2015 Fourth Quarter Briefing April 2016 Disclaimer This document is provided by Cathay Financial Holding Co., Ltd. (the "Company"). Except for the num

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1 2015 Fourth Quarter Briefing April 2016 Disclaimer This document is provided by Cathay Financial Holding Co., Ltd. (the "Company"). Except for the numbers and information included in the Company's financial statements, the information contained in this document has not been audited or reviewed by any accountant or independent expert. The Company makes no express or implied representations or warranties as to the fairness, accuracy, completeness, or correctness of such information or opinions. This document is provided as of the date herein and will not be updated to reflect any changes hereafter. The Company, its affiliates and their representatives do not accept any responsibility or liability for any damage caused by their negligence or any other reasons, nor do they accept responsibility or liability for any loss or damages arising from the use of this document or the information contained herein or anything related to this document. This document may contain forward-looking statements, including but not limited to all statements that address activities, events or developments that the Company expects or anticipates to take place in the future based on the projections of the Company toward the future, and various factors and uncertainness beyond the Company's control. Therefore, the actual results may differ materially from those contained in the forward-looking statements. This document is not and cannot be construed as an offer to purchase or sell securities or other financial products or solicitation of an offer. This document may not be directly or indirectly reproduced, redistributed or forwarded to any other person and may not be published in whole or in part for any purpose. 2

2 Agenda Introduction of Cathay FHC 2015 Business Overview and 2016 Outlook Overseas Expansion Business Performance Summary Cathay United Bank Cathay Life Cathay Century Cathay s CSR Efforts M&A Key Highlights Appendix 3 Cathay FHC: largest FHC, comprehensive products Cathay FHC Chairman: Mr. Hong-Tu Tsai President: Mr. Chang-Ken Lee 100% 100% 100% 100% 100% Cathay United Bank Cathay Century Cathay Life Asset Management Cathay Securities Cathay Venture Indovina Bank (50%) CUBC Bank (100%) Cathay Century (China) (49%)* Cathay Century (Vietnam) (100%) Cathay Life (China) (50%) Cathay Life (Vietnam) (100%) Cathay Securities Investment Trust (100%) Conning (100%) Cathay Conning Asset Management (100%) Cathay Futures (100%) CDBS-CAM (33%) One of the largest private banks in terms of total assets No. 2 credit card issuer The largest brokerage settlement bank 2 nd biggest nonlife insurer Market share in total premium income: 13.3% (FY15). No. 1 life insurer in terms of total assets and total premium Market share in total premium: 22.0% (FY15). * The capital injection from Ant Financial is subject to the regulatory approval Largest AUM among asset managers in Taiwan Qualified QFII to invest in China Pursue business opportunity from QDII of China Investment banking, brokerage, and prop trading businesses Strong underwriting and capital raising platform Diversified products and services 4

3 Cathay s earnings accelerates as life turnarounds (NT$) EPS & ROE (NT$ BN) Profit contribution CUB Cathay Life % EPS 10.9% ROE % % 14.0% 12.9% 12.0% 10.0% 8.0% 6.0% FHC Life CUB % % CUB Cathay Life - 0.0% 16% 53% 64% 66% Note: (1) FY13 figures do not reflect the impact from applying fair value method on investment property. (2) Since Cathay FHC has more subsidiaries other than Cathay Life and CUB, besides, due to affiliate transactions, the Cathay FHC net income might not equal to the sum of Cathay Life and CUB s. (3) EPS has been adjusted for stock dividend (stock split). 82% 50% 36% 32% 5 Cathay FHC Net income & EPS Net income (NT$BN) Impact to net income from fair value method on investment property 17% 57.9 (1) 31% Adjusted EPS (NT$) Impact to EPS from fair value method on investment property 4.58 (1) FY13 FY14 FY15 Note: (1) FY13 figures reflected the impact from applying fair value method on investment property, starting 2014/1/1. The impact to FY13 net income and EPS of Cathay FHC was NT$9.0BN and NT$0.74, respectively. (2) EPS has been adjusted for stock dividend (stock split). Net income of primary subsidiaries FY13 FY14 FY15 ROE FY14 FY15 (NT$BN) FY14 FY % 12.9% 14.5% 12.1% 12.7% 12.3% 10.5% 11.4% 10.7% 11.4% CUB Cathay Life Cathay Century Cathay SITE Cathay Securities Cathay FHC CUB Cathay Life Cathay Century Cathay SITE 6

4 Market leader in Taiwan s FIG sector Largest listed financials group by market capitalization and assets. Ranking of total asset (US$bn) Privately owned Government-run Cathay Fubon Taiwan CTBC Mega Cooperative Shin Kong First Hua Nan Taishin Note: Total assets as of Sep.30, 2015 Ranking of market cap (US$bn) R Privately owned Government-run Cathay Fubon CTBC Mega First E.SUN Cooperative Hua Nan Yuanta CDF Note: Market capitalization as of Dec.31, Agenda Introduction of Cathay FHC 2015 Business Overview and 2016 Outlook Overseas Expansion Business Performance Summary Cathay United Bank Cathay Life Cathay Century Cathay s CSR Efforts M&A Key Highlights Appendix 8

5 2015 Business overview Cathay United Bank Loan maintained stable with benign credit quality Fee income grew by 19% YoY, wealth management fee grew by 32% Continued to deepen customer relationship and expand overseas footprints Cathay Life Regular-paid policies accounted for 97% of traditional life FYP, ranked No.1 by FYPE Value of New Business grew by 8% YoY Maintained strong capital adequacy, RBC ratio reached 305% Cathay Century Market share reached 13.3%, maintained No.2 market position Continued to reduce loss ratio; FY15 after-tax profit grew by over 40% YoY Increase overseas footprints to extend offshore business Cathay SITE Ranked No.1 in terms of AUM, which amounted to NT$431BN Taiwan Futures Exchange, Lipper and Smart rewarded Cathay Mandarin Fund and Cathay Global Infrastructure Fund with Taiwan Fund Award in 2016, and Asia Investors rewarded Cathay SITE with Market Award - Taiwan in 2015 Cathay Securities Delivered significant growth with FY15 net profits. FY15 after-tax profit and EPS Expanding overseas business to grow offshore market Outlook Cathay United Bank Maintain mild growth in loan with benign asset quality Increase fee income contribution Continue to grow offshore earnings and business coverage Cathay Life Focus on sales of regular-paid products, foreign currency denominated policies and investment linked policies to improve value of new business Continue to increase overseas investment and maintain stable hedging cost Cathay Century Develop best operation and sales organization and utilize digital application to enhance service quality and satisfaction Increase the efficiency of capital and net profits Continue to expand overseas and develop quality channel for better local branding Cathay SITE Perform market segmentation strategy meanwhile offer complete product lines to meet customers requirements Leverage group resources and expand external distribution channels to increase AUM Cathay Securities Actively utilize digital technology to expand cross-selling opportunities Continue to expand overseas business 10

6 Cathay FHC Book value & BVPS Book value (NT$BN) Impact to book value from fair value method on investment property BVPS (NT$) Impact to BVPS from fair value method on investment property Note: FY13 figures reflected the impact from applying fair value method on investment property 11 Agenda Introduction of Cathay FHC 2015 Business Overview and 2016 Outlook Overseas Expansion Business Performance Summary Cathay United Bank Cathay Life Cathay Century Cathay s CSR Efforts M&A Key Highlights Appendix 12

7 Cathay FHC in South East Asia China Vietnam Cambodia Hong Kong Singapore Malaysia Laos Philippines Thailand Myanmar Indonesia Bank 6* Life P&C 25 2 Asset Mgt 1 1 Securities 1 Note: Footprints in Thailand, Myanmar and Indonesia are representative offices. CUB obtained the approval to set up Shenzhen branch. Myanmar Cathay United Bank Cathay Life Cathay Century Laos Thailand Vietnam Cambodia Philippines Malaysia Singapore Indonesia Banking - Vietnam: Business performed steadily with solid financial performance and superior asset quality - Cambodia: Owns most footprints among Taiwanese banks - Philippines: Manila branch has opened in October Philippines: Invest 22.3% stake in RCBC* - Indonesia: Invest 24.9% stake in Bank Mayapada* Cathay Life - Cathay Life (Vietnam) has performed steadily. Continued to expand agent force. Cathay Century - Continue to expand local channels to enhance growth momentum Note: Investments in RCBC and Bank Mayapada are funded by Cathay Life. 13 Cathay FHC in China Cathay Life (China) Cathay United Bank Cathay Century (China) Cathay Securities Szechwan Beijing Hubei Cathay Conning Asset Management Tianjin CDBS Cathay Asset Management Company Liaoning Shandong Jiangsu - Strong premium income growth in FY15 up by 17% YoY Shanghai - Increase footprints to extend offshore business Zhejiang - Capital injection from Ant Financial is subject to Fujian regulatory approval Guangdong Hong Kong Cathay United Bank - Each business line has performed steadily in Shanghai branch. Jiading Dist. sub-branch has opened in 4Q15 - Shenzhen branch has been approved - Apply for Xiamen branch Cathay Life (China) - FY15 solvency ratio 309% - Reported pre-tax profits of 92MN RMB in 2015 Cathay Century (China) Cathay Securities - Set up Cathay Securities (HK) to expand overseas business JV with China Development Bank Securities (CDBS Cathay Asset Management) - Continued to launch new products, mainly focus on fixed income funds Conning - Continued to expand asset management business 14

8 Agenda Introduction of Cathay FHC 2015 Business Overview and 2016 Outlook Overseas Expansion Business Performance Summary Cathay United Bank Cathay Life Cathay Century Cathay s CSR Efforts M&A Key Highlights Appendix 15 Cathay United Bank Loan & deposit breakdown Loan breakdown Credit Card related Consumer Mortgage Corporate 0.4% 1, , % % 40.4% (NT$BN) 1.3% 8.0% 43.8% Deposit breakdown Demand Deposit Time Deposit 1, , % 59.7% 1, ,112.5 (NT$BN) 59.5% % % % % FY14 FY15 FY14 FY15 Note: Totals may not sum due to rounding. 16

9 2.15% 2.13% 2.10% 2.08% 2.06% 2.04% 2.03% 1.99% Cathay United Bank Interest yields Avg. rate of interest-earning assets Interest spread Net interest margin 1.81% 1.95% 1.96% 1.67% 1.70% 1.79% 1.79% 1.79% 1.81% 1.84% 1.84% 1.83% 1.84% 1.83% 1.17% 1.26% 1.26% 1.42% 1.39% 1.36% 1.33% 1.24% 1.23% 1.23% 1.20% FY11 FY12 FY13 1Q14 1H14 9M14 FY14 1Q15 1H15 9M15 FY15 Note: Credit card related loans are included in the calculation of interest spread. 17 Cathay United Bank Credit quality NPL & Coverage ratio NPL ratio Coverage ratio Gross provision Gross provision (NT$BN) Recovery ,083% % % 5.39% % 0.14% FY14 FY15 FY14 FY15 Mortgage NPL 0.04% 0.04% 18

10 Cathay United Bank SME & FX loans SME loans Foreign currency loans (NT$BN) (NT$BN) As % of total loans 11.5% 10.5% 10.5% 10.6% 15.1% 16.1% 16.6% 13.3% Note: Total loans exclude credit card revolving balance. 19 Cathay United Bank Offshore earnings Offshore earnings As % of CUB pre-tax profits (NT$BN) 30% % % % 42.4% 46.1% 36.3%

11 Cathay United Bank Fee income Fee income breakdown Others Syndicated loans FX Wealth management Cards related 25% % % % 6.9% 2.5% 53.0% (NT$BN) % Note: Totals may not sum due to rounding. 21 Cathay United Bank Wealth management fee Wealth management fee breakdown (NT$MN) Wealth Management Fee Income 3,894 5,163 6,673 8,779 YoY growth (%) 17.7% 32.6% 29.2% 31.6% FY12 FY13 FY14 FY15 6,097 3,862 1,226 2,386 2,307 2,038 Mutual Funds Structured products & Securities Trust & Custody 2,532 2,106 Insurance Note: (1) Wealth management fee excludes revenue from DCI, SI and others. (2) Totals may not sum due to rounding. 22

12 Agenda Introduction of Cathay FHC 2015 Business Overview and 2016 Outlook Overseas Expansion Business Performance Summary Cathay United Bank Cathay Life Cathay Century Cathay s CSR Efforts M&A Key Highlights Appendix 23 Cathay Life Total premium Total premium Interest crediting annuity Investment-linked (non-vul) Investment-linked (VUL) Health, accident and others Traditional life % % % % % (NT$BN) 0.0% 17.9% 2.7% 14.6% 52.0% % FY10 Note: Totals may not sum due to rounding. 24

13 Cathay Life FYP & FYPE FYP Interest crediting annuity Investment-linked (non-vul) Investment-linked (VUL) Health, accident and others Traditional life single paid Traditional life regular paid (NT$BN) FYPE Interest crediting annuity (NT$BN) Investment-linked (non-vul) Investment-linked (VUL) Health, accident and others Traditional life % % % % % % % % 52.6% 0.1% 4.1% 1.3% 41.9% % 0.1% 21.9% 0.5% 13.3% 64.1% % 11.9% 0.2% 8.7% 79.2% FY14 FY15 Note: Totals may not sum due to rounding. FY14 FY15 25 Cathay Life Regular paid policies remain as focus Breakdown of Traditional FYP Traditional life single paid Traditional life - 2 year regular paid Traditional life - 3 year and above regular paid 6.1% 3.6% 3.0% 3.9% 13.4% VNB Profit Margin VNB/FYP 19% 26% 23% 27% VNB/FYPE 54% 70% 75% 57% 60.6% 42.8% 5.0% 83.0% 93.1% 3% 4% 8% 34.4% 51.1% Note: Totals may not sum due to rounding. Note FY14 and FY15 VNB is based on Cathay Life s 2014 EV actuarial assumptions. 26

14 Cathay Life Cost of liability Cost of liability (quarterly) Cost of Liability (annual) 5.40% 4.63% 5.07% 4.54% 4.47% 4.43% 4.41% 4.38% 4.34% 4.33% 4.83% 4.78% 4.63% 4.54% 4.43% 4.33% FY12 FY13 9M14 FY14 1Q15 1H15 9M15 FY15 FY08 FY09 FY10 FY11 Note: The figures of cost of liability are reserve-based. 27 Cathay Life Investment portfolio (NT$BN) 4Q12 4Q13 4Q14 4Q15 Total investments (1) 3, , , ,636.6 Weight Weight Weight Amount Weight Amount Cash & Cash equivalents 8.2% 3.7% 3.2% % 61.1 Equity- Domestic 8.1% 8.9% 8.4% % Equity- International 4.3% 4.9% 5.0% % Bond- Domestic 16.6% 14.4% 11.0% % Bond- International (1) 39.6% 38.9% 43.6% 1, % 2,344.8 Mortgage & Secured loans 10.3% 12.2% 12.7% % Policy loans 5.5% 4.7% 4.0% % Real estate (2) 5.6% 10.6% 10.5% % Others 1.8% 1.7% 1.6% % 95.8 Note: (1) Total assets excluded separate account assets; international bond includes foreign currency deposit and related adjustments (2) Real estate included 2013/1/1 IFRS adoption appraisal gain NT$71.3BN from investment property and the impact of NT$133.1BN from the change to fair value method on investment property on 2014/1/1. FY2014 and FY2015 appraisal gain from subsequent measurement of investment property are NT$16.6BN and NT$11.0BN respectively. 28

15 Cathay Life Investment performance highlight After-hedging investment yield Pre-hedging recurring yield 3.6% 3.4% 3.2% 3.3% 3.9% 4.4% (1) 4.1% 4.3% 4.2% 3.3% (2) Currency Hedging Structure Note: (1) FY13 (4.4% ) was pro forma adjusted number of fair value method on investment property. (2) FY13 (3.3%) was pro forma adjusted number of fair value method on investment property. (3) Pre-hedging recurring income doesn t include capital gains but rental, interest revenue and cash dividend. Most dividend will be recognized in 2Q & 3Q. FX policy 30% FX risk Exposure 70% FX Asset NT$2.70 TR Proxy & Open 14% AFS Currency 24% Swap & NDF 62% FY15 Hedging Cost 0.58% 29 Cathay Life Cash dividend & Overseas fixed income by region Cash dividend Overseas Fixed Income by Region* (NT$BN) Others Asia Pacific Europe North America 15% 13% 11% 12% % 18% 24% 24% % 24% 20% 18% 44% 45% 44% 45% Note: Exclude overseas deposit and equity. 30

16 Cathay Life Book value & Unrealized G/L of AFS financial assets Book value (NT$BN) Impact to book value from fair value method on investment property Unrealized G/L of AFS financial assets (NT$BN) Note: FY13 figures reflected the impact from applying fair value method on investment property 31 Cathay Life Distribution channel FYP FYPE Others Bancassurance-CUB Tied agents 2.6% 2.2% 15.1% 22.1% 2.5% 2.7% 15.9% 19.4% 82.2% 75.8% 81.5% 77.9% FY14 FY15 FY14 FY15 32

17 Cathay Life Operational indicators Persistency ratio Expense ratio FY14 FY % 97.6% 94.9% 91.8% 9.9% 10.3% 13 months 25 months FY14 FY15 33 Agenda Introduction of Cathay FHC 2015 Business Overview and 2016 Outlook Overseas Expansion Business Performance Summary Cathay United Bank Cathay Life Cathay Century Cathay s CSR Efforts M&A Key Highlights Appendix 34

18 Cathay Century Premium income & distribution Others Engineering Marine Fire Auto Premium income (NT$BN) % % % % % % % % % % % Distribution channel Affiliate channels Cathay P&C agents Cathay group channel 0.3% 0.3% 37.8% 38.3% 61.9% 61.4% FY14 FY15 Market share 13.6% 13.3% Retention 76.9% 74.9% Note: Totals may not sum due to rounding. FY14 FY15 35 Cathay Century Combined ratio Gross combined ratio Gross expense ratio Gross loss ratio Retained combined ratio Retained expense ratio Retained loss ratio 90.7% 85.3% 99.3% 93.2% 31.1% 32.3% 35.8% 37.1% 59.6% 53.0% 63.5% 56.1% FY14 FY15 FY14 FY15 36

19 Agenda Introduction of Cathay FHC 2015 Business Overview and 2016 Outlook Overseas Expansion Business Performance Summary Cathay United Bank Cathay Life Cathay Century Cathay s CSR Efforts M&A Key Highlights Appendix 37 Continuous efforts in CSR Recognized the highest ranking of IDTR in A++ A++ Ranked Top 7 of Taiwan Corporate Citizenship Award Top 7 among Taiwan companies Top 2 in Financial sector in Taiwan A A- A CDP disclosure score exceeded the worldwide industry average The leader to be recognized by DJSI and Equator Principles Top 1 among Taiwan life insurance companies Top 2 in Taiwan financial sector Top 1 in Taiwan Top 6 in Asia Note: 1. Information Disclosure and Transparency Ranking (IDTR) is an important evaluation initiated by TWSE. 2. Taiwan Corporate Citizenship Award is ranked by Taiwan Common Wealth Magazine. 3. CDP has the largest database of corporate climate change related information. 38

20 Incorporate in the DJSI emerging markets index Cathay FHC has been selected as a DJSI Emerging Markets Component in Sep Cathay FHC is committed to develop ESG in the long term. The company attained the highest rating of A++ from TWSE Information Disclosure and Transparency Ranking, and became one of the top 5% of listed companies in Corporate Governance Evaluation of Taiwan DJSI in the World Dow Jones Sustainability Index (DJSI) launched in 1999, which is based on an analysis of corporate economic, environmental and social performance and select top 10% performers in each industry as its index components. The DJSI now is the most recognized sustainability index in the world. 39 CUB is the first EPFI in Taiwan EPFIs in the World 82 Equator Principles Financial Institutions (EPFIs) in 36 countries have officially adopted the EP as of March of EPFIs are Asian financial institutions. North Latin Middle Region Europe Africa Oceania Asia America America East EPFIs no China - 1 Japan - 4 India - 1 Taiwan

21 Review and categorize the risk of EP projects EPFIs categorize the potential Environmental & Social (E&S) risks and impacts of each project. High Category A Projects with potential significant adverse environmental and social risks and/or impacts that are diverse, irreversible or unprecedented. Risk and impact Category B Projects with potential limited adverse environmental and social risks and/or impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures. Low Category C Projects with minimal or no adverse environmental and social risks and/or impacts. Source EP 41 Comprehensive EP risk management mechanism CUB has comprehensive E&S risk management mechanism for the EP projects, including: Standard loan approval procedures in accordance with the EP Management guidelines for reviewing and post-loan monitoring Incorporating covenants based on E&S risk categories E&S risk assessment IT system Conducting internal EP trainings CUB s EP achievements in the past one year: Taiwan - Completed the first EP loan case in Taiwan Loan to Formosa I Wind Power Co. to build offshore wind power farm in Chunan Miaoli. Formosa I Wind Power Co. was selected to the Offshore Wind Power Demonstration Incentive Program initiated by Ministry of Economic Affairs, Taiwan ROC. International - Received the international EP loan cases in Australia, Indonesia, Vietnam and Myanmar. 42

22 Agenda Introduction of Cathay FHC 9M15 Business Overview Overseas Expansion Business Performance Summary Cathay United Bank Cathay Life Cathay Century Cathay s CSR Efforts M&A Key Highlights Appendix 43 Transaction Overview RCBC Transaction Structure Purchase Price Regulatory Approval Strategic Rationale Investment in 280 million shares of Rizal Commercial Banking Corporation ( RCBC ), which consist of both new and existing shares Post transaction, Cathay Life Insurance ( Cathay ) owns 20% of RCBC with 3 board seats of the company Depending on market conditions, Cathay may increase its investment in RCBC, via placement or open market purchase, to no more than 30% in the future PHP64.00 per share. Total consideration of acquiring 280 million shares was PHP17.92 billion (c. US$400 million or NT$12.9 billion). Post-money P/B is c.1.57x The transaction has been completed. Strong potential of the Philippine market Expand regional banking platform Stable investment return Potential strategic cooperation 44

23 Transaction Overview Bank Mayapada Transaction Structure Purchase Price Cathay Life will acquire a 40% stake in PT Bank Mayapada International, Tbk ( Bank Mayapada ) from selling shareholders: Stage 1 acquire 24.9% stake (USD 164 million) Stage 2 acquire 15.1% stake Total consideration is ~IDR3.52tn (USD 295 million), representing a P/B multiple of ~ 3.15x Timetable Stage 1 has been completed in the first half of 2015 Closing of Stage 2 is subject to Fit and Proper Test as stipulated by the Indonesia Financial Services Authority ("OJK") Strategic Rationale Participation in Indonesia s growth opportunity Stable investment return Expansion of regional banking platform Potential strategic cooperation 45 Transaction Overview Conning Transaction Structure Purchase Price Regulatory Approval Strategic Rationale Conning Holdings Corporation ( Conning ) is a leading asset manager for insurance and pension clients with $90 billion AuM (4Q14) Cathay Life Insurance Company ( Cathay Life ) acquires 100% of Conning Acquisition price of US$240 million in cash P/AuM of 0.26% based on AuM as of September 30, 2014 Cathay Financial Holdings will sell its approximately 10% stake in Conning to Cathay Life Pre tax disposal gain amounts to US$ 5 million The transaction has been completed. Transaction will significantly expand Cathay s global presence in asset management Significant step forward in realizing Banking + Insurance + Asset Management strategy 46

24 Transaction Overview Conning Acquires Octagon Transaction Rationale Investment Details Regulatory & Closing Conditions Octagon Credit Investors is a specialist credit-focused manager with expertise in bank loans, collateralized loan obligations ( CLOs ) and high yield bonds $12.8 billion in assets under management Conning to acquire a majority ownership stake in Octagon Octagon to operate as a subsidiary of Conning Adds scale and accelerates Conning s product development objectives Facilitates participation in growing market for specialty mandates Expands distribution opportunities for both firms Important asset classes for insurers, other sophisticated institutions, and retail investors Total capital commitment up to $175.6 million Conning to acquire 82% controlling interest Includes significant capital investment to support risk retention requirements Expected to close early in 2016, subject to customary regulatory approvals and closing conditions 47 Alliance with Ant Financial Transaction Structure Transaction Rationale Cathay Insurance Company Ltd. (China) ( Cathay Insurance (China) ) is planning a new capital issuance of RMB 833 million. Zhejiang Ant Small & Micro Financial Services Group ( Ant Financial ) will be the sole subscriber. Total capital after issuance will increase from RMB 0.8 billion to RMB 1.63 billion After the transaction, Ant Financial, Cathay Insurance, and Cathay Life will separately hold stakes of 51%, 24.5% and 24.5%, respectively of Cathay Insurance (China) The alliance will enable Cathay Financial Holdings to increase its exposure to the rapidly growing internet finance market The strategic investor, Ant Financial, operates the largest internet financial services platform in China and possesses a large customer base and enormous volume of transaction data, which are critical assets for the development of internet finance The alliance represents a combination of traditional finance and internet business to create new ecosystem for internet finance Regulatory Approval The transaction is subject to customary regulatory approvals and is expected to be completed in the first half of

25 Transaction Overview Global Life and Singfor Life Transaction Structure Support Measures The takeover of the assets, liabilities and operations of Global Life and Singfor Life. (the Companies ) Transaction Price Subsidization of NTD$ 30.3 bn by Taiwan Insurance Guarantee Funds Increase asset allocation flexibility Relax certain related regulations Progress update Cathay Life has completed the takeover on July 1, The company has kept the business operations smooth and unhindered Cathay Life expects that the cost of liability will increase 1 bp because of this acquisition. Overall, the company remains its target of improving 5-10 bps on the cost of liability annually The acquisition has positive impact on Cathay Life s EV and net worth. Also it has increased Cathay Life s asset allocation flexibility Exercise corporate social responsibility and provide the strength and stability to the policyholders of the Companies and the general public. 49 Agenda Introduction of Cathay FHC 9M15 Business Overview Overseas Expansion Business Performance Summary Cathay United Bank Cathay Life Cathay Century Cathay s CSR Efforts M&A Key Highlights Appendix 50

26 Embedded Value & Appraisal Value Valuation date 2013/12/ /12/31 In-force business investment yield Future one year s new business investment yield 3.94% ~ Year % for NTD policies 4.47% ~ Year % for USD policies 2.71% ~ Year % for Interest crediting annuity (Equivalent investment yield: 4.39% rolling over to 2014: 4.54%) 2.76%~ Year % for NTD policies 4.02% ~ Year % for USD policies 2.42% ~ Year % for Interest crediting annuity 4.01% ~ Year % for NTD policies 4.40% ~ Year % for USD policies 2.75% ~ Year % for Interest crediting annuity (Equivalent investment yield: 4.46%) 2.54%~ Year % for NTD policies 4.47% ~ Year % for USD policies 2.19% ~ Year % for Interest crediting annuity Risk discount rate 10% 10% Adjusted net worth Value of in-force business Cost of capital (CoC) Value of in-force business (After CoC) Embedded Value (EV) EV per shr (EV per FHC shr) (55.0) (3) 133.6(56.4) Appraisal Value (AV) 1,093 1,191 Value of future one year s new business (After CoC) AV per shr (AV per FHC shr) (94.7) (3) 224.4(94.8) Note: (1) EV/AV calculation does not include business of Cathay Life in China and Vietnam. In addition, EV/AV calculation does not include the takeover of the assets, liabilities and operations of Global Life Insurance and Singfor Life Insurance. (2) per share = per share of Cathay Life; (per share) = per share of Cathay FHC (3) EV and AV per FHC share of 2013 is based on 2013 weighted average of outstanding shares. If the weighted average of outstanding shares in 2014 were used, EV and AV per FHC share of 2013 would be 50.5 and 87.0,respectively. (4) May not sum to total due to rounding.. 51 Summary Embedded value Value of one year s new business Appraisal value (20 years NB) Basic Value per share Adjusted Value per share Valuation date Growth rate 1Q15 Equity % -- Adjusted net worth % -- Value of in-force business % -- Cost of capital (CoC) % -- Value in-force business (after CoC) % -- Embedded value % -- First year premium (FYP) % 52.3 First year premium equivalent (FYPE) % 16.2 Value of one year s new business (V1NB) % 12.0 Profit margin (V1NB/FYP) 26% 23% -- 23% Profit margin (V1NB/FYPE) 70% 75% -- 74% Profit margin (V1NB/FYP)(investmentlinked(non-VUL)is excluded) 44% 53% -- 60% Multiple Appraisal value 1,093 1,191 9% -- EV per FHC shr 55.0 (1) 56.4 (2) 3% -- AV per FHC shr 94.7 (1) 94.8 (2) 0% -- EV per FHC shr 50.5 (2) 56.4 (2) 11% -- AV per FHC shr 87.0 (2) 94.8 (2) 9% -- Note: (1) Basic EV and AV per share is based on 2013 weighted average of outstanding shares 11.5bn. (2) Adjusted EV and AV per share calculation is based on 2014 weighted average of outstanding shares 12.6bn. (3) Totals may not sum due to rounding. 52

27 Economic Assumptions: In-force business investment yield Investment return assumptions for the value of in force business of NTD-denominated policies as of the end of 2013 & Investment return assumptions for the value of in force business of USD-denominated policies as of the end of 2013 & Economic Assumptions: Future one year s new business investment yield Investment return assumptions for the value of future one year s new business of NTDdenominated policies as of the end of 2013 & Investment return assumptions for the value of future one year s new business of USDdenominated policies as of the end of 2013 &

28 Fair Value of Insurance Contracts: Risk-free Rate (NTD) Calculate 3-yr daily MA yield curve based on the zero coupon yield curve announced by OTC (Svensson) and use the extrapolation method provided by EU Solvency II QIS 5 to contruct the complete yield curve. 5.00% 4.50% 4.00% Construct Yield Curve Based on Spot Rates of Year 1-10 Spot Rate (incl. liquidity premium 3.50% Spot Rate 3.00% 2.50% 2.00% 1.50% 1.00% 10-yr Spot Rate 1.44% 30-yr Spot Rate 2.72% 100-yr Spot Rate 3.73% Single Equivalent Discount Rate 2.76% Calculated Based on Net Cash Flows as of Dec. 31, % 0.00% Note:The Spot Rate mentioned above refers to 3-yr daily MA yield curve. 55 Fair Value of Insurance Contracts: Liquidity Premium If insurers apply fair value model for investment property, their insurance liabilities should also be assessed under fair value basis. Taiwan adopts a relatively strict standard of liquidity premium compared to the international level of 0.5%~1%. NTD 4% : 1.50% NTD 4% : 0.80% 4% : 0.25% 4% : 0.25% Mandatory 0.5% ~ 1.0% Non-NTD 0.25% Non-NTD 0.25% NT Equivalent Level 0.57% Based on Cathay Life s product structure and the regulations on liquidity premium, the equivalent level is 0.57%. According to the regulations on liquidity premium mentioned above, Cathay Life s reserve is enough and allowed to recognize after tax full amount of investment property appraisal gain under fair value method into shareholder s equity. 56

29 Special reserve of unrealized gains on property (NT$BN) (20%) Retained as special reserve in liability 44.3 (80%) Recovered over 5 years (capped at NT$10bn per year). Such accounting profit is restricted from dividend payout. (2) Net unrealized gains on investment property (1) Negative impact of first adoption Special reserve of unrealized gains on property Note: (1) Net unrealized gains on investment property is calculated by discounting rental income at industry average WACC(3.29%), net of related taxes. The amount is therefore well below the property market value. (2) The recovery of such special reserve is subject to regulatory approval each year. Hence, the actual recovery depends on the fair valuation results each year. 57 Illustration of 2013 pro forma BV of Cathay FHC Cathay Financial Holdings Cathay Life Cathay United Bank Appraisal gain based on fair value method on 2013/1/1 Appraisal gain from property reclassification Additional property appraisal gain in 2013 Impact to CUB from fair value method Intercompany adjustments Consolidated impact to Cathay FHC (Original) Cathay FHC book value (New) Pro forma FHC book value Note: Totals may not sum due to rounding. 58

30 Capital adequacy Cathay FHC CAR (%) CUB Capital Adequacy (%) BIS Tier Tier Cathay Life RBC(%) Cathay Life Overseas bond breakdown by currency and rating Overseas bond by currency Overseas bond by rating KRW, 1% CNH, 6% AUD, 1% Others, 1% Non-IG, 5% Euro, 1% Fully hedged to USD USD, 91% IG, 95% Note: Totals may not sum due to rounding. 60

31 Cathay Financial Holdings FY15/ 4Q15/ (NT$MN) FY14 4Q14 Income Statement Data (Consolidated) FY13 FY14 FY15 % Chg 4Q14 4Q15 % Chg Operating Income Net interest income 114, , ,962 12% 32,553 37,261 14% Net commission and fee (4,480) -1313% (1,331) (1,571) 18% Net earned premium 441, , ,858 10% 149, ,769-2% Change in liability reserve (293,570) (290,800) (306,598) 5% (98,180) (67,539) -31% Net claims payment (228,125) (285,869) (309,104) 8% (72,474) (95,929) 32% Investment income 56,350 75,751 63,734-16% 14,061 1,653-88% Contribution from associates-equity method , % % Other net non-interest income 6,972 3,449 14, % (373) 4, % Bad debt expense (1,484) (2,982) (2,467) -17% (1,793) (1,913) 7% Operating expense (54,277) (57,477) (65,067) 13% (16,106) (19,385) 20% Income before taxes 42,799 56,058 67,132 20% 5,813 3,848-34% Income taxes (4,779) (6,427) (9,250) 44% (848) (851) 0% Net income 38,020 49,631 57,882 17% 4,965 2,998-40% EPS (NT$) Dividend Payout Cash dividend per share Stock dividend per share Weighted average outstanding shares 12,124 12,563 12,563 (Millions of shares) Balance Sheet Data Total assets 6,177,273 6,944,837 7,568,975 Total shareholders' equity 379, , ,062 Operating Metrics ROAE (Consolidated) 10.82% 12.10% 12.86% ROAA (Consolidated) 0.65% 0.76% 0.80% Double leverage ratio(inc. preferred stock) 111% 113% 111% Capital Adequacy Metrics Capital Adequacy Ratio 119% 144% 151% Notes: (1) All data and information on this page is provided for informational purposes only, and may subject to adjustment. For more details, please refer to our official financial reports. (2) Starting from 2015/1/1, Cathay FHC adopted IFRS 2013 version and has adjusted FY14 financial data to pro-forma basis. FY14 total assets, liabilities, and shareholders' equity have also been adjusted accordingly. (3) Total may not sum due to rounding.

32 Cathay Life FY15/ 4Q15/ (NT$MN) FY14 4Q14 Income Statement Data (Consolidated) FY13 FY14 FY15 % Chg 4Q14 4Q15 % Chg Net written premium 426, , ,014 10% 145, ,019-2% Net earned premium 418, , ,250 10% 144, ,560-2% Reinsurance commission earned 11,610 4, % 19 (21) -212% Fee income 3,090 5,943 5,762-3% 1,353 1,353 0% Recurring investment income 113, , ,977 14% 29,315 33,940 16% Gain on disposal of investment Realized gain (loss)-equity 16,586 23,357 30,072 29% 3,972 3,375-15% Realized gain (loss)-debt 14,604 12,828 14,804 15% 3,726 1,995-46% Investment property appraisal gains 13,045 16,579 11,074-33% 330 (237) -172% FX and others, net (4,197) (7,166) (13,101) 83% 637 (4,466) -801% Investment income, net 153, , ,827 8% 37,980 34,608-9% Other operating income 1, % % Separate account revenues 90, ,040 17,303-85% 14,826 12,141-18% Net claims payment (210,029) (275,195) (298,102) 8% (68,849) (92,114) 34% Changes in liability reserves (292,978) (290,109) (305,864) 5% (98,520) (67,619) -31% Acquisition and commission expense (34,188) (32,405) (33,238) 3% (8,057) (8,842) 10% Other operating costs (5,570) (4,544) (5,541) 22% (1,209) (1,642) 36% Financial cost 303 (106) (296) 179% (39) % Separate account expense (90,719) (115,040) (17,303) -85% (14,826) (12,141) -18% Operating expense (15,677) (16,869) (23,021) 36% (5,279) (7,400) 40% Net non-operating income 1,156 1,482 1,265-15% % Income taxes (3,657) (2,810) (5,710) 103% (80) (68) -15% Net income 27,569 31,734 38,447 21% 2,461 1,045-58% Balance Sheet Data Total assets 4,195,229 4,704,976 5,180,081 General account 3,818,977 4,242,710 4,699,512 Separate account 376, , ,568 Reserves for life insurance liabilities 3,448,659 3,770,679 4,228,117 Total liabilities 3,923,923 4,376,595 4,831,846 Total shareholders' equity 271, , ,235 Operating Metrics First Year Premium(FYP) 200, , ,378 First Year Premium Equivalent(FYPE) 73,463 71, ,002 Expense ratio 11.5% 9.9% 10.3% 13-M persistency ratio 98.2% 97.9% 97.6% 25-M persistency ratio 94.7% 94.9% 91.8% ROAE 10.92% 10.54% 11.36% ROAA 0.69% 0.71% 0.78% Capital Adequacy Metrics RBC ratio (Standalone) 224% 287% 305% Notes: (1) All data and information on this page is provided for informational purposes only, and may subject to adjustment. For more details, please refer to our official financial reports. (2) Starting from 2015/1/1, Cathay Life adopted IFRS 2013 version and has adjusted FY14 financial data to pro-forma basis. FY14 total assets, liabilities, and shareholders' equity have also been adjusted accordingly. (3) Total may not sum due to rounding.

33 Cathay United Bank FY15/ 4Q15/ (NT$MN) FY14 4Q14 Income Statement Data (Consolidated) FY13 FY14 FY15 % Chg 4Q14 4Q15 % Chg Operating Income Net interest income 21,915 25,779 26,729 4% 6,733 6,433-4% Fee income 9,204 11,806 14,344 21% 3,142 3,122-1% Investment income 5,650 7,326 5,599-24% 1,010 1,034 2% other income 956 1,064 1,380 30% % Net operating income 37,725 45,975 48,052 5% 11,067 10,884-2% Operating expenses (20,216) (22,804) (24,851) 9% (6,281) (6,677) 6% Pre-provision profit 17,509 23,170 23,201 0% 4,786 4,207-12% Net provisions for possible losses (542) (2,471) (1,922) -22% (1,726) (1,748) 1% Income before taxes 16,967 20,700 21,279 3% 3,060 2,459-20% Income tax (2,188) (2,885) (2,513) -13% (489) (291) -40% Net income 14,780 17,814 18,767 5% 2,571 2,168-16% Balance Sheet Data Total assets 1,988,774 2,243,958 2,383,377 Loans, net 1,031,105 1,119,281 1,127,807 Financial assets 638, , ,192 Total liability 1,855,610 2,096,340 2,226,608 Deposits 1,615,860 1,739,023 1,881,657 Financial Debenture Payable 52,417 67,614 51,900 Total shareholders' equity 133, , ,769 Operating Metrics Cost income ratio 53.59% 49.60% 51.72% ROAE 12.33% 12.71% 12.33% ROAA 0.78% 0.84% 0.81% Assets Quality NPL 3,013 3,277 1,599 NPL ratio 0.29% 0.29% 0.14% NPL provisions 14,494 17,675 17,323 Coverage ratio 478% 539% 1083% Capital Adequacy Metrics BIS ratio (Standalone) 13.5% 16.2% 16.4% Tier I Ratio (Standalone) 10.1% 11.5% 12.0% Notes: (1) All data and information on this page is provided for informational purposes only, and may subject to adjustment. For more details, please refer to our official financial reports. (2) Starting from 2015/1/1, Cathay United Bank adopted IFRS 2013 version and has adjusted FY14 financial data to pro-forma basis. FY14 total assets, liabilities, and shareholders' equity have also been adjusted accordingly. (3) Total may not sum due to rounding.

34 Cathay Century FY15/ 4Q15/ (NT$MM) FY14 4Q14 Income Statement Data (Consolidated) FY13 FY14 FY15 % Chg 4Q14 4Q15 % Chg Premium income 19,727 21,279 22,449 5% 5,759 6,334 10% Net written premium 15,280 16,080 17,254 7% 4,303 4,853 13% Net earned premium 14,156 15,626 17,169 10% 3,941 4,535 15% Reinsurance commission earned % % Fee income % % Investment % % Interest income % % Other investment income, net % % Other operating income % % Net claims payment (7,835) (8,747) (9,292) 6% (2,630) (2,790) 6% Changes in liability reserves (592) (691) (734) 6% % Commissions and other operating costs (1,083) (1,218) (1,402) 15% (313) (386) 23% Operating expenses (5,328) (5,823) (6,197) 6% (1,526) (1,668) 9% Operating income ,095 37% % Net non-operating income 9 29 (4) -114% (2) 9-690% Income taxes (218) (174) (287) 65% (76) (58) -24% Net income % % Balance Sheet Data Total assets 31,709 35,863 42,106 Total shareholders' equity 5,511 6,829 7,219 Operating Metrics Gross Combined ratio 80.0% 90.7% 85.3% Net Combined ratio 92.6% 99.3% 93.2% ROAE 6.37% 10.71% 11.44% ROAA 1.08% 1.94% 2.06% Capital Adequacy Metrics RBC ratio (Standalone) 312% 324% 359% Notes: (1) All data and information on this page is provided for informational purposes only, and may subject to adjustment. For more details, please refer to our official financial reports. (2) Starting from 2015/1/1, Cathay Century adopted IFRS 2013 version and has adjusted FY14 financial data to pro-forma basis. FY14 total assets, liabilities, and shareholders' equity have also been adjusted accordingly. (3) Total may not sum due to rounding.

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