2018 First Quarter Briefing May 2018 Disclaimer This document is provided by 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 This document may not be directly or indirectly reproduced, redistributed or forwarded to any other person and may not be published in whole or in part for any purpose. 2
Agenda Introduction of FHC Business Overview Overseas Expansion Business Performance Summary United Bank Life Century s CSR Efforts M&A Key Highlights Appendix 3 FHC: largest FHC, comprehensive products FHC Chairman: Mr. Hong-Tu Tsai Vice Chairman: Mr. Tsu-Pei Chen President: Mr. Chang-Ken Lee 100% 100% 100% 100% 100% United Bank Century Life Asset Management Securities Venture Indovina Bank (50%) CUBC Bank (100%) Century (China) (49%) Century (Vietnam) (100%) Lujiazui Life (China) (50%) Life (Vietnam) (100%) Conning (100%) Securities Investment Trust (100%) Futures (100%) Securities (HK) (100%) CDBS-CAM (33%) Securities (Shanghai) (100%) 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: 11.8% (). No. 1 life insurer in terms of total assets and total premium Market share in total premium: 19.6% (). 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
s earnings accelerates as life turnarounds EPS & ROE Profit contribution (NT$/%) (NT$ BN) CUB Life 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 3.9 10.9% 12.1% 2.4 6.8% 1.3 EPS ROE 4.6 4.5 3.8 12.9% 16.0% 14.0% 12.0% 9.7% 10.0% 10.0% 8.0% 6.0% 4.0% 2.0% 31.7 38.4 30.2 36.3 2.5 15.4 13.3 14.6 17.8 18.8 17.5 19.7 FY12 FY13 FY14 FY15 FY16 FY17 FHC 16.2 29.0 49.6 57.9 48.0 56.7 Life 2.5 15.4 31.7 38.4 30.2 36.3 CUB 13.3 14.6 17.8 18.8 17.5 19.7 CUB Life - FY12 FY13 FY14 FY15 FY16 FY17 0.0% 16% 53% 64% 66% 63% 64% Note: (1) FY13 figures do not reflect the impact from applying fair value method on investment property. (2) Since FHC has more subsidiaries other than Life and CUB, besides, due to affiliate transactions, the FHC net income might not equal to the sum of Life and CUB s. (3) EPS has been adjusted for stock dividend (stock split). 82% 50% 36% 32% 36% 35% FY12 FY13 FY14 FY15 FY16 FY17 5 Market leader in Taiwan s FIG sector Largest listed financials group by market capitalization and assets. Ranking of total asset (US$bn) 298 233 180 Privately owned Government-run 178 120 115 114 89 87 57 Fubon CTBC Taiwan Mega Cooperative Shin Kong First Hua Nan Taishin Note: Total assets as of Dec. 31, 2017 Ranking of market cap (US$bn) 22.7 17.6 14.0 12.1 Privately owned 8.4 Government-run 7.2 7.1 6.7 5.7 5.7 Fubon CTBC Mega First E.SUN Cooperative Hua Nan CDF Yuanta Note: Market capitalization as of Apr. 30, 2018 6
FHC Net income & EPS Net income EPS (NT$) 116% 23.3 1.84 10.8 0.85-17% 18% 7 FHC Net income & EPS Net income of primary subsidiaries ROE 16.7 27.2% 5.0 5.8 5.1 0.4 0.5 0.1 0.2 0.1 0.1 18.5% 18.0% 14.9% 12.4% 12.4% 14.8% 14.2% 8.0% 5.6% CUB Life Century SITE Securities FHC CUB Life Century SITE FY16 FY17 FY16 FY17 17.5 19.7 36.3 30.2 28.5% 18.8% 19.7% 13.8% 11.1% 11.5% 9.7% 10.0% 8.5% 9.0% 2.3 1.9 0.3 0.4 0.3 0.3 CUB Life Century SITE Securities FHC CUB Life Century SITE Note: Starting, ROE calculation was based on IFRS 9. 8
FHC Book value & BVPS Book value BVPS (NT$) 461.1 529.8 608.5 608.9 36.2 37.7 43.7 43.7 FY15 FY16 FY17 FY15 FY16 FY17 Note: (1) Book value includes preferred shares and minority interests, BVPS represented BVPS attributable to common shareholders. (2) Starting Jan.1, 2018, the reporting was based on IFRS 9. 9 Agenda Introduction of FHC Business Overview Overseas Expansion Business Performance Summary United Bank Life Century s CSR Efforts M&A Key Highlights Appendix 10
Business overview ay United Bank Loan and deposit delivered mild growth with benign credit quality. Continued to expand overseas business. FX loan grew 21% YoY. Wealth management and credit card fee grew by 12% and 21% YoY respectively. Active card number ranked No.1 in the industry. Life Focused on value-driven strategy with investment-linked and traditional life regular paid policies. FYP and FYPE remained No. 1 in the industry. After-hedging investment yield reached 4.5%. Overall investment performance maintained stable. Century Premium income grew 6% YoY. Remained in second place with 11.8% market share. Deepened overseas operation and elevate service quality. Developed online products in China and enlarged localized management team in Vietnam. SITE Ranked No.1 in terms of AUM, which amounted to NT$608 BN. Received Best Institutional House and "Best New ETF" awards from Asia Asset Management and "Risk Management Award" from Benchmark magazine. Selected by Thomson Reuters Lipper and Morningstar as Taiwan Fund Award" winner. Securities Brokerage business grew steadily. Sub-brokerage market share ranked No.1. Optimized customer experience with new digital business model. 11 Agenda Introduction of FHC Business Overview Overseas Expansion Business Performance Summary United Bank Life Century s CSR Efforts M&A Key Highlights Appendix 12
FHC in South East Asia China Vietnam Cambodia Hong Kong Singapore Malaysia Laos Philippines Thailand Myanmar Indonesia Bank 6 37 16 1 1 1 1 1 1 1 1 Life 44 44 P&C 26 2 Asset Mgt 1 1 Securities 1 1 Note: (1) Lujiazui Life obtained approval to set up a branch office in Henan, China. (2) Footprints in Thailand, Myanmar and Indonesia are representative offices. (3) Investments in RCBC and Bank Mayapada are funded by Life. (4) FHC owns 49% stake of Century (China), and 33% stake of CDBS Asset Management. Myanmar Laos Thailand Vietnam Cambodia Philippines Malaysia Banking - Vietnam: Indovina Bank posts solid results - Cambodia: Subsidiary s businesses grows steadily - Philippines: Invests 23% stake in RCBC (3) - Indonesia: Invests 40% stake in Bank Mayapada (3) Life Vietnam - Total premium grew 56% YoY to VND129BN in - Expands and diversifies distribution channels Century - Continues to expand local distribution channels to enhance growth momentum Life United Bank Century Singapore Indonesia 13 FHC in China Lujiazui Life United Bank Century (China) Securities Szechwan Conning Asia Pacific Limited Beijing Hubei Tianjin CDBS Asset Management Company Liaoning Shandong Jiangsu Shanghai Zhejiang Fujian Guangdong Hong Kong United Bank - Expects to convert Shanghai branch into subsidiary in 2018 Lujiazui Life - Total premium grew 52% YoY to RMB 709MN in Century (China) - Forms a strategic alliance with Ant Financial group to capture new business opportunities Securities (HK) - Each business line grows steadily JV with China Development Bank Securities (CDBS Asset Management) - Continues to launch new products. Mainly focus on fixed income funds Conning Asia Pacific Limited - Continues to expand asset management business 14
Agenda Introduction of FHC Business Overview Overseas Expansion Business Performance Summary United Bank Life Century s CSR Efforts M&A Key Highlights Appendix 15 United Bank Loan & deposit breakdown Loan breakdown Credit Card related Consumer Mortgage Corporate 1,475.1 2% 1,505.9 15.2 1.0% 16.3 110.3 135.6 7.5% 1.1% 9.0% Deposit breakdown Demand Deposit Time Deposit 2,021.1 4% 2,101.4 629.8 42.7% 684.2 45.4% 1,233.1 61.0% 1,300.0 61.9% 719.8 48.8% 669.7 44.5% 788.0 39.0% 801.4 38.1% 16
United Bank Interest yields Avg. rate of interest-earning assets Interest spread Net interest margin Funding cost 1.96% 2.08% 1.99% 1.81% 1.78% 1.76% 1.76% 1.80% 1.83% 1.86% 1.88% 2.01% 1.79% 1.84% 1.83% 1.75% 1.71% 1.68% 1.66% 1.81% 1.56% 1.60% 1.64% 1.67% 1.26% 1.33% 1.20% 1.07% 1.05% 1.05% 1.07% 1.11% 1.14% 1.16% 1.18% 1.24% 0.70% 0.75% 0.79% 0.74% 0.73% 0.71% 0.69% 0.69% 0.69% 0.70% 0.71% 0.77% FY13 FY14 FY15 1Q16 1H16 9M16 FY16 1H17 9M17 FY17 4Q15 1Q16 2Q16 3Q16 4Q16 2Q17 3Q17 4Q17 Quarterly Spread Quarterly NIM 1.81% 1.75% 1.68% 1.62% 1.59% 1.56% 1.64% 1.74% 1.76% 1.81% 1.12% 1.07% 1.02% 1.06% 1.10% 1.11% 1.18% 1.20% 1.22% 1.24% Note: Credit card related loans are included in the calculation of interest spread. 17 United Bank Credit quality NPL & Coverage ratio Gross provision NPL ratio Coverage ratio Gross provision Recovery 733% 7.33% 778% 7.78% 0.19% 0.20% 0.8 0.8 0.5 0.3 Mortgage NPL 0.10% 0.14% 923% 9.23% 756% 7.56% 5.4 4.5 0.15% 0.21% 1.3 1.8 FY16 FY17 FY16 FY17 Mortgage NPL 0.08% 0.15% 18
United Bank SME & FX loans SME loans Foreign currency loans 116.5 118.8 130.9 151.9 157.4 185.0 148.9 174.0 224.0 227.7 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 As % of total loans 10.5% 10.6% 9.2% 10.7% 10.6% 16.6% 13.3% 12.2% 15.8% 15.3% Note: Total loans exclude credit card revolving balance. 19 United Bank Offshore earnings Offshore earnings As % of CUB pre-tax profits 2.9-33% 1.9 52.7% 29.0% -19% 36% 9.4 12% 7.6 6.9 17% 10.0 8.5 42.4% 46.1% 36.3% 44.5% 45.6% FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 20
United Bank Fee income Fee income breakdown (quarterly) Fee income breakdown (annual) Others Syndicated loans FX Wealth management Cards related 13% 4.6 6.9% 0.3 4.7% 0.2 2.2% 0.1 57.4% 2.6 5.2 0.4 0.2 0.1 3.0 7.2% 3.0% 2.2% 56.9% 9.8% 8.2% 2.9% Others Syndicated loans FX Wealth management Cards related 11% 16.6 19% 1.3 13.9 1.2 26% 1.3 0.4 11.0 1.1 1.1 0.4 0.9 8.8 0.3 6.7-3% 18.4 17.9 1.3 1.4 1.1 0.8 0.4 0.4 9.8 8.8 7.7% 4.7% 2.3% 49.2% 46.8% 5.2 28.7% 1.3 1.6 30.7% 32.2% 3.5 4.4 4.9 5.7 6.5 36.1% FY13 FY14 FY15 FY16 FY17 21 United Bank Wealth management fee Wealth management fee breakdown (NT$MN) FY15 FY16 FY17 Wealth Management Fee Income 2,641 2,952 8,779 9,828 8,837 YoY growth (%) -10.4% 11.8% 31.6% 11.9% -10.1% FY15 FY16 FY17 2,016 2,025 6,097 7,794 5,790 503 758 31 58 80 95 2,307 2,453 1,573 85 124 230 273 304 316 Mutual Funds Structured products & Securities Trust & Custody Insurance Mutual Funds Structured products & Securities Trust & Custody Insurance 22
Agenda Introduction of FHC Business Overview Overseas Expansion Business Performance Summary United Bank Life Century s CSR Efforts M&A Key Highlights Appendix 23 Life Total premium Total premium (quarterly) Total premium (annual) Interest sensitive annuity Investment-linked (non-vul) Investment-linked (VUL) Health, accident and others Traditional life 26% 194.0 0.0 153.7 53.1 0.1 11.9 4.0 3.7 21.4 21.8-9% 176.4 0.0 44.6 3.5 23.0 0.0% 25.3% 2.0% 13.1% 25.2% 4.3% 5.4% 13.1% 561.4 141.5 24.0 30.3 73.5 Interest sensitive annuity Investment-linked (non-vul) Investment-linked (VUL) Health, accident and others Traditional life 561.3 548.0 13.8 10.8 70.5 90.8 26.0 23.3 84.9 87.5 645.2 0.1 115.5 17.5 94.0 15% 768.3 669.9 0.1 0.2 155.5 55.8 15.6 14.5 99.3 101.9 0.0% 20.2% 1.9% 13.3% 116.4 115.5 105.2 59.6% 52.0% 292.1 366.1 335.6 418.1 499.1 496.4 64.6% 1Q16 FY10 FY12 FY13 FY15 FY16 FY17 24
Life FYP & FYPE First Year Premium Interest sensitive annuity Investment-linked (non-vul) Investment-linked (VUL) Health, accident and others Traditional life single paid Traditional life regular paid 76.5-11% 0.0 47% 67.9 39.8 0.0 0.0% 0.0 1.2 52.1 0.0 2.4 0.0 52.7 11.6 44.3 65.2% 0.1 2.4 0.6 36.2 0.0 0.0 0.1% 2.2 2.9 4.2% 37.5 1.0 1.6% 1.1 20.5 19.6 28.8% Annualized First Year Premium Interest sensitive annuity Investment-linked (non-vul) Investment-linked (VUL) Health, accident and others Traditional life -36% 25.3 0.0 5.3 0.0 2.2 17.9-15% 21.4 0.0 4.5 0.0 2.9 14.1 0.0% 20.8% 0.2% 13.4% 65.6% 1Q16 1Q16 25 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 Value for New Business Profit Margin 1Q15 1Q16 VNB/FYP 23% 39% 19% 21% VNB/FYPE 74% 51% 57% 68% 6% 4% 3% 13% 4% 4% 6% 5% 8% 18% 14% 71% -30% 1% 20.5 12.0 14.4 14.5 61% 43% 1Q15 1Q16 83% 93% 88% 5% 76% 80% 51% 34% FY12 FY13 FY14 FY15 FY16 FY17 Profit Margin FY12 FY13 FY14 FY15 FY16 FY17 VNB/FYP 19% 26% 23% 27% 38% 22% VNB/FYPE 54% 70% 75% 57% 56% 64% 46.0 Target 50.0 51.4 53.5 50.0 52.5 Actual 57.6 55.5 75.5 59.0 54.0 50.5 FY12 FY13 FY14 FY15 FY16 FY17 YoY 3% 4% 8% 31% -33% 26
Life Cost of liability Cost of liability (quarterly) Cost of Liability (annual) 5.40% 4.31% 4.29% 4.26% 5.07% 4.23% 4.21% 4.17% 4.14% 4.11% 4.10% 4.83% 4.78% 4.63% 4.54% 4.43% 4.33% 4.23% 4.11% 1Q16 1H16 9M16 FY16 1H17 9M17 FY17 FY08 FY10 FY12 FY14 FY16 FY17 Note: The figures of cost of liability are reserve-based. 27 Life Investment portfolio FY15 FY16 FY17 Total investments (1) 4,636.6 5,001.1 5,502.6 5,555.5 Weight Weight Weight Amount Return Weight Amount Return Cash & Cash equivalents 1.3% 1.3% 1.6% 87 0.5% 2.4% 131 0.5% Equity- Domestic 7.4% 7.9% 8.4% 465 9.1% 8.2% 454 9.8% Equity- International (2) 6.2% 6.4% 6.3% 347 8.3% 6.4% 357 18.0% Bond- Domestic 8.0% 6.5% 5.5% 305 2.1% 5.5% 305 2.8% Bond- International (1)(2) 50.6% 53.8% 55.7% 3,063 5.0% 55.4% 3,076 4.9% Mortgage & Secured loans 10.2% 8.9% 8.1% 444 1.8% 7.9% 436 1.9% Policy loans 3.6% 3.3% 3.0% 166 5.8% 3.0% 166 5.6% Real estate 10.5% 9.8% 9.2% 496 2.3% 9.0% 498 2.6% Others 2.1% 2.2% 2.4% 130 2.4% 133 Note: (1) Total assets excluded separate account assets; international bond includes foreign currency deposit and related adjustments (2) Yields of international equity and international bond are pre-hedge investment yields. 28
Life Investment performance highlight After-hedging investment yield (quarterly) After-hedging investment yield (annual) 4.01% 4.48% 3.62% 3.68% 4.48% 4.38%* 4.13% 4.35% 4.18% 4.02% 4.02% 1Q14 1Q15 1Q16 FY13 FY14 FY15 FY16 FY17 Note: FY13 (4.38% ) was pro forma adjusted number of fair value method on investment property. 29 Life Investment performance highlight Pre-hedging recurring yield Pre-hedging recurring yield 3.35% 3.17% 3.28% 3.39% 3.35% 3.27% (1) 2.86% 2.84% 3.02% 2.98% 2.86% FY13 FY14 FY15 FY16 FY17 1Q14 1Q15 1Q16 Currency Hedging Structure Hedging cost 1.32% FX policy 30% Proxy & Open 16% Note: (1) FY13 (3.27%) was pro forma adjusted number of fair value method on investment property. (2) 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 risk Exposure 70% FVOCI & FVTPL(overlay) 21% Currency Swap & NDF 63% FX Asset NT$3.50 TR 30
Life Cash dividend income & Overseas fixed income by region Cash dividend income Overseas fixed income by region* Others Asia Pacific Europe North America 20.3 22.6 23.7 12% 15% 17% 15% 24% 22% 22% 23% 15.2 18% 19% 18% 18% 45% 44% 43% 43% FY14 FY15 FY16 FY17 FY15 FY16 FY17 Note: Exclude overseas deposit and equity. 31 Life Book value & Unrealized G/L of financial assets Book value Unrealized G/L of financial assets AFS financial assets FVOCI & FVTPL(overlay approach) 348.2 364.0 441.2 432.9 51.6 34.6 3.2 FY15 FY16 FY17 FY15 FY16 FY17-3.9 Note: Starting Jan.1, 2018, the reporting was based on IFRS 9.. 32
Life Distribution channel First Year Premium Annualized First Year Premium Others Bancassurance-CUB Tied agents 2.5% 4.2% 14.7% 24.0% 2.6% 1.9% 14.7% 15.9% 82.8% 71.8% 82.7% 82.2% 33 Life Operational indicators Persistency ratio Expense ratio 98.3% 98.4% 94.5% 92.0% 9.4% 10.3% 13 months 25 months 34
Agenda Introduction of FHC Business Overview Overseas Expansion Business Performance Summary United Bank Life Century s CSR Efforts M&A Key Highlights Appendix 35 Century Premium income Others Marine Fire Auto 17.6% 2.6% 2.5% 11.8% Engineering Premium income 5.0 6% 5.3 17.6% 3.2% 3.1% 12.5% Distribution channel Affiliate channels P&C agents group channel 0.2% 0.3% 33.9% 33.1% 65.6% 63.7% 65.9% 66.6% Market share Retention 12.0% 11.8% 77.2% 79.4% 36
Century Combined ratio Gross combined ratio Gross expense ratio Gross loss ratio Retained combined ratio Retained expense ratio Retained loss ratio 78.0% 79.4% 31.3% 32.2% 46.7% 47.2% 90.5% 92.1% 34.7% 34.7% 55.8% 57.4% 99.3% 30.7% 68.6% 80.0% 30.8% 49.2% 93.3% 90.9% 35.1% 35.1% 58.2% 55.8% FY16 FY17 FY16 FY17 37 Agenda Introduction of FHC Business Overview Overseas Expansion Business Performance Summary United Bank Life Century s CSR Efforts M&A Key Highlights Appendix 38
Continuous efforts in CSR A Superior Corporate Governance A- A A++ A++ A++ A++ 2011 2012 2013 2014 2015 2016 2017 Since 2016, IDTR has changed to Corporate Governance Evaluation. FHC ranked as top 5% Ranked Top 10 of Taiwan Corporate Citizenship Award Ranked top 10 for 5 consecutive years 19 12 10 9 7 5 Top 10 2011 2012 2013 2014 2015 2016 2017 Recognized by representative international ESG institutions Selected in DJSI Emerging Markets since 2015 The first Taiwan insurance company included in DJSI 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. Constituents of Vigeo Eiris Best EM Performers 39 Incorporate in the DJSI emerging markets index FHC has been selected as a DJSI Emerging Markets Component since Sep. 2015 FHC is the first Taiwan insurance company included in DJSI 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. 40
CUB is the first EPFI in Taiwan EPFIs in the World 92 Equator Principles Financial Institutions (EPFIs) in 37 countries have officially adopted the EP as of Jan 2018. 12 of EPFIs are Asian financial institutions. North Latin Middle Region Europe Africa Oceania Asia America America East EPFIs no. 39 14 10 9 5 12 3 Korea - 1 China - 2 Japan - 5 India - 1 Taiwan - 3 41 Life complies with the PSI Life insurance started to comply with the PSI at Q1 of 2016 Launched at the 2012 UN Conference on Sustainable Development Served as a global framework for the insurance industry to address environmental, social and governance risks and opportunities. A total of 55 insurance companies signed the PSI initiative (2017/2). Eight signatories are from property insurers and reinsurers in the Asia region. Samsung Fire & Marine Insurance Damage Insurance Nipponkoa Tokyo Marine Nichido Fire Insurance 42
Agenda Introduction of FHC Business Overview Overseas Expansion Business Performance Summary United Bank Life Century s CSR Efforts M&A Key Highlights Appendix 43 M&A Transaction: Conning in USA Life acquired 100% stake of Conning Holdings Corporation in 2015 for US$240 MN. P/AuM was 0.26% upon announcement FHC expected to expand its global presence in asset management and realize Banking + Insurance + Asset Management strategy Conning Asset Management Founded in 1912, Conning is a leading global investment management firm focusing on insurers and pension funds. It ranks as top 10 globally in insurance mandate with US$123 BN AuM (1Q2018) Conning operates through its offices in North America, Europe and Asia Assets by Client Type (US$BN) Assets Life 46.2 Property-Casualty 42.1 Managed CLO Funds 13.8 Mutual Fund 8.1 Pension Plans 5.8 Healthcare 2.2 Banks 1.7 Others 2.7 Total AUM 122.6 Assets by Region (US$BN) Assets North America 68.4 APAC 43.8 United Kingdom 6.6 Continental Europe 1.6 Bermuda 1.6 Other 0.5 Total AUM 122.6 Note: Totals may not sum due to rounding. 44
M&A Transaction: RCBC in Philippines Life invested in 20% shares of Rizal Commercial Banking Corporation ( RCBC ) with 3 board seats of the company in 2015. Total investment was PHP$17.9 BN (c. US$400 MN). Post-money P/B was c.1.57x upon announcement Life may increase its investment in RCBC via placement or open market purchase, up to 30% RCBC s Performance RCBC is one of the large private-owned banks in terms of total assets, with 503 branches and over 6,000 employees Total loan (PHP$BN) 353 ROE ROA 259 297 306 11.0% 9.4% 10.0% 10.0% 1.3% 1.2% 1.2% 1.1% 9.2% 9.3% 1.1% 6.4% 6.7% 1.0% 0.8% 0.8% FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 RCBC Industry RCBC Industry 45 M&A Transaction: Bank Mayapada in Indonesia Life has completed the acquisition of 40% stake in PT Bank Mayapada International, Tbk ( Bank Mayapada ) Stage 1 acquire 24.9% stake (US$ 164 MN) completed in 1H15 Stage 2 acquire 15.1% stake completed in Oct 2016 Total investment was~idr$3.52 TN (US$ 295 MN), representing a ~3.15x P/B multiple upon announcement Bank Mayapada s Performance Total loan (IDR$TN) ROE* ROA* 26.0 34.2 47.2 56.4 16.7% 16.5% 17.7% 13.6% 14.1% 13.5% 13.5% 8.7% 2.1% 1.4% 1.8% 1.8% 1.6% 1.5% 1.9% 1.0% FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Bank Mayapada Industry Bank Mayapada Industry Note: ROE: Profit After Tax/Average Total Equity, ROA: Profit After Tax/Average Total Assets; ROE and ROA in the unaudited report are 25.5%(=Profit After Tax /Average Core Capital (Tier1) and 2.4% (=Profit Before Tax/Average Total Assets) respectively. 46
Life - Asset reclassification under IFRS 9 2017/12/31 Classification under IAS 39 2018/1/1 Classification under IFRS 9 FVTPL 0.7% FVTPL 0.9% Available for Sale AFS 36.8% Overlay( AFS) 25.9% FVOCI Loan and Receivables LAR + Hold to Maturity HTM AC 25.4% 62.5% 47.8% Life s book value increased by NT$32.6 bn. Note: FVTPL stands for Fair Value through Profit or Loss, FVOCI stands for Fair Value through Other Comprehensive Income, and AC stands for Amortized Cost. 47 Asset classification under IFRS 9 with overlay approach Debt Equity Contractual cash flow characteristic test (SPPI test)* FAIL Yes Held for trading PASS No Business model assessment 1 2 Held-to-Collect contractual cash flow Held-to-Collect contractual cash flow & sell Neither 1 or 2 No If recognizing volatility of fair value to OCI (FVOCI option) If designating to value at fair value No No Yes Yes Amortized Cost FVOCI (with recycling) FVTPL FVOCI (no recycling) Eligible for overlay approach if the asset is not FVTPL under IAS 39 *SPPI means cash flow are solely payments of the principal and interests on the principal amount outstanding. Interests consist of the consideration of time value and credit risk associated with the principal. 48
Life FYP & FYPE First Year Premium Interest sensitive annuity Investment-linked (non-vul) Investment-linked (VUL) Health, accident and others Traditional life single paid Traditional life regular paid Annualized First Year Premium Interest sensitive annuity Investment-linked (non-vul) Investment-linked (VUL) Health, accident and others Traditional life 217.4-8% 0.1 114.3 0.3 8.9 2.8 91.0 17% 199.1 0.1 54.6 0.2 9.3 5.2 129.6 233.2 0.1 154.2 0.2 9.1 4.4 65.3 0.0% 66.1% 0.1% 3.9% 1.9% 28.0% 32% 102.0 0.0 12.1 0.2 8.9 80.8 135.0 0.0 5.5 0.2 9.3 120.0-42% 78.6 0.0 15.5 0.1 9.1 53.9 0.0% 19.7% 0.2% 11.6% 68.5% FY15 FY16 FY17 FY15 FY16 FY17 49 Life Overseas bond breakdown by currency and rating Overseas bond by currency () Overseas bond by rating () VND, 1% GBP, 0.3% Others, 1% AUD, 2% CNH, 3% Non-IG, 5% Fully hedged to USD USD, 93% IG, 95% 50
Embedded Value & Appraisal Value NT$BN, except for per share figures Valuation date 2015/12/31 2016/12/31 In-force business investment yield 3.95% ~ Year 2035 5.02% for NTD policies 4.67% ~ Year 2035 5.81% for USD policies (Equivalent investment yield: 4.40% rolling over to 2016: 4.45%) 4.00% ~ Year 2036 5.05% for NTD policies 4.76% ~ Year 2036 5.82% for USD policies (Equivalent investment yield: 4.50%) Risk discount rate 10% 10% Adjusted net worth 393 392 Value of in-force business 490 633 Cost of capital (CoC) -148-169 Value of in-force business (After CoC) 342 464 Embedded Value (EV) 735 856 EV / per share 138.5 (58.5) 161.3 (68.1) Future one year s new business investment yield 2.96%~ Year 2035 4.90% for NTD policies 4.37% ~ Year 2035 5.81% for USD policies 2.97%~ Year 2036 4.91% for NTD policies 4.38% ~ Year 2036 5.84% for USD policies Value of future one year s new business (After CoC) 59.0 54.0 Appraisal Value (AV) 1,249 1,328 AV / per share 235.3 (99.4) 250.3 (105.7) Note: (1) EV/AV calculation does not include business of Life in China and Vietnam. (2) per share = per share of Life; (per share) = per share of FHC (3) The outstanding shares of Life and FHC are 5.3bn and 12.6bn,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 Valuation date 2015 2016 Growth rate Equity 346 361 4% -- Adjusted net worth 393 392 0% -- Value of in-force business(before CoC) 490 633 29% -- Cost of capital (CoC) -148-169 14% -- Value in-force business (after CoC) 342 464 36% -- Embedded value 735 856 16% -- First year premium (FYP) 217.4 199.1-8% 76.5 First year premium equivalent (FYPE) 102.0 135.0 32% 25.3 Value of one year s new business (V1NB) 57.6 75.5 31% 14.4 Profit margin (V1NB/FYP) 27% 38% -- 19% Profit margin (V1NB/FYPE) 57% 56% -- 57% Profit margin (V1NB/FYP)(investmentlinked(non-VUL)is excluded) 53% 51% -- 53% Multiple 8.7 8.7 -- -- Appraisal value 1,249 1,328 6% -- EV / per share of FHC 58.5 68.1 16% -- AV / per share of FHC 99.4 105.7 6% -- Note: (1) Basic EV and AV per share is based on weighted average of outstanding shares 12.6bn. (2) Totals may not sum due to rounding. NT$BN, except for per share figures 52
Economic Assumptions: In-force business investment yield Investment return assumptions for the value of in force business of NTD-denominated policies as of the end of 2015 & 2016. Investment return assumptions for the value of in force business of USD-denominated policies as of the end of 2015 & 2016. 53 Economic Assumptions: Future one year s new business investment yield Investment return assumptions for the value of future one year s new business of NTDdenominated policies as of the end of 2015 & 2016. policy year Investment return assumptions for the value of future one year s new business of USDdenominated policies as of the end of 2015 & 2016. policy year 54
Capital adequacy FHC CAR (%) CUB Capital Adequacy (%) BIS 16.2 16.4 14.2 15.9 Tier2 4.7 4.4 3.5 4.2 144.2 151.0 146.3 141.1 Tier1 11.5 12.0 10.7 11.7 FY14 FY15 FY16 FY17 Life RBC(%) FY14 FY15 FY16 FY17 304.6 304.8 309.5 287.4 FY14 FY15 FY16 FY17 55
Financial Holdings FY17/ / (NT$MN) FY16 Income Statement Data (Consolidated) FY15 FY16 FY17 % Chg % Chg Operating Income Net interest income 139,998 153,478 168,461 10% 40,525 41,104 1% Net commission and fee (4,480) (8,050) 1,070 113% (216) 978 553% Net earned premium 535,858 622,916 624,617 0% 143,875 136,368-5% Change in liability reserve (306,598) (408,614) (445,833) -9% (98,573) (79,909) 19% Net claims payment (309,104) (308,697) (295,503) 4% (73,311) (89,750) -22% Investment income 63,734 37,782 62,065 64% 5,064 31,162 515% Contribution from associates-equity method 1,108 1,202 1,298 8% 472 67-86% Other net non-interest income 14,151 40,606 22,446-45% 10,517 1,215-88% Bad debt expense (2,467) (5,232) (3,460) 34% (319) (417) -30% Operating expense (65,067) (75,207) (75,526) 0% (17,176) (19,020) -11% Income before taxes 67,132 50,185 59,636 19% 10,859 21,799 101% Income taxes (9,250) (2,145) (2,962) -38% (68) 1,458 2233% Net income 57,882 48,039 56,673 18% 10,790 23,257 116% EPS (NT$) 4.58 3.79 4.47 0.85 1.84 Dividend Payout Cash dividend per share 2.00 2.00 Stock dividend per share 0.00 0.00 Weighted average outstanding shares 12,563 12,563 12,563 12,563 12,563 (Millions of common shares) Balance Sheet Data Total assets 7,568,975 8,135,137 8,841,510 8,279,518 8,961,966 Total shareholders' equity 461,062 529,824 608,471 543,293 608,892 Operating Metrics ROAE (Consolidated) 12.86% 9.70% 9.96% 8.04% 14.85% ROAA (Consolidated) 0.80% 0.61% 0.67% 0.53% 1.04% Double leverage ratio(inc. preferred stock) 111% 105% 108% 105% 108% Capital Adequacy Metrics Capital Adequacy Ratio 151% 146% 141% Notes: (1) All data and information on this page is provided for informational purposes only, and may subject to adjustment. For more details, please refer to our official financial reports. (2) Total may not sum due to rounding. (3) Starting from 2018/1/1, FHC adopted IFRS9. The comparative information for prior periods was not restated.
Life FY17/ / (NT$MN) FY16 Income Statement Data (Consolidated) FY15 FY16 FY17 % Chg % Chg Net written premium 519,014 605,910 608,404 0% 140,111 132,246-6% Net earned premium 518,250 605,231 607,547 0% 140,493 132,524-6% Reinsurance commission earned 200 363 301-17% 52 55 6% Fee income 5,762 5,542 9,468 71% 2,589 2,660 3% Recurring investment income 140,977 161,051 173,846 8% 37,549 40,343 7% Gain on disposal of investment Realized gain (loss)-equity 30,072 18,210 43,625 140% 14,743 25,090 70% Realized gain (loss)-debt 14,804 29,382 21,233-28% 5,231 8,810 68% Gain on investment property 11,074 5,000 (756) -115% (2) (19) -1125% FX and others, net (13,101) (21,333) (28,258) -32% (10,817) (11,141) -3% Investment income, net 183,827 192,310 209,691 9% 46,704 63,083 35% Other operating income 914 5,032 5,069 1% 1,168 1,290 10% Separate account revenues 17,303 39,589 44,304 12% 4,820 2,678-44% Net claims payment (298,102) (297,201) (284,023) 4% (71,370) (87,255) -22% Changes in liability reserves (305,864) (408,398) (445,843) -9% (98,438) (80,035) 19% Acquisition and commission expense (33,238) (38,901) (32,507) 16% (8,232) (8,620) -5% Other operating costs (5,541) (6,381) (6,418) -1% (1,533) (2,063) -35% Financial cost (296) (413) (1,963) -375% (293) (568) -94% Separate account expense (17,303) (39,589) (44,304) -12% (4,820) (2,678) 44% Operating expense (23,021) (30,768) (28,790) 6% (7,112) (7,366) -4% Net non-operating income 1,265 1,956 1,442-26% 370 324-12% Income taxes (5,710) 1,861 2,294 23% 733 2,697 268% Net income 38,447 30,235 36,268 20% 5,131 16,727 226% Balance Sheet Data Total assets 5,179,877 5,556,950 6,097,655 5,611,606 6,176,772 General account 4,699,309 5,058,936 5,542,385 5,104,057 5,617,725 Separate account 480,568 498,014 555,269 507,549 559,047 Reserves for life insurance liabilities 4,228,117 4,567,324 4,944,292 4,602,079 4,999,017 Total liabilities 4,831,642 5,192,967 5,656,473 5,239,024 5,743,851 Total shareholders' equity 348,235 363,984 441,181 372,583 432,921 Operating Metrics First Year Premium(FYP) 217,378 199,082 233,250 76,546 67,879 First Year Premium Equivalent(FYPE) 102,002 135,035 78,602 25,348 21,443 Expense ratio 10.3% 10.3% 8.6% 9.4% 10.3% 13-M persistency ratio 97.6% 98.3% 98.2% 98.3% 98.4% 25-M persistency ratio 91.8% 92.2% 94.3% 92.0% 94.5% ROAE 11.36% 8.49% 9.01% 5.57% 14.76% ROAA 0.78% 0.56% 0.62% 0.37% 1.09% Capital Adequacy Metrics RBC ratio (Standalone) 305% 305% 309% 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) Total may not sum due to rounding. (3) Starting from 2018/1/1, Life adopted IFRS9. The comparative information for prior periods was not restated.
United Bank FY17/ / (NT$MN) FY16 Income Statement Data (Consolidated) FY15 FY16 FY17 % Chg % Chg Operating Income Net interest income 26,729 25,910 29,701 15% 7,033 7,711 10% Fee income 14,344 15,745 14,862-6% 3,850 4,483 16% Investment income 5,599 8,278 9,442 14% 1,468 2,075 41% Other income 1,380 1,222 1,216 0% 282 179-37% Net operating income 48,052 51,154 55,222 8% 12,633 14,448 14% Operating expenses (24,851) (26,959) (29,301) -9% (6,550) (7,075) -8% Pre-provision profit 23,201 24,195 25,920 7% 6,083 7,373 21% Net provisions for possible losses (1,922) (4,455) (3,494) 22% (370) (433) -17% Income before taxes 21,279 19,740 22,426 14% 5,712 6,940 21% Income tax (2,513) (2,229) (2,763) -24% (704) (1,136) -61% Net income 18,767 17,511 19,664 12% 5,008 5,803 16% Balance Sheet Data Total assets 2,383,377 2,566,669 2,735,704 2,642,894 2,777,640 Loans, net 1,127,807 1,437,531 1,434,558 1,471,529 1,503,695 Financial assets 791,192 849,989 859,590 798,861 922,363 Total liability 2,226,608 2,406,701 2,553,396 2,478,535 2,587,301 Deposits 1,881,657 2,032,600 2,098,368 2,037,125 2,117,166 Financial Debenture Payable 51,900 51,900 63,350 51,900 59,500 Total shareholders' equity 156,769 159,968 182,308 164,359 190,339 Operating Metrics Cost income ratio 51.72% 52.70% 53.06% 51.85% 48.97% ROAE 12.33% 11.06% 11.49% 12.35% 12.35% ROAA 0.81% 0.71% 0.74% 0.77% 0.84% Assets Quality NPL 1,599 2,133 2,982 2,753 2,917 NPL ratio 0.14% 0.15% 0.21% 0.19% 0.20% NPL provisions 17,323 19,686 22,553 20,172 22,701 Coverage ratio 1083% 923% 756% 733% 778% Capital Adequacy Metrics BIS ratio (Standalone) 16.4% 14.2% 15.9% Tier I Ratio (Standalone) 12.0% 10.7% 11.7% 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) Total may not sum due to rounding. (3) Starting from 2018/1/1, United Bank adopted IFRS9. The comparative information for prior periods was not restated.
Century FY17/ / (NT$MM) FY16 Income Statement Data (Consolidated) FY15 FY16 FY17 % Chg % Chg Premium income 22,449 22,774 21,878-4% 5,080 5,364 6% Net written premium 17,254 17,390 16,610-4% 3,917 4,254 9% Net earned premium 17,169 17,213 16,344-5% 3,879 4,153 7% Reinsurance commission earned 517 526 489-7% 124 141 14% Fee income 48 44 42-6% 10 11 11% Investment 972 2,082 892-57% 180 247 37% Interest income 564 568 547-4% 131 134 2% Other investment income, net 408 1,514 345-77% 49 112 131% Other operating income 15 0 0 0 0 0% Net claims payment (9,292) (9,559) (9,138) 4% (2,015) (2,411) -20% Changes in liability reserves (734) (209) 10 105% (135) 125 193% Commissions and other operating costs (1,402) (3,015) (2,859) 5% (679) (763) -13% Operating expenses (6,197) (4,248) (3,609) 15% (861) (907) -5% Operating income 1,095 2,834 2,170-23% 503 596 18% Net non-operating income (4) (1) (16) -1862% (5) (5) 13% Income taxes (287) (492) (297) 40% (62) (109) -75% Net income 804 2,342 1,858-21% 436 483 11% Balance Sheet Data Total assets 42,106 38,250 38,351 37,904 38,171 Total stockholders' equity 7,219 9,216 10,517 9,627 10,917 Operating Metrics Gross Combined ratio 85.3% 99.3% 80.0% 78.0% 79.4% Net Combined ratio 93.2% 93.3% 90.9% 90.5% 92.1% ROAE 11.44% 28.50% 18.83% 18.50% 18.01% ROAA 2.06% 5.83% 4.85% 4.58% 5.05% Capital Adequacy Metrics RBC ratio (Standalone) 359% 385% 392% 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) Total may not sum due to rounding. (3) Starting from 2018/1/1, Century adopted IFRS9. The comparative information for prior periods was not restated.