properties could be used by the Group for other purposes Furthermore given the attractiveness of the property locations and the overall promising long-term economic and financial prospects of Shanghai Shenzhen and other places where the investment properties are situated the Board believes that the Group will be able to benefit from capital appreciation related to the investment properties over the long term Bank loans (certain of them were previously used in the construction of STFT) will also be transferred to the Group as part of the Target Assets The interest rates of the loans are in the ranges of HIBOR plus 167 to 28 which the Company considers are fair and favourable Transferring the loans reduces the amount of consideration to be paid by the Company and thereby lessens the dilutive effect of the Acquisition In respect of certain bank loans maturing in 2014 TPG undertakes to assist the Company to extend the maturity of such bank loan by 3 years The financial leverage ratio and interest coverage ratio of the Enlarged Group as at 31 December 2012 (details of which shall be set out in the circular to be despatched) is 437 and 38 times respectively which are considered at a healthy level As mentioned in the last paragraph the possible transfer of certain properties to TPL will free up cash for the Company which may be used to repay the bank loans if needed The acquisition of Pacific Asia Walkman Mano and Prospect Inc would enable the Enlarged Group to directly assume rights and obligation under the bank facilities which have historically been borrowed through them and reduce related parties transactions between the Group and the TPG Group E Increase transparency and clarity of corporate structure The Acquisition will result in TPG transferring its shares in the subsidiaries of the Group to the Company in exchange for shares directly in the Company As a result the cross-shareholdings in the subsidiaries which currently are prevalent in the Group corporate structure will be eliminated All other core businesses and key assets of TPG will also be put into the Company A simpler and clearer corporate structure will be established with TPGs ownership of the Company being its major assets This simplified structure will assist investors in understanding valuing and evaluating the businesses and operations of the Group The new structure would best position the Company in its strategic planning and development work for the future More focused decision-making would be the result with TPG management able to concentrate all of their attention on the Company and to maximize value for the Shareholders

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 24 -

F Broaden the financing capacity and flexibility of the Company with a strengthened capital base The Acquisition will significantly strengthen the Companyrsquos capital base with the number of shares increased by 506 from 1705875092 to 2568610362 and increase TPGrsquos shareholding in the Company from 5327 to 6896 which in turn provides the Group with additional flexibility in capital raising for the Company

The Directors (excluding the independent non-executive Directors who would give their view after having been advised by the independent financial adviser) are of the view that the transactions contemplated under the Framework Agreement are on normal commercial terms and the Framework Agreement was entered into in the ordinary and usual course of business of the Company and that the terms of the Framework Agreement are fair and reasonable and in the interests of the Shareholders as a whole

5 FINANCIAL EFFECTS OF THE ACQUISITION (a) Assets As at 31 December 2012 the consolidated total assets of the Group were approximately HK$24293851 million (equivalent to approximately RMB19698729 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$969592 million to approximately HK$25263443 million (equivalent to approximately RMB20484925 million) Unaudited pro forma financial information of the Enlarged Group will be set out in the circular to be despatched to the Shareholders (b) Liabilities As at 31 December 2012 the consolidated total liabilities of the Group were approximately HK$22194609 million (equivalent to approximately RMB17996553 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated total liabilities of the Enlarged Group will be increased by approximately HK$793920 million to approximately HK$22988529 million (equivalent to approximately RMB18640305 million) (c) Net assets value As at 31 December 2012 the consolidated net assets value attributable to the Shareholders of the Group was approximately HK$1383677 million (equivalent to approximately RMB1121958 million) Assuming the Acquisition was completed on 31 December 2012 the pro forma consolidated net assets value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$582541 million to approximately HK$1966218 million (equivalent to approximately RMB1594313 million)

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 25 -

(d) Earnings For the year ended 31 December 2012 the consolidated net profit of the Group was approximately HK$147374 million (equivalent to RMB119904 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Group was approximately HK$93656 million (equivalent to approximately RMB76199 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) Assuming the Acquisition was completed on 31 December 2012 the pro-forma consolidated net profit of the Enlarged Group will be increased by approximately HK$57639 million to approximately HK$205013 million (equivalent to approximately RMB166799 million converted at a conversion rate of RMB1 to HK$12291 for the year 2012) and the consolidated net profit attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$88784 million to approximately HK$182440 million (equivalent to approximately RMB148434 million) (e) Group embedded value As at 31 December 2012 the group embedded value attributable to the Shareholders of the Group was approximately HK$22172 million (equivalent to RMB17978 million) Assuming that the Acquisition was completed on 31 December 2012 the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$10742 million to approximately HK$32914 million (equivalent to RMB26689 million) The details of the post-Acquisition group embedded value attributable to the Shareholders of the Enlarged Group are illustrated as follows

HK$ Million

Adjusted Net Worth of CTIH attributable to Shareholders (1) 13406

Value of in-force business after CoC for TPL (2)=(3)-(4) 25976

Value of in-force business before CoC for TPL (3) 29528

Cost of capital for TPL (4) 3552

CTIHrsquos interest in TPL assuming the Acquisitions were completed

on 31 December 2012 (5) 7510

Value of in-force business after CoC for TPL attributable to

shareholders of CTIH (6)=(2)times(5) 19508

Group Embedded Value attributable to shareholders of CTIH (7)=(1)+(6) 32914

Notes a) The Adjusted Net Worth of CTIH attributable to shareholders is based on the post-Acquisition

consolidated CTIHrsquos net asset value assuming the Acquisition was completed on 31 December 2012 after making the following major adjustments 1) TPLrsquos net asset value is measured on the PRC statutory basis 2) Certain asset values have been adjusted to their market values 3) Goodwill and intangible assets produced during consolidation have been deducted

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 26 -

b) The capital injection of RMB2500 million into TPL has been completed in March 2013 The portion contributed by TPG in relation to its 2505 stake in TPL amounted to RMB62625 million (equivalent to approximately HK$77234 million) was also incorporated in the Adjusted Net Worth of CTIH

(f) TPL embedded value As at 31 December 2012 TPL embedded value attributable to the Shareholders of the Group adjusted by subsequent capital contribution of HK$1543 million (equivalent to RMB1251 million) was approximately HK$16201 million (equivalent to RMB13137 million) Assuming that the Acquisition was completed on 31 December 2012 the adjusted post-Acquisition TPL embedded value attributable to the Shareholders of the Enlarged Group will be increased by approximately HK$8109 million to approximately HK$24310 million (equivalent to RMB19711 million) (g) Per Share information The per Share information of the Group (pre-Acquisition) and the Enlarged Group (post-Acquisition) are set out below

The Group (pre-Acquisition)

The Enlarged Group

(post-Acquisition) Change HK$ HK$ HK$Basic earnings per Share (Note 1) 0550 0711 +0161 dollarOwnersrsquo Net assets value per Share (Note

2) 8111 7655 -0456 dollar

Ownersrsquo group embedded value per Share (Note 3) 12997 12814 -0183 dollar

Note 1 Basic earnings per Share for the Group= HK$93656 million 1704096489 Shares (being the weighted

average number of Shares in issue during the year 2012) Basic earnings per Share for the Enlarged Group= HK$182440 million (1704096489 Shares+862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 2 Owners net assets value per Share for the Group = HK$1383677 million 1705875092 Shares (being the

number of issued Shares as at 31 December 2012)

Owners net assets value per Share for the Enlarged Group = HK$1966218 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

Note 3 Owners group embedded value per Share for the Group = HK$22172 million 1705875092 Shares (being the number of issued Shares as at 31 December 2012)

Owners group embedded value per Share for the Enlarged Group = HK$32914 million (1705875092 Shares +862735270 Shares (being the maximum number of Consideration Shares to be issued for the Acquisition))

6 LISTING RULE IMPLICATIONS As at the date of this announcement TPG(HK) held approximately 5327 of the total issued share capital of the Company and is a controlling Shareholder TPG owns the entire share capital of TPG(HK) and is the ultimate controlling Shareholder Therefore TPG and TPG(HK) are connected persons of the Company under Chapter 14A of the Listing Rules The Acquisition thus constitutes a connected transaction of the Company under the Listing Rules

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 27 -

As all applicable percentage ratios in respect of the Acquisition calculated in accordance with Chapter 14 of the Listing Rules exceed 25 but are less than 100 the Acquisition constitutes a major and connected transaction of the Company and is subject to the reporting announcement and independent shareholdersrsquo approval requirements under the Listing Rules None of the Directors had any material interest in the transactions contemplated under the Framework Agreement Notwithstanding the fact that Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun Mr PENG Wei and Mr LI Tao are common directors in TPG TPG(HK) and the Company none of them is beneficially interested in any shares in TPG and TPG(HK) or has any personal interest in the proposed Acquisition Therefore none of them had any material interest in the transactions contemplated under the Framework Agreement for which he shall be required to abstain from voting on the board resolutions approving the Framework Agreement and the proposed Acquisition The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder First Shanghai has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder 7 PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL The authorised share capital of the Company is HK$100000000 comprising 2000000000 Shares of which 1705875092 Shares are in issue as at the date of this announcement As part of the terms of the Acquisition the Board proposes to increase the authorised share capital of the Company from HK$100000000 to HK$150000000 by the creation of an additional 1000000000 unissued Shares which rank pari passu in all respects with the existing Shares in the capital of the Company The increase in authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Independent Shareholders at the EGM 8 GENERAL INFORMATION The principal activity of the Company is investment holding The principal activities of the Companyrsquos subsidiaries are the underwriting of direct life insurance business property and casualty insurance business and all classes of reinsurance business Apart from these the Group also carries on operations in pension and group life business asset management E-commerce for insurance and insurance intermediaries The principal activities of TPG and its subsidiaries (including TPG(HK)) are insurance business and securities broking and the holding of various investments 9 EXTRAORDINARY GENERAL MEETING A circular containing among other things (i) further financial information of the Acquisition Targets (ii) the proposed increase in authorized share capital of the Company (iii) review report on the embedded value of TPL and the group embedded value of CTIH (iv) unaudited pro forma financial information of the Enlarged Group (v) valuation reports of the property interests of the TPG Group (vi) the recommendation of the Independent Board Committee (vii) the advice of First Shanghai to the Independent Board Committee and the Independent Shareholders and (viii) the notice of EGM for the purposes of considering and if thought fit approving (a) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (b) the proposed increase in authorized share capital of the Company will be despatched as soon as

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 28 -

practicable and is expected to be despatched on or before 18 June 2013 As at the date of this announcement TPG through TPG(HK) and its associates collectively held 908689405 Shares representing 5327 interests in the Company TPG(HK) and its associates are deemed to have material interests in the transactions contemplated under the Framework Agreement and shall abstain from voting in respect of the resolutions approving the Acquisition at the EGM 10 TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company trading in the Shares and debt securities of China Taiping Capital Limited guaranteed by the Company (Stock Code 4582) on the Stock Exchange has been halted from 100 pm on 24 May 2013 pending the publication of this announcement An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares and the debt securities with effect from 900 am on 28 May 2013 DEFINITIONS Unless the context otherwise requires the following terms in this announcement shall have the meanings set out below ldquoAcquisitionrdquo the proposed acquisition by the Company of the Acquisition Targets

from TPG and TPG(HK) as contemplated under the Framework Agreement

ldquoAcquisition Targetsrdquo the Target Interests and the Target Assets

ldquoAction Profitrdquo Action Profit Development Limited a limited company incorporated in Hong Kong a wholly-owned subsidiary of TPG Action Profit is an inactive company and is one of the Target Companies

ldquoAdjusted Tranche B Considerationrdquo

the aggregate of the Tranche B Consideration and the Post-Agreement Capital Increase Amount

ldquoAgeasrdquo Ageas Insurance International NV (荷蘭富傑保險國際股份有限公

司) (formerly known as Fortis Insurance International NV (富通保險

國際股份有限公司)) a company incorporated in the Netherlands

ldquoassociatesrdquo has the same meaning ascribed to it under the Listing Rules

ldquoBoardrdquo the board of directors of the Company

ldquoBVIrdquo the British Virgin Islands

ldquoCIG Trusteesrdquo CIG Trustees Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) CIG Trustees is principally engaged in the provision of trustee services to members of the Group and is one of the Target Companies

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 29 -

ldquoCIRCrdquo China Insurance Regulatory Commission

ldquoCompanies Ordinancerdquo Companies Ordinance Chapter 32 of the Laws of Hong Kong

ldquoCompanyrdquo or ldquoCTIHrdquo China Taiping Insurance Holdings Company Limited a company incorporated in Hong Kong with limited liability the shares of which are listed on the Main Board of the Stock Exchange

ldquoCompletionrdquo completion of the Acquisition in accordance with the terms of the Framework Agreement and the Specific Agreements

ldquoConsiderationrdquo RMB10581367500 being the aggregate consideration for acquiring the Acquisition Targets assuming that Tranche B Consideration is adjusted by the maximum of Post-Agreement Capital Increase Amount and there is no segregation of Segregated Targets

ldquoConsideration Sharesrdquo new Shares to be allotted and issued by the Company as payment for the Consideration

ldquoCSRCrdquo China Securities Regulatory Commission

ldquoCTPI(HK)rdquo China Taiping Insurance (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoDirectorsrdquo the directors of the Company

ldquoDragon Jaderdquo 龍璧工業區管理（深圳）有限公司 (Dragon Jade Industrial District Management (Shenzhen) Co Ltd) a limited company established in the PRC with limited liability and a wholly-owned subsidiary of TPG(HK) Dragon Jade is principally engaged in property investment and is one of the Target Companies

ldquoEGMrdquo the extraordinary general meeting of the Company to be held to consider and if thought fit to approve (i) the Framework Agreement and the transactions contemplated thereunder and the issue of Consideration Shares and (ii) the proposed increase in authorized share capital of the Company

ldquoEnlarged Grouprdquo the Group immediately after Completion which includes the Target Companies

ldquoFirst Shanghairdquo First Shanghai Capital Limited a corporation licensed to carry out Type 6 regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoFramework Agreementrdquo the framework agreement dated 27 May 2013 entered into by TPG and TPG(HK) as vendors and the Company as purchaser the principal terms of which are set out in the section headed ldquo2 Framework Agreementrdquo in this announcement

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 30 -

ldquoGrouprdquo the Company and its subsidiaries

ldquoHK$rdquo or ldquoHKDrdquo

Hong Kong Dollars the lawful currency of Hong Kong

ldquoHong Kongrdquo the Hong Kong Special Administrative Region of the PRC

ldquoIndependent Board Committeerdquo

the independent board committee of the Company comprising all independent non-executive Directors of the Company namely Dr Wu Jiesi Mr Che Shujian and Mr Lee Kong Wai Conway to make recommendation to the Independent Shareholders in respect of the Framework Agreement and the transactions contemplated thereunder

ldquoIndependent Shareholdersrdquo

the shareholders of the Company other than TPG(HK) and its associates

ldquoIssue Pricerdquo the issue price of the Consideration Shares being HK$1539 per Consideration Share

ldquoLast Trading Daterdquo 24 May 2013 being the last trading day of the Shares before the date of issue of the Announcement

ldquoListing Rulesrdquo the Rules Governing the Listing of Securities on the Stock Exchange

ldquoLujiazui Finance and Trade Zonerdquo

the finance and trade zone located at Lujiazui Shanghai the PRC

ldquoMacaurdquo Macau Special Administrative Region of the PRC

ldquoManordquo Mano Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Mano is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoMing Leerdquo Ming Lee Investment Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Ming Lee is principally engaged in property investment and is one of the Target Companies

ldquoMOFrdquo Ministry of Finance of the PRC

ldquoMOFCOMrdquo Ministry of Commerce of the PRC

ldquoOverseas PampC Targetsrdquo TP Macau TP Singapore TP UK and TP Indonesia

ldquoPacific Asiardquo Pacific Asia Group Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Pacific Asia is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 31 -

ldquoPost-Agreement Capital Increase Adjustmentrdquo

possible adjustment to the Tranche B Consideration based on the principle set out in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPost-Agreement Capital Increase Amountrdquo

has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Consideration ndash Post-Agreement Capital Increase Adjustmentrdquo in this announcement

ldquoPRCrdquo the Peoplersquos Republic of China Except where the context requires otherwise geographical references in this announcement to the PRC or China excludes Hong Kong and Macau

ldquoPRC GAAPrdquo the generally accepted accounting principles of the PRC

ldquoProspect Incrdquo Prospect Inc Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Prospect Inc is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquoPampCrdquo property and casualty insurance business

ldquoRestructuring Proposalrdquo the restructuring proposal submitted by TPG in relation to the proposed restructuring of the TPG Group

ldquoRMBrdquo

Renminbi the lawful currency of the PRC

ldquoSarleyrdquo Sarley International Limited a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of TPG(HK) Sarley is an investment holding company and is one of the Target Companies

ldquoSavills TPMLrdquo Savills Taiping Property Management Limited a company incorporated in Hong Kong with limited liability Savills TPML is owned as to 45 by Savills Property Management Limited 30 by China Life Insurance (Overseas) Company Limited and 25 by TPG(HK) Savills TPML is principally engaged in property management business and is one of the Target Companies

ldquoSegregated Targetsrdquo has the meaning as defined in the paragraph headed ldquo2 Framework Agreement ndash (C) Adjustment to the Considerationrdquo in this announcement

ldquoSFOrdquo Securities and Futures Ordinance Chapter 571 of the Laws of Hong Kong

ldquoShare(s)rdquo the ordinary shares of HK$005 each in the share capital of the Company

ldquoShareholder(s)rdquo the holder(s) of the Share(s)

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 32 -

ldquoSpecific Agreementsrdquo the various specific sale and purchase agreements to be entered into by TPG andor TPG(HK) as vendor(s) and the Company as purchaser in respect of the Acquisition Targets

ldquoStock Exchangerdquo The Stock Exchange of Hong Kong Limited

ldquosubstantial shareholderrdquo has the meaning ascribed to it under the Listing Rules

ldquoSZTPIrdquo

深圳市太平投資有限公司 (Shenzhen Taiping Investment Company Limited) a limited company established in the PRC a wholly-owned subsidiary of TPG SZTPI is an inactive company and is one of the Target Companies

ldquoTaiping Real Estate Shanghairdquo

Taiping Real Estate Shanghai Company Limited a limited company established in the PRC owned as to 61 by TPIH and 39 by TPL

ldquoTarget Assetsrdquo the TPG Target Assets and the TPG(HK) Target Assets

ldquoTarget Companiesrdquo TPL TPI TPP TP Indonesia TPAM TPFAS TPFSC Action Profit SZTPI TP Singapore TP Macau TP UK TPFH TP Japan CIG Trustees Savills TPML TPIH Dragon Jade Ming Lee Pacific Asia Walkman Mano Prospect Inc Sarley and Toplap collectively (each a ldquoTarget Companyrdquo)

ldquoTarget Interestsrdquo the TPG Target Interests and the TPG(HK) Target Interests

ldquoToplaprdquo

Toplap Investments Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 90 is directly owned by TPG(HK) 10 owned by wholly-owned subsidiaries of TPIH) Toplap is an inactive company and is one of the Target Companies

ldquoTP Indonesiardquo

PT China Taiping Insurance Indonesia a limited company incorporated in Indonesia owned as to 55 by TPG and 45 by PT Megah Putra Manunggal TP Indonesia is principally engaged in property and casualty insurance business in Indonesia and is one of the Target Companies

ldquoTP Japanrdquo China Taiping Insurance Service (Japan) Co Ltd a company incorporated in Japan with limited liability and a wholly-owned subsidiary of TPG(HK) TP Japan is principally engaged in insurance agency business in Japan and is one of the Target Companies

ldquoTP Macaurdquo China Taiping Insurance (Macau) Company Limited a company incorporated in Macau with limited liability and a wholly-owned subsidiary of TPG(HK) (of which 98 is directly held by TPG(HK) 1 is held by TPIH and 1 is held by CIG Trustees TPIH and CIG Trustees were holding such shares in trust for TPG(HK)) TP Macau is principally engaged in property and casualty insurance business in Macau and is one of the Target Companies

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 33 -

ldquoTP Singaporerdquo China Taiping Insurance (Singapore) PTE Ltd a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of TPG(HK) TP Singapore is principally engaged in property and casualty insurance business in Singapore and is one of the Target Companies

ldquoTP UKrdquo China Taiping Insurance (UK) Company Limited a company incorporated in the United Kingdom with limited liability and a wholly-owned subsidiary of TPG(HK) TP UK is principally engaged in property and casualty insurance business in the United Kingdom and is one of the Target Companies

ldquoTPAMrdquo 太 平 資 產 管 理 有 限 公 司 (Taiping Asset Management Company Limited) a limited liability company established in the PRC owned as to 60 by the Company 20 by TPG and 20 by Ageas TPAM is principally engaged in the provision of investment consultancy services and is one of the Target Companies

ldquoTPA(HK)rdquo

Taiping Assets Management (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPeCrdquo 太平電子商務有限公司 (Taiping eCommerce Company Limited) a limited company established in the PRC owned as to 80 by the Company and 20 by Ageas

ldquoTPFASrdquo

太平金融稽核服務（深圳）有限公司 (Taiping Financial Audit Service (Shenzhen) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFAS is principally engaged in the provision of internal audit services for the Group and the TPG Group and is one of the Target Companies

ldquoTPFHrdquo Taiping Financial Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPFH is an investment holding company and is one of the Target Companies

ldquoTPFSCrdquo

太平共享金融服務（上海）有限公司 (Taiping Financial Service Centre (Shanghai) Company Limited) a limited liability company established in the PRC and a wholly-owned subsidiary of TPG TPFSC is principally engaged in the provision of back office services for the Group and the TPG Group and is one of the Target Companies

ldquoTPGrdquo 中國太平保險集團公司 (China Taiping Insurance Group Co) a state-owned enterprise (全民所有制企業) established in the PRC and the ultimate holding company of the Company holding an effective interest of approximately 5327 in the Company as at the date of this announcement

ldquoTPG Grouprdquo TPG and its subsidiaries for the purpose of this announcement excluding the Group

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 34 -

ldquoTPG Target Assetsrdquo certain assets and liabilities of TPG details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG Target Interestsrdquo (1) 2505 equity interests in TPL (2) 3879 equity interests in TPI (3) 4 equity interests in TPP (4) 55 of the issued share capital of TP Indonesia (5) 20 equity interest in TPAM (6) 100 equity interests of TPFAS (7) 100 equity interests of TPFSC (8) entire issued share capital of Action Profit and (9) 100 equity interests of SZTPI

ldquoTPG(HK)rdquo China Taiping Insurance Group (HK) Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG

ldquoTPG(HK) Target Assetsrdquo

certain assets and liabilities of TPG(HK) details of which are set out in the paragraph headed ldquo3 Information on the Acquisition Targets ndash (B) Segmental Information on the Acquisition Targets ndash (3) Tranche C Targets ndash (v) Other companies and Target Assetsrdquo in this announcement

ldquoTPG(HK) Target Interestsrdquo

(1) entire issued share capital of TP Singapore (2) entire issued share capital of TP Macau (3) entire issued share capital of TP UK (4) entire issued share capital of TPFH (5) entire issued share capital of TP Japan (6) entire issued share capital of CIG Trustees (7) 25 of issued share capital of Savills TPML (8) entire issued share capital of TPIH (9) 100 equity interests of Dragon Jade (10) entire issued share capital of Ming Lee (11) entire issued share capital of Pacific Asia (12) entire issued share capital of Walkman (13) entire issued share capital of Mano (14) entire issued share capital of Prospect Inc (15) entire issued share capital of Sarley and (16) 90 of issued share capital of Toplap

ldquoTPIrdquo 太 平 財 產 保 險 有 限 公 司 (Taiping General Insurance Company Limited) a limited liability company established in the PRC owned as to 6121 by the Company and 3879 by TPG TPI is principally engaged in property and casualty insurance business in the PRC and is one of the Target Companies

ldquoTPIHrdquo Taiping Investment Holdings Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) TPIH is principally engaged in property investment and is one of the Target Companies

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 35 -

ldquoTPLrdquo 太平人壽保險有限公司(Taiping Life Insurance Company Limited) a limited liability company established in the PRC owned as to 5005 by the Company 2505 by TPG and 2490 by Ageas TPL is principally engaged in life insurance business in the PRC and is one of the Target Companies

ldquoTPPrdquo

太平養老保險股份有限公司 (Taiping Pension Company Limited) a joint stock limited company established in the PRC owned as to 96 by the Company and 4 by TPG TPP is principally engaged in corporate and personal retirement insurance and annuity businesses in the PRC and is one of the Target Companies

ldquoTPRBrdquo Taiping Reinsurance Brokers Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPRerdquo Taiping Reinsurance Company Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

ldquoTPSIrdquo 太平養老產業投資有限公司 (Taiping Senior Living Investments Co Ltd) a limited liability company established in the PRC and a wholly-owned subsidiary of TPL

ldquoTranche A Completionrdquo completion of the sale and purchase of the Tranche A Targets

ldquoTranche A Completion Daterdquo

the date on which the amendments to the articles of association of TPL relevant to the transfer of 2505 equity interest in TPL from TPG to the Company having been approved by the CIRC or such later date as TPG and the Company may agree in writing

ldquoTranche A Considerationrdquo

RMB7011311200 being the consideration for the sale and purchase of the Tranche A Targets

ldquoTranche A Targetsrdquo 2505 equity interest in TPL

ldquoTranche B Completionrdquo completion of the sale and purchase of the Tranche B Targets

ldquoTranche B Completion Daterdquo

the date on which the amendments to the articles of association of TPI TPP and TPAM relevant to the transfer of 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM from TPG to the Company having been approved by the CIRC (if such approvals are granted on various dates the latest of such dates) or such later date as TPG and the Company may agree in writing

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 36 -

ldquoTranche B Considerationrdquo

RMB1606194000 being the consideration for the sale and purchase of the Tranche B Targets (before Post-Agreement Capital Increase Adjustment)

ldquoTranche B Targetsrdquo 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM

ldquoTranche C Completionrdquo completion of the sale and purchase of the Tranche C Targets

ldquoTranche C Completion Daterdquo

the date on which all necessary approvals and industrial and commerce registration procedures in respect of the transfer of the Tranche C Targets have been completed in accordance with the Specific Agreement(s) in respect of the Tranche C Targets (if such approvals and registration procedures are completed on various dates the latest of such dates) or such later date as TPG TPG(HK)and the Company may agree in writing

ldquoTranche C Considerationrdquo

RMB1699912300 being the consideration for the sale and purchase of the Tranche C Targets (assuming there is no segregation of Segregated Targets)

ldquoTranche C Targetsrdquo all Target Interests other than 2505 equity interest in TPL 3879 equity interest in TPI 4 equity interest in TPP and 20 equity interest in TPAM and the Target Assets

ldquoWalkmanrdquo Walkman Limited a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of TPG(HK) Walkman is principally engaged in the provision of back-to-back financing arrangement to members of the Group and is one of the Target Companies

ldquordquo per cent

In this announcement unless otherwise stated amounts in Renminbi have been converted into Hong Kong dollars at the rate of RMB1 = HK$123327 for the purpose of illustration only and does not constitute a representation that any amount has been could have been or may be converted The English names of the PRC entities referred to in this announcement are translations from their Chinese names and are for identification purposes only If there is any inconsistency the Chinese name shall prevail

By order of the board of China Taiping Insurance Holdings Company Limited

WANG Bin Chairman

Hong Kong 27 May 2013 As at the date of this announcement the Board comprises 8 Directors of which Mr WANG Bin Mr SONG Shuguang Mr XIE Yiqun and Mr PENG Wei are executive Directors Mr LI Tao is a non-executive Director and Dr WU Jiesi Mr CHE Shujian and Mr LEE Kong Wai Conway are independent non-executive Directors This announcement is posted on the website of the Stock Exchange at wwwhkexnewshk and on the website of the Company at wwwctihcntaipingcom

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 37 -

APPENDIX ndash MANAGEMENT DISCUSSION AND ANALYSIS OF TARGET COMPANIES In respect of the Tranche A Targets and Tranche B Targets which are the existing consolidated but non-wholly-owned subsidiaries of the Group namely TPL TPI TPAM and TPP their financial performance over the past three years are discussed in the MRampA MDampA section of the Companyrsquos publicly available annual and interim reports In respect of the Tranche C Targets the discussion focuses on the target companies with continuing operating activities Such discussion is divided into five parts (1) Overseas PampC insurance business carried out by TP Macau TP Singapore TP UK and TP Indonesia (2) Property investment carried out by TPIH Dragon Jade and Ming Lee (3) Securities broking business carried out by TPFH (4) Financial support services business carried out by TPFAS and TPFSC and (5) Other businesses carried out by TP Japan CIG Trustees and Savills TPML Their financial performance over the past three years is discussed as follows A OVERSEAS PROPERTY AND CASUALTY INSURANCE BUSINESS I) TP Macau Business Overview

Taiping Insurance (Macau) Company Limited is a limited company incorporated in Macau and commenced operation since 1952 TP Macau is registered under the Macau Insurance Ordinance as an insurer to underwrite general insurance business in Macau including among others Property Liability Construction All Risks Motor and Employeersquos Compensation TP Macau is the market leader in the Macau general insurance industry with the highest market share of 272 in terms of premium income as of 31 December 2012

TP Macau is rated A by international rating agency

The figures below are the results of TP Macau from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 40654 30151 26846Underwriting profit 2924 2274 1422Profit before tax 8267 3177 3996Profit after tax 7341 2794 3521 Rate of Equity Return (ldquoROErdquo) 1 311 145 209Technical reserves ratio 1440 1383 1330Retained ratio 630 651 620Earned premiums ratio 548 599 600Combined ratio 869 874 912 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1627 to HK$7341 million in 2012 from HK$2794 million in 2011 as a result of strong premium growth and better investment performance Net profit decreased by 206 to HK$2794 million in 2011 from HK$3521 million in 2010 mainly due to poor market conditions in 2011

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 38 -

Gross premiums written increased by 348 to HK$40654 million in 2012 from HK$30151 million in 2011 as a result of increased business volumes Gross premiums written increased by 123 to HK$30151 million in 2011 from HK$26846 million in 2010 as TP Macau maintained its leading market share

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012 of Total 2011 of Total 2010 of Total Motor 7469 184 5951 197 4176 156Marine 404 10 396 13 356 13Non-Marine 1 32781 806 23804 790 22314 831 Total gross premiums written 40654 1000 30151 1000 26846 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 869 874 and 912 in 2012 2011 and 2010 respectively Net claims incurred increased by 263 to HK$11461 million in 2012 from HK$9073 million in 2011 The expense ratio improved to 354 in 2012 from 372 in 2011 and 441 in 2010 due to higher growth achieved in net earned premiums relative to underwriting expenses Net claims incurred increased by 195 to HK$9073 million in 2011 from HK$7595 million in 2010

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

of Total

2010

ofTotal

Debt securities 24525 420 19876 411 17130 412Cash and bank deposits 24436 419 21595 447 15155 364Equity investment 3742 64 4887 101 6369 153Others １ 5655 97 1975 41 2951 71 Total invested assets 58358 1000 48333 1000 41605 1000

1 Includes investment funds and investment properties

Due to poor equity market conditions during the reporting periods investments in equity

securities were reduced from 153 in 2010 to 64 in 2012

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 1714 1446 1311Total investment income 2 4929 854 2502 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposit 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses)

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 39 -

Total investment income increased by 4772 to HK$4929 million in 2012 from HK$854 million in 2011 due to higher net unrealized gains on investments in debt securities Total investment income decreased by 659 to HK$854 million in 2011 from HK$2502 million in 2010 due to poor market conditions

Administrative and Other Expenses

Administrative and other expenses were HK$4102 million HK$3877 million and HK$4599 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs and other costs

Financial Strength and Solvency Margin

The solvency margin ratios of TP Macau under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 23959 17985 16404Minimum Statutory Solvency Margin 11286 8600 7761 Solvency Margin Ratio 2123 2091 2114

ii Financial Position

TP Macaursquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Macau had bank and cash balances of HK$24436 million HK$21595 million and HK$15155 million respectively As at 31 December 2012 2011 and 2010 TP Macau had no bank or third party borrowings and had net assets of HK$27337 million HK$19816 million and HK$18608 million respectively

iii Capital Structure

TP Macau did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As at 31 December 2012 the registered and paid in capital of TP Macau was HK$7700 million TP Macau is contemplating to increase its paid up capital to HK$1155 million by capitalization of its reserve of MOP40 million (equivalent to HK$385 million)

iv Dividend Payout History

The dividend payout of TP Macau for the three years ended 31 December 2012 2011 and 2010

are as follows

(HK$ million) 2012 2011 2010 Dividend (Note 1) 1602 1202

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010 and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2944 2432 2977 Number of employees 64 63 62 The remuneration policies of TP Macau are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 40 -

vi Details of Charges on Assets

The following assets have been pledged in favour of Autoriodade Monetaacuteria de Macau to

guarantee the technical reserves in accordance with the Macau Insurance Ordinance (HK$ million) 2012 2011 2010 Pledged deposits and bank balances 9855 7004 5274 Investment in securities 27358 22093 19557 Investment properties 3425 1974 2952 Land and buildings 819 921 942 Total pledged assets 41457 31992 28725

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Macaursquos operations are mainly located in Macau and its transactions are denominated in Hong

Kong Dollars Macau Patacas and United States Dollars TP Macau monitors its foreign exchange exposures and will consider hedging significant currency exposures should the need arise

II) TP Singapore Business Overview

China Taiping Insurance (Singapore) PTE Ltd is incorporated in the Republic of Singapore in 1938 with its principal place of business and registered office in Singapore TP Singapore was registered as a direct general insurer on December 16 2002 under the Insurance Act Chapter 142 to underwrite general insurance business including Motor Workmenrsquos Compensation Marine Cargo Marine Hull Fire Bonds Personal Accident Health Public Liability EngineeringCAREAR Professional Indemnity and others As of 31 December 2012 TP Singapore ranks number fourteen in terms of premium income and has achieved a market share of 21 in Singapore

TP Singapore is rated A- by international rating agency

The figures below are the results of TP Singapore from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 45100 43504 36814Underwriting profit 5326 5119 4803Profit before tax 10757 6622 8396Profit after tax 8983 5616 7104 Rate of Equity Return (ldquoROErdquo) 1 151 105 161Technical reserves ratio 2047 2063 2016Retained ratio 825 813 812Earned premiums ratio 807 715 854Combined ratio 854 835 847

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 41 -

Net Profit and Gross Premiums Written

Net profit increased by 600 to HK$8983 million in 2012 from HK$5616 million in 2011 mainly due to higher underwriting profits in 2012 and an increase in fair value of investment property in 2012 Net profit decreased by 209 to HK$5616 million in 2011 from HK$7104 million in 2010 mainly due to impairment loss on securities of HK$942 million and higher net realized investment loss in 2011

Gross premiums written increased slightly by 37 to HK$45100 million in 2012 from HK$43504 million in 2011 mainly due to a 67 growth in non-marine business Gross premiums written increased by 182 to HK$43504 million in 2011 from HK$36814 million in 2010 mainly due to a 193 growth in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 ofTotal 2011

ofTotal 2010

ofTotal

Motor 16692 370 15798 363 13277 361Marine 4036 90 4861 112 4381 119Non-marine 1 24372 540 22845 525 19156 520 Total gross premiums written 45100 1000 43504 1000 36814 1000

1 Includes workmenrsquos compensation fire bonds personal accident health public liability engineeringCAREAR professional indemnity and other

Net Claims Incurred and Combined Ratio

The combined ratio was 854 835 and 847 in 2012 2011 and 2010 respectively Net claims incurred increased by 224 to HK$18182 million in 2012 from HK$14856 million in 2011 The expense ratio improved to 354 in 2012 from 358 in 2011 mainly because of higher net premiums growth relative to underwriting expenses in 2012 Net claims incurred decreased by 109 to HK$14856 million in 2011 from HK$16667 million in 2010 The expense ratio increased to 357 in 2011 from 317 in 2010 mainly attributable to an increase in net commission expenses and underwriting expenses in 2011 Investment Performance

The composition of investments was as follows

(HK$ million) 2012 ofTotal 2011

ofTotal 2010

ofTotal

Debt securities 74132 496 60437 467 49644 415 Cash and bank deposits 47469 318 45309 350 47515 397 Equity investment 12867 86 12987 100 15744 131Others 1 15010 100 10695 83 6786 57 Total invested assets 149478 1000 129428 1000 119689 1000

1 Includes investment funds and investment properties

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 42 -

The total investment income on a pre-tax basis recognized in the income statement was as follows

(HK$ million) 2012 2011 2010 Net investment income 1 3487 3603 3171Total investment income 2 5978 1281 4436

1 Net investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

2 Total investment income is the summation of net investment income and net realizedunrealized investment gains(losses)

Total investment income increased by 3666 to HK$5978 million in 2012 from HK$1281

million in 2011 mainly due to increase in fair value of investment properties recognized in 2012 Total investment income in 2011 decreased to HK$1281 million from HK$4436 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses were HK$6999 million HK$6104 million and HK$6619 million in 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Singapore under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 79291 59845 54811Minimum Statutory Solvency Margin 36877 26603 23562 Solvency Margin Ratio 2150 2250 2326

ii Financial Position

TP Singaporersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 2011 and 2010 TP Singapore had bank and cash balances of HK$47469 million HK$45309 million and HK$47515 million respectively As at 31 December 2012 2011 and 2010 TP Singapore had no bank or third party borrowings and had net assets of HK$66057 million HK$52265 million and HK$50597 million respectively

iii Capital Structure

TP Singapore did not issue any shares during the three years ended 31 December 2012 2011 and

2010 As of 31 December 2012 the registered and paid in capital of TP Singapore was HK$31405 million

iv Dividend Payout History The dividend payout of TP Singapore for the three years ended 31 December 2012 2011 and

2010 are as follows

(HK$ million) 2012 2011 2010 Dividend Note 1 2697 1640

Note 1 Due to the possible restructuring of TPG the dividend payment was put on hold

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 43 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as of 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 4935 4171 3852Number of employees 94 94 93 The remuneration policies of TP Singapore are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets were held as cash collateral in respect of insurance bonds issued on behalf of

customers and for credit terms granted to agents (HK$ million) 2012 2011 2010 Bank deposits 5620 5237 5287

In addition a bank deposit of HK$301 million was pledged as a statutory deposit and bank

covenant as at 31 December 2010 as required by Section 14(1) of the Insurance Act of the Republic of Singapore The statutory deposit was cancelled during the year 2011

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Singaporersquos operations are mainly located in Singapore and its transactions are primarily

denominated in Singapore Dollars United States Dollars and Hong Kong Dollars TP Singapore managed its foreign exchange exposures by using the natural hedges which arise from offsetting assets and liabilities that are denominated in foreign currencies

viii Contingent Liabilities

TP Singapore did not have any material contingent liabilities for the three years ended 31

December 2012 2011 and 2010

III) TP UK Business Overview

China Taiping Insurance (UK) Company Limited is a limited company incorporated in the UK in 1983 It has a registered and paid-in capital of HK$18797 million as of 31 December 2012 TP UK mainly operates in the small to medium retail market writing Traders Combined Business through appointed brokers or directly with its customers Such business accounts for more than 90 of its gross premiums written of HK$17972 million in 2012 (2011 HK$17666 million) which after reinsurance cessions results in net premiums written of HK$14104 million in 2012 (2011 HK13142 million)

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 44 -

The figures below are the results of TP UK from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Gross premiums written 17972 17666 16281Underwriting profit(loss) 399 614 (7113)Profit(Loss) before tax 3686 901 (3499)Profit(Loss) after tax 2719 934 (2824) Rate of Equity Return (ldquoROErdquo) 1 116 43 (129)Technical reserves ratio 2168 2615 3413Retained ratio 785 744 613Earned premiums ratio 777 696 599Combined ratio 972 950 1729

1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 1911 to HK$2719 million in 2012 from HK$934 million in 2011 mainly due to significantly higher total investment income from realizing gains in equity investments Net profit increased to HK$934 million in 2011 from a HK$2824 million net loss in 2010 mainly due to a decline in net claims incurred

Gross premiums written increased by 17 to HK$17972 million in 2012 from HK$17666 million in 2011 mainly due to an increase in non-marine business Gross premiums written increased by 85 to HK$17666 million in 2011 from HK$16281 million in 2010 mainly due to the underlying growth in the market

The detailed breakdown of gross premiums written was as follows

(HK$ million) Business Line 2012

ofTotal 2011

of Total 2010

ofTotal

Motor 346 19 301 17 257 16Marine 019 01 039 02 023 01Non-marine 1 17607 980 17326 981 16001 983 Total gross premiums written 17972 1000 17666 1000 16281 1000

1 Includes fire engineering personnel accident travel insurance hospital cash and others

Net Claims Incurred and Combined Ratio

The combined ratio was 972 950 and 1729 in 2012 2011 and 2010 respectively Net claims incurred increased by 289 to HK$6418 million in 2012 from HK$4980 million in 2011 The expense ratio improved to 512 in 2012 from 545 in 2011 as a result of more strengthened measurers in budget management Net claims incurred decreased by 531 to HK$4980 million in 2011 from HK$10624 million in 2010 The expense ratio improved to 545 in 2011 from 640 in 2010 which was attributable to the implementation of new measures for budget management in 2011

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 45 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011 of Total 2010 of Total Debt securities 29028 621 25933 517 25194 500Cash and bank deposits 13402 287 11765 234 12418 247Equity investment 1589 34 4140 82 4185 83Investment funds 2691 58 8379 167 8573 170 Total invested assets 46710 1000 50217 1000 50370 1000 The total investment income on a pre-tax basis recognized in the income statement was as

follows

(HK$ million) 2012 2011 2010 Net investment income 1 1810 1765 1166Total investment income 2 4413 552 4132 1 Net investment income mainly consists of fixed investment income such as interest income from

debt securities and bank deposits 2 Total investment income is the summation of net investment income and net realizedunrealized

investment gains(losses) Total investment income increased by 7 times to HK$4413 million in 2012 from HK$552

million in 2011 mainly due to net realized investment gains of HK$1233 million in 2012 from the sale of equity investments Total investment income decreased by 866 to HK$552 million in 2011 from HK$4132 million in 2010 due to poor equity market conditions

Administrative and Other Expenses

The administrative and other expenses in 2012 2011 and 2010 were HK$5350 million HK$4365 million and HK$5214 million respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP UK under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 25141 22192 20521Minimum Statutory Solvency Margin 3739 3661 4100 Solvency Margin Ratio 6724 6062 5005

ii Financial Position

TP UKrsquos capital and other expenditures are mainly funded by contributions from the shareholder

and cash generated from operations As at 31 December 2012 2011 and 2010 TP UK had bank and cash balances of HK$13402 million HK$11765 million and HK$12418 million respectively As at 31 December 2012 2011 and 2010 TP UK had no bank or third party borrowings and had net assets of HK$25203 million HK$21652 million and HK$20386 million respectively

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 46 -

iii Capital Structure

TP UK did not issue any shares for the three years ended 31 December 2012 2011 and 2010 As

at 31 December 2012 the registered and paid in capital of TP UK was HK$18797 million

iv Dividend Payout History No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 2959 1916 2195Number of employees 37 39 37 The remuneration policies of TP UK are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged to comply with the requirements of Commissariat aux

Assurances of Luxembourg for guarantee funds and to comply with the requirement of the landlord of the TP UKrsquos office in the Netherlands

(HK$ million) 2012 2011 2010 Bank deposits pledged as guarantee fund 008 007 007Bank deposit pledged as required by landlord 125 120 120 Total pledged assets 133 127 127

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP UKrsquos operations are mainly located in the UK and its transactions are primarily denominated

in Pound Sterling TP UK monitors its foreign exchange exposure and will consider hedging significant currency exposures should the need arise

IV) TP Indonesia Business Overview PT China Taiping Insurance Indonesia is jointly owned by TPG (55) and PT Megah Putra Manunggal (45) TP Indonesia is engaged in general insurance business including Fire Motor Vehicle Engineering Marine Cargo and General It commenced operations in September 1990 and obtained license to operate as a joint venture non-life insurance business in June 1996 TP Indonesia obtained license to engage in health insurance business in December 2000 TP Indonesia is domiciled in Jakarta Indonesia

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 47 -

The figures below are the results of TP Indonesia from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Gross premiums written 8859 9048 6184Underwriting profit 539 438 174Profit before tax 820 556 147 Profit after tax 699 480 166 Rate of Equity Return (ldquoROErdquo) 1 108 97 37Technical reserves ratio 987 961 903Retained ratio 246 249 286Earned premiums ratio 236 211 286Combined ratio 742 771 901 1 ROE is calculated by profit after tax based on average shareholdersrsquo equity

Net Profit and Gross Premiums Written

Net profit increased by 456 to HK$699 million in 2012 from HK$480 million in 2011 mainly due to the steady growth of its underwriting profit and an increase in investment income Net profit increased by 1892 to HK$480 million in 2011 from HK$166 million in 2010 due to solid premium growth and better underwriting performance

Gross premiums written decreased by 21 to HK$8859 million in 2012 from HK$9048 million in 2011 primarily due to unfavourable exchange rate fluctuations (excluding the effects of foreign exchange gross premiums written would have increased by 44) Gross premiums written increased by 463 to HK$9048 million in 2011 from HK$6184 million in 2010 mainly due to a substantial increase in non-marine business

The detailed breakdown of gross premiums written was as follows

(HK$ million)

Business Line 2012 of Total 2011

ofTotal 2010

of Total

Motor 704 79 750 83 553 89Marine 1834 207 1450 160 720 117Non-marine 1 6321 714 6848 757 4911 794 Total gross premiums written 8859 1000 9048 1000 6184 1000

1 Includes fire engineering and General

Net Claims Incurred and Combined Ratio

The combined ratio was 742 771 and 901 in 2012 2011 and 2010 respectively Net claims incurred increased by 151 to HK$784 million in 2012 from HK$681 million in 2011 The expense ratio improved to 367 in 2012 from 414 in 2011 which was primarily due to effective expense controls Net claims incurred decreased by 149 to HK$681 million in 2011 from HK$800 million in 2010 The expense ratio improved to 414 in 2011 from 449 in 2010 which was attributable to higher commission income earned in 2011

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 48 -

Investment Performance

The composition of investments was as follows

(HK$ million) 2012 of Total 2011

of Total

2010

of Total

Debt securities 1259 117 1233 162 1245 193 Equity securities 009 01 010 01 010 01 Cash and bank deposits 9500 882 6380 837 5210 806 Total invested assets 10768 1000 7623 1000 6465 1000

The total investment income on a pre-tax basis recognized in the income statement was as

follows (HK$ million) 2012 2011 2010 Net and total investment income 418 332 294

1 Net and total investment income mainly consists of fixed investment income such as interest income from debt securities and bank deposit

Total investment income was HK$418 million during 2012 which consisted of interest income

from bank deposits and debt securities Total investment income was relatively stable for the three years ended 31 December 2012 2011 and 2010 and there was no significant change in the investment environment throughout the years

Administrative and Other Expenses

Administrative and other expenses were HK$1478 million HK$1367 million and HK$1148 million for the years ended 31 December 2012 2011 and 2010 respectively which mainly consisted of staff costs rental expenses and other expenses

Financial Strength and Solvency Margin

The solvency margin ratios of TP Indonesia under local insurance regulations were as follows

(HK$ million) 2012 2011 2010 Actual Solvency Margin 6341 3709 3173Minimum Statutory Solvency Margin 1558 1062 995 Solvency Margin Ratio 4070 3492 3189

ii Financial Position

TP Indonesiarsquos capital and other expenditures are mainly funded by contributions from the

shareholders and cash generated from operations As at 31 December 2012 2011 and 2010 TP Indonesia had bank and cash balances of HK$9500 million HK$6380 million and HK$5210 million respectively As at 31 December 2012 2011 and 2010 TP Indonesia had no bank or third party borrowings and had net assets of HK$7877 million HK$5044 million and HK$4612 million respectively

iii Capital Structure

TP Indonesia did not issue any shares during the two years ended 31 December 2011 and 2010 In

the year 2012 the shareholders of TP Indonesia approved the increase of the authorized issued and paid-up capital from HK$3256 million to HK$5698 million Additional capital was contributed by the existing shareholders resulting in no change in the ownership structure These changes were approved by the Minster of Law and Human Rights of the Republic of Indonesia on 23 January 2013 As at 31 December 2012 the registered and paid in capital of TP Indonesia was HK$3256 million and the cash received on additional capital of HK$2442 million was recorded as other paid-up capital

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 49 -

iv Dividend Payout History

No dividend was declared in respect of the three years ended 31 December 2012 2011 and 2010

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010 Total remuneration 1041 913 762 Number of employees 75 77 72 The remuneration policies of TP Indonesia are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Details of Charges on Assets The following assets have been pledged as guarantee fund in accordance with Government

Regulation of the Republic of Indonesia (HK$ million) 2012 2011 2010 Bank deposits 285 302 217Investment in debt securities 407 432 435 Total pledged assets 692 734 652

vii Exposure to Fluctuations in Exchange Rates and Related Hedges TP Indonesiarsquos operations are mainly located in Indonesia and its transactions are primarily

denominated in United States Dollars TP Indonesia has a policy to maintain its assets denominated in foreign currencies at a higher level than its liabilities and to regularly exchange these assets to local currency at the right moment TP Indonesia also monitors its foreign exchange exposures by matching the receipts and payments in each individual currency

B PROPERTY INVESTMENT BUSINESS

Companies involved in property investment include TPIH Dragon Jade and Ming Lee which derive the majority of their respective book value from various offices and car parking properties spanning tier-1 cities in the PRC as well as Hong Kong and Macau most of which are for rent (the rest are for self-use) providing a constant and stable cash flow stream The largest holdings include the Shanghai Taiping Finance Tower located in the heart of the Lujiazui Finance and Trade Zone in Shanghai the PRC Collectively these property investment companies represent a net asset value to be transacted of HK$ 4651 million as at 31 December 2012 after adjusting for all inter-group balances between the relevant Target Companies and TPGTPG(HK) which will be eliminated in the consolidated account of the Enlarged Group

Set out below is a summary discussion of the key financial statement items of TPIH Dragon Jade

and Ming Lee which constitute the majority of our property investment operations for the three years ended 31 December 2010 to 2012

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 50 -

I) TPIH Business Overview

Taiping Investment Holdings Company Limited (ldquoTPIHrdquo) is a limited company incorporated in Hong Kong It has a registered and paid-in capital of HK$21500 million as of 31 December 2012 TPIH principally acts as an investment holding company and generates its revenue from property rental income interest income and dividend income TPIH holds properties in PRC Hong Kong and Macau The major properties held by TPIH include Taiping Finance Tower in Shanghai the PRC 18 units in Beijing Wangfujing Century Plaza in Beijing the PRC 34 residential units in Profit Mansion Hong Kong and a residential unit in Macau The properties are leased out to procure rental income

On 28 December 2012 TPIH had entered the sales and purchases agreement with TPG (HK) in

relation to the disposal of its wholly owned subsidiary Tellon Development Limited (Tellon) including its subsidiary associates and available-for-sale investments under segment of other businesses (Tellon subgroup) Tellon subgroup had an aggregate net asset value of HK$102912 million and was sold for a total consideration of HK$339140 million Subsequent to 31 December 2012 the disposal of Tellon subgroup was completed by the end of March 2013 upon the fulfilment of all required legal procedures The Tellon subgroup assets and liabilities were recorded in the assets classified as held for sale section of the TPIH accountantsrsquo report for the year ended 31 December 2012

For the year ended 31 December 2012 the Tellon subgroup generated total income of HK$12645

million representing 153 of the consolidated revenue of TPIH for the same period For the year ended 31 December 2012 the Tellon subgroup generated profit after tax of HK$11162 million representing 211 of the consolidated profit after tax of TPIH for the same period

The figures below are the results of TPIH (excluding Tellon subgroup) from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Rental income 20595 6884 607Interest income and dividend income 7003 4408 1722Change in fair value in investment properties 36439 109178 40398Gain on disposal of an associate - 38616 -Gain on disposal of properties and other investment 376 13716 -Administrative expenses (8734) (16430) (2791)Finance costs (8236) (3905) (3321)Profit before tax 53074 158231 37530Profit after tax 41851 127236 27612

Revenue

Rental income for the years ended 31 December 2012 2011 and 2010 amounted to HK$20595

million HK$6884 million and HK$607 million respectively The substantial increase in rental income over prior years is primarily due to the rental income from Taiping Finance Tower in Shanghai which was available for leasing from 2011

Profit after tax

Profit after tax for year ended 31 December 2011 was HK$127236 million which was

exceptionally high as compared with 2012 and 2010 primarily due to an extraordinary and non-recurring revaluation gain arising from the completion of construction of the Taiping Finance Tower in Shanghai in 2011 In addition a gain on disposal of an associate was recorded in 2011 of HK$38616 million relating to the sale of TPIHrsquos 30 equity interest in Shenzhen Futian Gas Turbine Power Co Ltd and a gain on disposal of property in 2011 was derived from the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 51 -

Administrative expense

Administrative expenses was HK$8734 million HK$16430 million and HK$2791 million for

the years ended 31 December 2012 2011 and 2010 respectively The significant increase in 2011 was mainly due to the significant business taxes and additional charges incurred for the disposal of certain gross floor area of Taiping Finance Tower in Shanghai to TPL Finance costs

Finance costs increased by 1109 to HK$8236 million in 2012 from HK$3905 million in 2011

and increased by 176 to HK$3905 million in 2011 from HK$3321 million in 2010 primarily due to increase in the size of total borrowings

ii Properties Information

As at 31 December 2012 2011 and 2010 TPIH had interest in properties with carrying amount

of HK$532443 million HK$491808 million and HK$337346 million The following table illustrates the detail of TPIHrsquos investment properties as of 31 December 2012

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value as at 28220131

Taiping Finance Tower Pudong New

District Shanghai

Commercial Mainly leasing out to third parties (the rest for self-use)

497564 498058

Beijing Wangfujing Century Plaza

Beijing Commercial Leasing out to third parties

18916 19028

Profit Mansion Kowloon Hong Kong

Residential Leasing out to third parties

7125 7319

Tung Hip Commercial Building

Hong Kong Commercial Leasing out to third party

3220 3220

Wu Ye Shi Dai Xin Ju

Futian DistrictShenzhen

Residential Leasing out to third parties

2844 2854

City Garden Hong Kong Car parking spaces

Leasing out to third parties

1330 1330

The Residencia Macau

Macau Residential Leasing out to third party

533 578

Wing Wah Building

Kowloon Hong Kong

Residential Leasing out to third party

284 284

425M Queenrsquos Road West

Hong Kong Residential Leasing out to third party

280 280

118 Tai Nan Street

Kowloon Hong Kong

Residential Leasing out to third party

205 205

Lot No 2847 Demarcation District No 1 Tung Chung

Lantau IslandHong Kong

Residential Vacant - To Lease out to third party

142 142

Total 532443 533298

1 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 52 -

iii Financial Position

TPIHrsquos capital and other expenditures are mainly funded by contributions from the shareholder

bank borrowings and cash generated from operations As at 31 December 2012 2011 and 2010 TPIH had bank and cash balances of HK52040 million HK$52218 million and HK$63752 million respectively As at 31 December 2012 2011 and 2010 TPIH had bank and other borrowings which amounted to HK$432995 million HK$372963 million and HK$271966 million respectively TPIH had net assets of HK$357824 million HK$320966 million and HK$275184 million as at 31 December 2012 2011 and 2010 respectively and net assets attributable to shareholders as at 31 December 2012 amounted to HK$214240 million As at 31 December 2012 2011 and 2010 TPIHrsquos gearing ratio (as expressed by borrowing over the summation of borrowing plus equity) was 547 537 and 496 respectively

iv Capital Structure

Share Capital

TPIH did not issue any shares during the three years ended 31 December 2012 2011 and 2010 As at 31 December 2012 the registered and paid in capital of TPIH amounted to HK$21500 million

Borrowings

TPIHrsquos borrowings are principally denominated in Hong Kong dollars The detail of net borrowings of TPIH is set out below (HK$ million) 2012 2011 2010 Total borrowings 432995 372963 271966Less cash and cash equivalents 52040 52218 63752 Net borrowings 380955 320745 208214 The terms of total borrowings as at 31 December 2012 are set out below

(HK$ million) Term (Note 4) Maturity Amount Bank loans (including bank loans through SPVs (Note 3)

HIBOR + 12 per annum (Notes 1amp3) November 2013 29880HIBOR + 12 per annum (Notes 1amp3) March 2013 30000HIBOR + 17 per annum (Note 2) July 2014 283169HIBOR + 167 per annum (Note 3) November 2014 30000HIBOR + 28 per annum (Note 3) May 2015 58980 432029

Other loans Interest-free loan from others On demand 966 Total borrowings 432995 Note 1 Subsequent to 31 December 2012 the loans were renewed with maturity at May 2016 with HIBOR+19 per annum Note 2 In the process of extending by 3 years Note 3 Includes borrowings as of 31 December 2012 represented by amounts due to fellow subsidiaries which are indirect bank loans borrowed through various Special Purpose Vehicles (ldquoSPVsrdquo) of TPG namely Pacific Asia Walkman Prospect Inc and Mano Note 4 Based on effective interest rate

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 53 -

Subsequent to 31 December 2012 the bank borrowings were increased by HK$380 million The proceed of such additional bank borrowing was used by TPGTPG(HK) for their normal business operations This additional bank loan is matured in May 2016 with HIBOR plus 19 per annum Upon the completion of the Acquisition such additional bank loan will be assumed by the Group Such additional bank loan was taken into account by the parties to the Framework Agreement in arriving at the consideration attributable to the entire issued share capital of TPIH

v Material Acquisitions and Disposals

During the year ended 31 December 2010 TPIH disposed of its 39 stake in a subsidiary to

TPL for an aggregate consideration of HK$108587 million This gain was equal to the excess of the consideration of HK$108587 million over the carrying amount of the 39 of net assets disposed which amounted to HK$96394 million

During the year ended 31 December 2010 TPIH entered into a binding agreement with TPL to

sell approximately 1730862 square meters of gross floor area of Taiping Finance Tower located in Shanghai upon the completion of construction During the year ended 31 December 2011 this property was sold to the fellow subsidiary

Moreover TPIH sold a 30 equity interest in an associate Shenzhen Futian Gas Turbine Power

Co Ltd during the year ended 31 December 2011 at a consideration of HK$39731 million

vi Employees and Remuneration Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 2473 1974 1382Number of employees 44 45 48 The remuneration policies of TPIH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vii Exposure to Fluctuations in Exchange Rates and Related Hedges Certain bank balances other receivables other payables and amounts due fromto group

companies of TPIH are denominated in foreign currencies other than functional currencies which expose TPIH to foreign currency risk TPIH is also exposed to various economic and political risks including those arising from restrictions on the transfer of funds as a result of actions taken by the PRC government such as exchange controls and restrictions on the remittance of funds TPIH currently does not have a foreign currency hedging policy However the management monitors its foreign exchange exposures and will consider hedging significant foreign currency exposures should the need arise

II) Dragon Jade Business Overview Dragon Jade Industrial District Management (Shenzhen) Company Limited (ldquoDragon Jaderdquo) is a limited company incorporated in the PRC It has a registered and paid-in capital of approximately HK$5278 million as of 31 December 2012 Dragon Jade principally acts as an investment holding company and generates its revenue from property rental income interest income utilities income and property management income Dragon Jade holds properties in the PRC comprising 25 factory buildings in Dragon Jade Industrial District Bantain Village Buji Town Shenzhen Guangdong Province the PRC and Flats A to F on the 18th Floor Cui Lin Mansion Yuanling Garden Hongling Zhong Road Futian District Shenzhen Guangdong Province the PRC The properties are leased out to procure rental income

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 54 -

The figures below are the results of Dragon Jade from its operations before intra-group eliminations

i Performance Analysis

Overall performance (HK$ million) 2012 2011 2010 Rental income 5415 5079 4568Property management income 6796 3615 1067Water and electricity charge income 2402 2336 2171Other operating income 486 872 814Change in fair value in investment properties 4636 14311 2371Operating and administrative expenses (10431) (7478) (4891)Finance costs (653) (1314) (1598)Profit before tax 8649 17430 4762Profit after tax 6482 13117 3544

Revenue

Rental income remained stable over the years ended 31 December 2012 2011 and 2010

Property management income increased quite substantially over the past three years primarily due to property management services provided for Taiping Finance Tower located in Shanghai since its completion of construction in the second half of 2011

Profit after tax

Profit after tax for the year ended 31 December 2011 was HK$13117 million which was exceptional high as compared with 2012 and 2010 primarily due to the revaluation gain arising from 25 factory buildings in the Dragon Jade Industrial District located in Shenzhen

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years

primarily due to increases in staff costs and expenses related to new property management services provided

Finance costs

Finance costs decreased by 503 to HK$653 million in 2012 from HK$1314 million in 2011

primarily due to a decrease of bank and other borrowings in 2012 and the repayment of loans during the year ended 31 December 2011 Finance costs decreased by 178 to HK$1314 million in the year ended 31 December 2011 from HK$1598 million in the prior year primarily due to a decrease of bank and other borrowings from HK$16217 million as of 31 December 2010 to HK$4317 million as of 31 December 2011

ii Properties Information

As at 31 December 2012 2011 and 2010 Dragon Jade had investment properties with carrying

values of HK$69768 million HK$65336 million and HK$48299 million respectively The following table illustrates the detail of Dragon Jadersquos investment properties as of 31 December 2012

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 55 -

(HK$ million)

Name of property Location Nature Usage

Book Value as at

31122012

Capital Value

as at 280220132

Dragon Jade Industrial District

Buji Town Shenzhen

Industrial Mainly Leasingout to third parties

(the rest for self-use)

68598 67586

Cui Lin Mansion Yuanling Garden

Futian District Shenzhen

Residential Leasing outto third parties

1170 1174

Total 69768 68760

iii Financial Position

Dragon Jadersquos capital and other expenditures are mainly funded by contributions from the

shareholder and cash generated from operations As at 31 December 2012 and 2011 Dragon Jade had no bank borrowings As at 31 December 2010 Dragon Jade had bank borrowings of HK$6816 million As at 31 December 2012 2011 and 2010 Dragon Jade had cash balances of HK$4665 million HK$6562 million and HK$3125 million respectively

iv Capital Structure

Share Capital

The paid-in capital of Dragon Jade as at 31 December 2012 amounted to HK$5278 million

(equivalent to RMB4280 million) Dragon Jade did not make any additional capital injection during the three years ended 31 December 2012 2011 and 2010

Borrowings

Dragon Jadersquos borrowings were principally denominated in Renminbi Dragon Jade continuously repaid its borrowings and did not raise any new loans during the years

from 2010 to 2012 (HK$ million) 2012 2011 2010 Bank borrowings - - 6816Other borrowings 1 1233 4317 9401 Total borrowings 1233 4317 16217Less Cash and cash equivalents 4665 6562 3125 Net borrowings (net cash) (3432) (2245) 13092

1 Mainly Intra-group borrowings

2 Note Capital Value is the market value of the property as at 28 February 2013 appraised by an independent professional valuer the details of which shall be set out in the circular to be despatched to Shareholders For illustrative purpose only the capital value as at 28 February 2013 in RMB has been converted into HK$ at the exchange rate of RMB1 to HK$123557

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 56 -

v Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows

(HK$ million) 2012 2011 2010 Total remuneration 1081 756 570 Number of employees 77 73 69 The remuneration policies of Dragon Jade are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of Dragon Jade are denominated in

the functional currency of the respective entities Dragon Jade is not exposed to significant fluctuations in exchange rates for the three years ended 31 December 2012 2011 and 2010

III) Ming Lee Business Overview

Ming Lee is a property holding company whose propertys carrying value as at 31 December 2012 2011 and 2010 were HK$31510 million HK$27015 million and HK$25685 million respectively while capital value as at 28 February 2013 is HK$ 31510 million The properties are all residential properties located in Hong Kong for staff quarters purpose The details of the properties will be set out in the circular to be despatched to Shareholders

Revenue of Ming Lee consist of rental income of investment properties of HK$563 million HK$504 million and HK$536 million for the year 2012 2011 and 2010 respectively Administrative expenses for the three years ended 31 December 2012 2011 and 2010 amounted to HK$292 million HK$300 million and HK$244 million respectively IV) Other Companies Business Overview Pacific Asia Walkman Mano and Prospect Inc are private limited companies incorporated in Hong Kong and have been used by TPG(HK) as special purpose vehicles for entering into loan agreements with banks and the proceeds from such bank facilities were advanced to TPIH to fulfill its operation needs The details of such bank borrowings are set out under the ldquoBorrowingsrdquo section in the discussion of TPIH above Pacific Asia Walkman Mano and Prospect Inc do not have their own business operations Sarley also has loans and receivable with TPIH and Ming Lee In addition Sarley held investments in equity securities with a total carrying value of HK$158 million as at 31 December 2012 C SECURITIES BROKING BUSINESS I) TPFH Business Overview

Taiping Financial Holdings Company Limited (ldquoTPFHrdquo) is a private limited company incorporated in Hong Kong The principal activities of TPFH are investment holding and the provision of management services to its subsidiaries TPFH through its wholly-owned subsidiary carries out the business of securities dealing (Type 1 regulated activity) as approved under the SFO

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 57 -

The revenue sources of TPFH consist of commission and brokerage income interest income from

clients and dividend income from listed equity investments including available-for-sale securities and held-for-trading securities

The figures below are the results of TPFH from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Commission and brokerage income 3045 5635 6700Interest income from clients and

dividend income 1049 1309 1595Net realizedunrealized gain(loss) on

investments 237 (911) 16886Other income 368 540 -Operating and administrative expenses (3503) (5332) (6188)Profit before tax 1218 1240 18986Profit after tax 1099 1000 18781

Profit after tax

Profit after tax for the year ended 31 December 2010 is HK$18781 million which is

exceptionally high as compared with 2012 and 2011 primarily due to a one-off gain from disposal of a listed investment in 2010

ii Financial Position

TPFHrsquos capital and other expenditures are mainly funded by contributions from shareholders and

cash generated from operations As at 31 December 2012 2011 and 2010 TPFH had no bank borrowings and had bank and cash balances of HK$16841 million HK$18721 million and HK$14401 million respectively

iii Capital Structure

During the year 2012 TPFH increased the authorized ordinary share capital by 980000000 of

HK$1 each and issued 204553150 new ordinary shares to its shareholder by capitalization of its retained earning TPFH did not issue any new shares during the two years ended 31 December 2011 and 2010 As of 31 December 2012 the registered and paid in capital of TPFH amounted to HK$23455 million of which HK$10 million was non-voting deferred shares of HK$1 each

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 1901 1530 2187 Number of employees 40 43 44 The remuneration policies of TPFH are based on the prevailing market levels and the

performance of the employees These policies are reviewed on a regular basis

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 58 -

v Details of Charges on Assets

TPFH has pledged the following assets to financial institutions to secure general banking facilities

granted to TPFH (HK$ million) 2012 2011 2010Land and building (at carrying amount) 525 562 599Bank deposits 1600 1600 1600

vi Exposure to Fluctuations in Exchange Rates and Related Hedges As most of the transactions and financial assets and liabilities of TPFH are denominated in the

functional currency of the respective entities TPFH was not exposed to significant fluctuations in exchange rates for the years ended 31 December 2012 2011 and 2010

vii Contingent Liabilities

TPFH did not have any material contingent liabilities for the three years ended 31 December 2012

2011 and 2010 D FINANCIAL SUPPORT SERVICES BUSINESS I) TPFAS Business Overview

Taiping Financial Audit Service (Shenzhen) Company Limited (ldquoTPFASrdquo) is a limited company incorporated in the PRC The principal activity of TPFAS is the provision of internal audit services to the group companies of TPG (including the Company and its subsidiaries) The fee charged by TPFAS for its internal audit services is mutually determined by TPFAS and the relevant group companies receiving the services on a cost-sharing basis TPFAS is positioned as a cost centre within the TPG Group The key users of the internal audit services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company

The figures below are the results of TPFAS from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Internal audit services income 5323 4685 3853Operating and administrative expenses 5594 4912 3852(Loss)Profit before tax (269) (221) 001Loss after tax (269) (221) (069)

TPFAS recorded marginal losses after tax for the three years ended 31 December 2012 2011 and 2010

primarily because of its cost basis pricing policy Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of internal audit services provided

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 59 -

ii Financial Position

TPFASrsquos capital and other expenditures are mainly funded by contributions from its shareholder and its service fee income As at 31 December 2012 2011 and 2010 TPFAS had no bank borrowings and had cash balances of HK$644 million HK$360 million and HK$476 million respectively

iii Capital Structure

In 2011 TPFAS increased its registered capital by RMB350 million to RMB550 million from

RMB200 million and further increased its registered capital to RMB1050 million by an additional capital injection of RMB500 million from its shareholder in 2012 As of 31 December 2012 the paid in capital of TPFAS amounted to HK$1295 million (equivalent to RMB1050 million)

iv Employees and Remuneration

Total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 3698 3075 2484 Number of employees 143 138 111 The remuneration policies of TPFAS are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis II) TPFSC Business Overview Taiping Financial Service Centre (Shanghai) Company Limited (ldquoTPFSCrdquo) is a limited company incorporated in the PRC The principal activity of TPFSC is the provision of back office services to the group companies of TPG (including the Company and its subsidiaries) The back office services include (i) operating services including the underwriting and issuance of new policies renewal and maintenance of in-force policies claims handling and settlement and telephone enquiry services etc and (ii) information technology services including systems operation and maintenance and systems development The fee charged by TPFSC for its back office services is mutually determined by TPFSC and the relevant group companies receiving the services on a cost-sharing basis TPFSC is positioned as a cost centre within the TPG Group The key users of the back office services in terms of the service fees charged are TPL and TPI which are existing subsidiaries of the Company The figures below are the results of TPFSC from its operations before intra-group eliminations

i Performance Analysis

Overall performance

(HK$ million) 2012 2011 2010 Back office services income 26415 21139 14781Other income 047 036 262Operating and administrative expenses 26065 20744 14942Profit before tax 470 430 100Profit(Loss) after tax 201 138 (256)

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 60 -

TPFSC recorded marginal profits and losses after tax for the three years ended 31 December 2012 2011 and 2010 primarily due to its cost basis pricing policy

Operating and administrative expense

Operating and administrative expenses increased substantially over the past three years primarily

due to increases in staff costs and expenses related to increased volumes of back office services provided

ii Financial Position

TPFSCrsquos capital and other expenditures are mainly funded by contributions from its shareholder

and its service fee income As at 31 December 2012 2011 and 2010 TPFSC had no bank borrowings and had cash balances of HK$544 million HK$102 million and HK$674 million respectively

iii Capital Structure

The paid-in capital of TPFSC as at 31 December 2012 amounted to HK$1850 million (equivalent

to RMB1500 million) TPFSC did not receive any capital injections during the three years ended 31 December 2012 2011 and 2010

iv Employees and Remuneration

The total remuneration of employees for the three years ended 31 December 2012 2011 and 2010

and the number of employees as at 31 December 2012 2011 and 2010 were as follows (HK$ million) 2012 2011 2010Total remuneration 14241 12255 9150 Number of employees 1078 830 991 The remuneration policies of TPFSC are based on prevailing market levels and employee

performance These policies are reviewed on a regular basis

E OTHER BUSINESSES I) TP Japan Business Overview China Taiping Insurance Service (Japan) Co Ltd (ldquoTP Japanrdquo) is a limited company incorporated in Japan in 1991 The principal activities of TP Japan are the provision of insurance agency services in the Japanese market In addition TP Japan also maintains long-term business relationships with major insurance enterprises in Japan for the benefit of TPG In this regard TP Japan is a cost centre within the TPG Group TP Japan also produces rental income from its properties TP Japan holds properties in Chiba Prefecture Japan which has a capital value of approximately HK$1443 million (equivalent to JPY172 million) as at 28 February 2013 The details of the properties will be set out in the circular to be despatched to Shareholders

The revenue sources of TP Japan consist of commission income from providing insurance agency services and rental income from the leasing of properties Revenue for the years ended 31 December 2012 2011 and 2010 were HK$242 million HK$260 million and HK$201 million respectively while operating expenses were HK$555 million HK$525 million and HK$429 million respectively Because of its above-mentioned business nature insignificant losses after tax were incurred for the years 31 December 2012 2011 and 2010 and amounted to HK$315 million HK$267 million and HK$230 million respectively

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million

- 61 -

II) CIG Trustees Business Overview CIG Trustees Limited (ldquoCIG Trusteesrdquo) is a private limited company incorporated in Hong Kong The principal activity of CIG Trustees is the provision of trust services to the group companies of TPG (including the Company and its subsidiaries) CIG Trustees provides these services free of charge No income was generated in the years 2010 to 2012 except for minor amounts of interest earned from deposits in bank As at 31 December 2012 CIG Trustees deposited a sum of HK$168 million in the name of the Director of Accounting Services with a bank pursuant to section 77(2e) of the Hong Kong Trustee Ordinance The key users of the trustee services are the Company and its subsidiaries in respect of the asset management operations and the incentive share award scheme III) Savills TPML Business Overview Savills Taiping Property Management Limited (ldquoSavills TPMLrdquo) is a private limited company incorporated in Hong Kong and is jointly owned by TPG(HK) (25 ownership) Savills Property Management Limited (45 ownership) and China Life Insurance (Overseas) Company Limited (30 ownership) The principal activity of Savills TPML is the provision of property management services in Hong Kong The buildings under the management of Savills TPML are China Taiping Tower located in Causeway Bay Hong Kong (the headquarter of TPGTPG(HK) and the Company) and CLI Building located in Wanchai Hong Kong The profits for the years 31 December 2012 2011 and 2010 were HK$076 million HK$060 million and HK$091 million