NJA Insurance. Connections Series. Regional M&A catalysts ahead? Tier 1 4.2% 3.1% EurAsia spinoff 1.6% 1.6%

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1 May Asia Pacific Equity Research NJA Insurance Connections Series Regional M&A catalysts ahead? Figure : Superregional company positioning / league table NJA life insurance premiums (US$ mn) and market share (%), Tier Tier Tier,.%,,.% NJA market share (%) Sold HK / KR, + exited TH jv Life / P&C separation The Credit Suisse Connections Series leverages our exceptional breadth of macro and micro research to deliver incisive crosssector and crossborder thematic insights for our clients. Research Analysts Arjan van Veen arjan.vanveen@creditsuisse.com Richard Burden richard.burden@creditsuisse.com Gabriel Dechaine, CFA gabriel.dechaine@creditsuisse.com Frances Feng frances.feng@creditsuisse.com,,,,.%.% DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NONUS ANALYSTS. U.S. Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. EurAsia spinoff in.%.% Bought out minorities, sold AU.% Mainly minority stakes.%.% Only CN / IN 'core' markets.%.% AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich New Zealand Vietnam Source: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC We recently met with most regional insurance groups in the NJA region, which reinforced our view of the importance of scale; with only two superregional insurers currently and others seeking to emulate them. Organic growth tougher our meetings reinforced our view that it is tougher for regionals to enter new markets through agency models and achieve scale in mediumterm horizons; with agent recruitment more difficult, high cost of agent poaching (with an uncertain tenure beyond lock in), and more entrenched existing competition. Bancassurance: HolyGrail or mirage? bancassurance relationships provide a key entry point into the region with faster execution than agency; but choice of partners is key, structure of relationship crucial and must be executed well. Many such relationships take time to establish, build mutual trust and hire/train staff, with insurers often overreliant on one partner. M&A catalysts while consolidation of the sector will likely take a long time given strategic focus on the NJA region by many, we do see some nearer term potential M&A catalysts; highlighting the likely ING Eurasia spinoff, Aviva core market focus, and New York Life recent exits as examples. Likely participants post minority acquisition, AXA is looking to expand in Asia and join the premier tier; Manulife is looking to fill strategic gaps; while others such as Prudential and AIA will look for the right opportunities to enhance their franchises and entrench their leading positions.

2 May Table of contents Focus charts NJA regional insurance Superregional positioning Bancassurance: Holy Grail or mirage? Upcoming M&A catalysts Likely participants Superregional positioning Positioning based on % ownership NonJapan Asia (NJA) life insurance market Company positioning by region Premium growth by country/region Insurance density by country/region Insurance penetration by country / region Company positioning by market Company positioning new business Bancassurance Holy Grail or mirage? AXAKrunghtai bank example Key regional bank relationships Upcoming M&A catalysts NJA historical transaction multiples () Likely acquirers Potential merger scenarios: Scenario : AXA + ING Scenario : Manulife + Great Eastern Global life insurance valuation comparatives Company overview AIA (.HK) Prudential plc (PRU.L /.HK) Allianz (ALVG.DE) ING (ING.AS) Manulife (MFC.TO /.HK) Great Eastern (GELA.SI) AXA (AXAF.PA) Ageas (AGES.BR) Aviva (AV.L) Asian life insurance market Premium growth by country/region Insurance density by country/region GDP per capita entering the sweet spot Insurance penetration by country / region Global/NJA life insurance growth, density and penetration rates Global valuation comparisons NJA Insurance

3 May Focus charts Figure : Only two superregional insurers currently NJA regional company positioning (IF APE US$ mn) Figure : with Allianz close on new business NJA regional company positioning (NB APE US$ mn), Tier Tier Tier, Tier Tier Tier,.%.%.%,,.%,.% NJA market share (%) Sold HK / KR, + exited TH jv Life / P&C separation, EurAsia spin Mainly minority Only CN / IN, off in stakes 'core' markets Bought out,.%.% minorities, sold AU,,,.%.%.%.%.%.%.%.%.%.%.%.%.%.%.% AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich New Zealand Vietnam New Zealand Vietnam Figure : AIA mix better skew to developing markets NJA regional company positioning (IF APE US$ mn) Figure : but not in terms of new business NJA regional company positioning (NB APE US$ mn), Tier Tier Tier, Tier Tier Tier,.%.%.%,,.% NJA market share.% NJA market share (%),,,,.%.%,,,.%.%.%.%.%.%.%.%.%.%.%.%.%.%.% AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich Developed Developing Emerging Developed Developing Emerging Figure : Strong historical premium growth NJA regional company positioning (IF APE US$ mn) Figure : with new business growth more diverse NJA regional company positioning (NB APE US$ mn), Tier Tier Tier, Tier Tier Tier,,,,,, Sold TW/AU, Sold TW / AU,,, Sold AU Sold HK/KR and TH in Sold AU Sold HK/KR and TH in, AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich Source for all charts: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC, Credit Suisse estimates Notes (for all charts/tables in this report): * data used where available data used for,,,, no inforce data for NZ and Vietnam and no new business data for. Takaful inforce data split by company estimated by Credit Suisse. Year end currency cross rates used to convert to US$. APE (Annual Premium Equivalent) used (Annual Premium + % Single Premium) except for markets where breakup not available, and. Comparative total premiums shown on net ownership basis. New York Life position pre sale of, and operations in. NJA Insurance

4 May NJA regional insurance Superregional positioning We highlight that effectively only two superregional insurers exist in the form of AIA and Prudential, with others lacking either scale or country diversification. The next tier of regional life insurers include Allianz, ING, Manulife, Great Eastern and AXA, which are half the size or less of the two largest regional insurers and would require some form of M&A to launch them into the higher tier. The final tier includes companies like Ageas, New York Life, Aviva and Zurich, which we believe may need to reconsider their positions in the region in the medium term; some (such as New York Life) are already divesting assets in an apparent exit from the region. Bancassurance: Holy Grail or mirage? Given the time consuming nature of organic agency growth (with recruitment tougher now in many Asian countries), other than M&A, bancassurance relationships provide a key entry point into the region, but need to be with right partners, in the right format/structure and be executed well. While wellexecuted exclusive arrangements have been transformational for some companies in certain countries (i.e., AXA s relationships with Mandiri in and Krungthai in ), they also can lead the insurer to be too dependent on one partner and distribution channel in the medium term and could jeopardise the insurer s position in that country should the relationship deteriorate. Upcoming M&A catalysts While consolidation of the sector will likely take a long time given the strategic focus on the NJA region, we do see some upcoming nearer term potential M&A catalysts. Specifically, () we deem an ING Eurasia IPO in likely (and may attract bids ahead of this process); () Aviva s stated focus on core markets may see divestments in Asia, () New York Life recently exited from HK, and and may exit from further ones, with other subscale exits likely (i.e., Zurich from n life given recent structural separation of life and P&C businesses). Likely participants In terms of potential acquirers, we see AXA and Manulife likely to be more aggressive as both are keen to move into the premier league in terms of regional positioning. We deem AXA s acquisition of the minorities as a facilitator for a more aggressive Asian strategy. We believe Manulife is more keen to explore M&A potential in the region, as it moves past its capital strength and earnings volatility concerns. In addition, we would not rule out Allianz and note the Japanese have been more expansionary of late in Asia. We would not rule out the two superregionals AIA and Prudential from consolidation activity, as the they seek to enhance and consolidate their leading positions. We highlight Prudential s tilt for AIA last year and acquisition of UOB Life as two recent examples. AIA now has a significant excess capital position (>US$ bn), no gearing, and a share price currency well above its regional peers, which gives it significant capacity to outbid its competitors for what it considers to be strategically important assets. AIA and Prudential remain the only two superregional insurers at this point We caution investor on bancassurance and prefer more diversified business models We see some specific near to medium term potential M&A catalysts for the sector AXA and Manulife are keen to join the premier league but don't forget about Allianz, AIA and Prudential NJA Insurance

5 May Superregional positioning There are effectively only two superregional life insurers in NonJapan Asia (NJA) in the form of AIA (.HK) and Prudential (PRU.L /.HK), with others lacking either scale or country diversification. The next tier of regional life insurers include Allianz, ING, Manulife, Great Eastern and AXA; which are less than half the size of the two largest regional insurers and would require some form of M&A to launch them into the higher tier. Only two superregional life insurers exist in our view AIA and Prudential The final tier includes companies like Ageas, New York Life, Aviva and Zurich, which we believe may need to reconsider their positions in the region in the medium term; some (such as New York Life) are already divesting assets in an apparent exit from the region. Figure : Only two superregional life insurers currently NJA regional company positioning (IF APE US$ mn), Tier Tier Tier,.%,,.% NJA market share (%) Sold HK / KR, + exited TH jv Life / P&C separation, EurAsia spinoff in Mainly minority stakes Only CN / IN 'core' markets,.%.% Bought out minorities, sold AU,,.%.%.%.%.%.%.% AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich New Zealand Vietnam Figure : Only two superregional insurers currently NJA regional company positioning (IF APE US$ mn) Figure : Prudential same size on new business NJA regional company positioning (NB APE US$ mn), Tier Tier Tier, Tier Tier Tier,,,,,, Sold TW/AU, Sold TW / AU,,, Sold AU Sold HK/KR and TH in Sold AU Sold HK/KR and TH in, AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich Source for all charts: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC, Credit Suisse estimates NJA Insurance

6 May Positioning based on % ownership Given most n joint ventures are % ownership (the maximum permitted there) and most joint ventures around %, the market position changes quite dramatically if we assume full ownership of the business by each of the regional insurers. Figure below highlights the positions of the regional insurance companies assuming full ownership of all operations: Figure : Regional life insurers positioning assuming full ownership NJA regional company positioning (IF APE US$ mn) *, Tier Tier Tier,.%.%, NJA market share (%),,.%.%,.%,.%.%.%.%,.%.% AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich New Zealand Vietnam Source: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC, Credit Suisse estimates * data used where available data used for,,,, no inforce data for NZ and Vietnam and no new business data for.. NJA Insurance

7 May NonJapan Asia (NJA) life insurance market In examining the (nonjapan) Asian life insurance market (our listed NJA universe), we have classified the region into three subregions: Developed, Developing and Emerging Asia, representing the various stage of economic development they are in, and more specifically, the stages of insurance penetration and density. Developed Asia more developed economies, with high insurance penetration rates (premiums as a percentage of GDP) and medium to high insurance density (premium per capita). Includes:,, South,, and New Zealand Developing Asia developing Asian economies, which generally have low to medium insurance density and low insurance penetration rates. Includes:, and Emerging Asia emerging less developed economies, which generally have low insurance density and low insurance penetration rates. Includes:,, the and Vietnam For materiality reasons, we have defined NonJapan Asia (NJA) as the countries above, which, when combined with Japan, represent over % of all Asian life insurance premiums. Swiss Re data highlights that these countries wrote a combined life insurance premium of US$ bn in, representing around % of global premiums. In, the Asia Pacific market was largely comparable in size to Japan in, whereas it was only around % of the Japanese market in. Given this strong growth rate, the NJA market has grown from representing.% of total global life insurance premiums in, to almost double that in (.%). Figure : NJA was.% of global premium in Global life insurance premiums (% by region) Figure : which has doubled to.% in Global life insurance premiums (% by region) NJA.% Middle East.% North America.% FY NJA.% Middle East.% North America.% FY Japan.% Latin America.% Japan.% Latin America.% Central/East Europe.% Western Europe.% Central/East Europe.% Western Europe.% Source: Swiss Re, Credit Suisse estimates Source: Swiss Re, Credit Suisse estimates We also note that the growth rate of developed Asia (,,,, and NZ) has been materially lower than the rest of the NJA region. Figure : Life insurance premium growth rates (% p.a.) yr CAGR (%) yr CAGR (%) Emerging.. Developing.. Developed.. Total nonjapan Asia.. Source: Swiss Re, Credit Suisse estimates NJA Insurance

8 May Company positioning by region Figure : Only two superregional insurers currently NJA regional company positioning (IF APE US$ mn) Figure : with Allianz better on new business NJA regional company positioning (NB APE US$ mn), Tier Tier Tier, Tier Tier Tier,.%.%.%,,.% NJA market share (%).% NJA market share,,,,.%.%,,,.%.%.%.%.%.%.%.%.%.%.%.%.%.%.% AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich Developed Developing Emerging Developed Developing Emerging Source for all charts: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC, Credit Suisse estimates Figure : NonJapan Asia (NJA) by development categorisation Vietnam Developed Developing Emerging New Zealand Source: Credit Suisse estimates NJA Insurance

9 May Premium growth by country/region We note that growth rates within NJA are materially different by country, with the more mature countries growth rates slowing and the less developed countries growing at much higher rates as highlighted below. Figure : Developing and emerging Asia growth NJA life insurance premiums yr growth rate (CAGR % p.a.) local currency Premium growth (yr CAGR %pa).%.%.%.%.%.%.% FY Developed Developing Emerging FY Growth rates are materially higher outside developed Asia.%.% Vietnam New Zealand South Source: Swiss Re, Credit Suisse estimates Given the size of their populations, and have been the largest emerging life insurance markets in the last decade, as highlighted below. Figure : NonJapan Asian giants awakening NJA life insurance premiums (US$ mn) and yr growth rate (% p.a.) Life insurance premiums (US$mn),,,,,,.% FY.% Developed Developing Emerging.% South FY.%.%.% New Zealand.%.%.%.%.% yr CAGR (%pa).%.% Vietnam and have been the largest emerging life insurance markets in the last decade Source: Swiss Re, Credit Suisse estimates NJA Insurance

10 May Insurance density by country/region We highlight that insurance density increases with wealth, with the real growth opportunity residing in developing and emerging Asia. Figure : with real opportunity in developing and emerging markets NJA life Insurance density (premium per capita US$ and yr CAGR),, Developed Developing Emerging The real growth opportunity lies in developing and emerging Asia Life insurance premiums / capita (US$),,,,,.%.%.%.%.% yr CAGR (%pa).%.%.% FY.%.% FY.%.%.% Vietnam New Zealand South Source: Swiss Re, Credit Suisse estimates Insurance penetration by country / region We note that while NJA appears to be in line with many developed markets, this is misleading, as developed Asia significantly distorts the average, with developing and emerging Asia having very low penetration rates. Figure : but some way to go in nondeveloped Asia Life insurance premiums / GDP (%) Life insurance premiums (US$mn).%.%.%.%.% % Developed Developing Emerging FY FY although distorted by high penetration in developed Asia and very low penetration in developing and emerging Asia.%.% Vietnam New Zealand South Source: Company data, Credit Suisse estimates NJA Insurance

11 May Company positioning by market The key feature of a superregional insurer for us is not just the total size of the company, but also the depth and breadth of regional positioning. In our view, most of the key success stories have set up early in various markets and grown up with their development as M&A is invariably costly in Asia, and even successful bancassurance relationships will often lead to insurer becoming dependent on one partner/distribution channel in that country. Figure : AIA and Prudential depth and breadth key differentiator NJA regional company positioning (IF APE market share (%) and rank) * IF APE Great AIA Prudential Allianz ING Manulife eat Eastern AXA Ageas NY Life Aviva Zurich US$mn AIA PRU ALL ING MAN GE AXA AGE NEW AVI ZUR Developed.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.% New Zealand Developing.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.% Emerging.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.% Vietnam # countries % % % % % % % % % % % Source: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC, Company data, Credit Suisse estimates Notes: * data used where available data used for,,,, no inforce data for NZ and Vietnam and no new business data for. Takaful inforce split by company is estimated by Credit Suisse in. NJA Insurance

12 May AIA is the only insurer that has a presence in each of the major NJA countries, with Prudential and AXA the next highest. When we examine the regional country spread in more detail, we highlight that Allianz and ING have heavy / biases, while Manulife / AXA have very high singlecountry exposure to. And of these four, only Allianz has broad positioning across several developing/emerging markets. Figure : AIA has strong diverse regional positioning AIA regional company positioning (IF APE US$ mn), Developed Developing Emerging.% Figure : so does Prudential Prudential regional company positioning (IF APE US$ mn), Developed Developing Emerging.%,.%,.%.%,.%.%,,,.%.%.%.%,,.%.%.%.%.%.%.%.% NZ IF APE (US$mn LHS) Market share (% RHS) Vietnam NZ IF APE (US$mn LHS) Market share (% RHS) Vietnam Figure : Allianz skewed to and Allianz regional company positioning (IF APE US$ mn) Figure : ING strong in and ING regional company positioning (IF APE US$ mn), Developed Developing Emerging.%, Developed Developing Emerging.%,,,,.%.%.%,,,.%.%,.%,.%.%.%.%,,.%.%.%.% NZ IF APE (US$mn LHS) Market share (% RHS) Vietnam NZ IF APE (US$mn LHS) Market share (% RHS) Vietnam Figure : Manulife strong skew to Manulife regional company positioning (IF APE US$ mn) Figure : similarly for AXA AXA regional company positioning (IF APE US$ mn),, Developed Developing Emerging.%.%.%,,,, Developed Developing Emerging.%.%.%,,.%.%,.%.%.%.%.%.%.% NZ IF APE (US$mn LHS) Market share (% RHS) Vietnam NZ IF APE (US$mn LHS) Market share (% RHS) Vietnam Source for all charts: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC, Credit Suisse estimates Notes: * data used where available data used for,,,, no inforce data for NZ and Vietnam and no new business data for. Takaful inforce split by company is estimated by Credit Suisse in. NJA Insurance

13 May Company positioning new business The regional positioning landscape changes somewhat when we examine new business premiums (noting new business data is not available). Firstly, AIA s regional market share of new business was just.% in (relative to inforce market share of.%), which is not far ahead of Prudential s market share of.% (inforce.%) and Allianz at.% (inforce.%). We also highlight that AIA s new business sales were aided by an unusually strong contribution from, where AIA participates mainly in the Group Risk market and as such new business can be somewhat lumpy, which we wouldn t expect to necessarily repeat in. Figure : Three superregional life insurers in terms of new business NJA regional company positioning (NB APE US$ mn) *, Tier Tier Tier.%.%,.%,,.%.%.%.%.%.%.%.% AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas NY Life Aviva Zurich New Zealand Vietnam Source: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC, Credit Suisse estimates Notes: * data used where available data used for,,,, no inforce data for NZ and Vietnam and no new business data for.. Secondly, the gap between these three and the rest of the pack is substantially higher than the inforce position, as ING s new business market share of.% if much lower than its.% inforce market share and similarly for Manulife (.% relative to.% inforce). We note that Ageas s new business volumes would be similar to AXA s should we include their share of Taiping Life s new business for (not included as no new business data available in Chinese market overall). NJA Insurance

14 May Company positioning new business premiums Figure : Prudential and Allianz new business positioning stronger. NJA regional company positioning (NB APE market share (%) and rank) * NB APE Great AIA Prudential Allianz ING Manulifeeat Eastern AXA Ageas NY Life Aviva Zurich US$mn AIA PRU ALL ING MAN GE AXA AGE NEW AVI ZUR Developed.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.% New Zealand Developing.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.% Emerging.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.% Vietnam # countries % % % % % % % % % % % Source: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC, Credit Suisse estimates Notes: * data used where available data used for,,,, no inforce data for NZ and Vietnam and no new business data for. NJA Insurance

15 May Company positioning by market (new business) Figure : AIA has strong diverse regional positioning AIA regional company positioning (NB APE US$ mn) Developed Developing Emerging.%.%.%.%.% Figure : so does Prudential Prudential regional company positioning (NB APE US$ mn) Developed Developing Emerging.%.%.%.%.%.%.%.%.%.%.%.% NZ NB APE (US$mn LHS) Market share (% RHS) Vietnam NZ NB APE (US$mn LHS) Market share (% RHS) Vietnam Figure : Allianz skewed to and Allianz regional company positioning (NB APE US$ mn) Figure : and for ING ING regional company positioning (NB APE US$ mn) Developed Developing Emerging.%.%.%.%.%.% Developed Developing Emerging.%.%.%.%.%.%.%.%.% NZ NB APE (US$mn LHS) Market share (% RHS) Vietnam NZ NB APE (US$mn LHS) Market share (% RHS) Vietnam Figure : Manulife skew to (exjapan) Manulife regional company positioning (NB APE US$ mn) Figure : similarly for AXA AXA regional company positioning (NB APE US$ mn) Developed Developing Emerging.%.%.% Developed Developing Emerging.%.%.%.%.%.%.%.%.%.%.%.%.% NZ NB APE (US$mn LHS) Market share (% RHS) Vietnam NZ NB APE (US$mn LHS) Market share (% RHS) Vietnam Source for all charts: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC, Credit Suisse estimates Notes: * data used where available data used for,,,, no inforce data for NZ and Vietnam and no new business data for. Takaful inforce in based on Credit Suisse estimates. NJA Insurance

16 May Company positioning inforce vs new business Figure : Prudential and Allianz new business positioning stronger than inforce NJA regional company positioning (IF vs NB APE market share (%) * IF / NB APE Great AIA Prudential Allianz ING ManulifeGreat Eastern AXA Ageas NY Life Aviva Zurich US$mn AIA PRU ALL ING MAN GE AXA AGE NEW AVI ZUR Developed.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.% New Zealand Developing.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.% Emerging.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.%.% Vietnam # countries % % % % % % % % % % % Source: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC, Credit Suisse estimates Note): * data used where available data used for,,,, no inforce data for NZ and Vietnam and no new business data for. NJA Insurance

17 NJA Insurance Figure : AIA regional positioning by country Inforce and new business APE (US$ mn), market share (%), rank and ownership (%) by country AIA Group IF NB Premium (US$mn), Market share (%).% Ownership % IF NB Premium (US$mn) Market share (%).%.% Ownership % IF NB Premium (US$mn), Market share (%).%.% Ownership % Developed Developing Emerging IF NB Premium (US$mn), Market share (%).%.% Ownership % IF NB Premium (US$mn) Market share (%).%.% Ownership % IF NB Premium (US$mn) Market share (%).%.% Ownership % Vietnam Source: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC, Credit Suisse estimates IF NB Premium (US$mn), Market share (%).%.% Ownership % IF NB Premium (US$mn) Market share (%).% Ownership % IF NB Premium (US$mn), Market share (%).%.% Ownership % IF NB Premium (US$mn) Market share (%).%.% Ownership % IF NB Premium (US$mn) Market share (%).%.% Ownership % New Zealand May

18 May Bancassurance Holy Grail or mirage? Other than M&A, bancassurance relationships provide a key entry point into the region, but need to be with the right partners, in the right format or structure, and be executed well. Whilst well executed exclusive arrangements have been transformational for some companies in certain countries, but also can lead the insurer to be too dependent on one partner / distribution channel. We also highlight that the point in time between an agreement being signed and success can be quite lengthy. Banks often need time to trust its insurance partner before they allow full access to the customers and systems and staffing levels also take time to establish. AXAKrunghtai bank example We highlight the AXA Krungthai relationship as a good example of the benefits of a strong bancassurance relationship, but one that took time to nurture. KrungthaiAXA Life was established in as a : joint venture with access to over branches (over m customers) and currently over, agents. However, as highlighted below, it took some time for the company to start to achieve strong momentum in this relationship, which now is # in the market in terms of market ranking. AXA management have commented previously that it does take time for banks to trust their insurance partner, train sales staff and allow access to the wealthier segment of their customer base. Figure : AXA Krungthai relationship established in Krungthai AXA new business APE (BHT mn) / market share (%),, % % AXA s strong growth led by Krungthai bancassurance relationship, %, % % % % % Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: TLIA, Credit Suisse estimates Annual premium % single premium Market share (%) When we examine the new business sales more carefully (see Figure below), the really strong momentum in new business sales started in early and the joint venture appears to have hit a sweet spot. NJA Insurance

19 May Figure : Real momentum in bancassurance started in Krungthai AXA First Year Premium (BHT mn) / market share (%), AXA bancassurance sales accelerated in,,, Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: Company data, Credit Suisse estimates Agent Bancassurance Direct marketing Others We highlight that the type of bancassurance deal is key and our preference tends to be for joint venture arrangements. The reason is that it locks both parties into a longer term agreement, requires capital commitment from both parties, but are difficult to get out of when they are not working well. On the other hand, a fixed term agreement can be terminated at the end of the term and may require further payments to the bank at each renewal. In practise, successful agreements contain a significant amount of integration between companies and are not that easy to unwind. The issue in Asia, however, is that there is generally an insurer with deep pocket prepared to pay up for such a relationship which generally keeps the banks in the driving seat. The specific terms and type of arrangement are crucial in bancassurance In markets such as where there are generally no exclusive arrangements, we are not entirely convinced of the economic benefits to the insurers in many such relationships, especially not medium term should the status quo remain. Some agreements are often set up to carry penalties for nonattainment of targets, which we deem destructive longer term. In such a scenario, a nonachievement of a specific target could cause renewal of an agreement simply because the bank does not wish to pay the penalty, extending a relationship on bad terms. Additionally, having expertise in one country does not necessarily guarantee success in bancassurance relationships in another country. Aviva s expertise in bancassurance has not yet translated into strong momentum in Asia despite having locked in some strong bank partners throughout the region (see Figure ); highlighting local staff and expertise are crucial to execution of such relationships. NJA Insurance

20 May Key regional bank relationships We have highlighted the key regional insurance bank relationships below. We note that many more relationships exist; but have attempted to list those that are () currently material in size or () have the capacity to be so given the size and scale of the bank partner in each market. Figure : NJA regional insurance key bank relationships by company Great AIA Prudential Allianz ING ManulifeGreat Eastern AXA Ageas NY Life Aviva AIA PRU ALL ING MAN GE AXA AGE NEW AVI Regional Citibank Std Chtd Citibank ANZ UOB, Citbank HSBC, SCB Developed CCB CCB CITIC Citibank DBS DBS Maybank Citibank OCBC DBS SingPost SBI Kookmin Kookmin Kookmin Woori Shinhan, Woori SinoPac E.Sun trust trust First Taishin, First DBS Westpac** HSBC New Zealand Developing ^ ICBC CITIC ICBC Bank of Bohai ICBC ICBC CCB Beijing Bank Kiatnakin Ayudhya TMB Krungthai Kasikorn Siam* Tisco BSN Alliance Alliance Public Bank OCBC AFFIN Maybank CIMB EON Emerging UBI ICICI Syndicate ING Vysya IDBI DBS Bank Federal BCA Permata Danamon Danamon Mandiri BII BII DBS, SCB BPI HSBC bank Metrobank Vietnam ACB Agribank ANZ Tien Phong Techcombank Source: Company data, Credit Suisse estimates Notes: *Siam Commercial bought out New York Life joint venture on Feb, ^ bancassurance generally nonexclusive, **AIA provides Group Risk to Westpac s BT and Asguard superannuation funds. NJA Insurance

21 May Figure : NJA regional insurance bank deposit market share Bank deposits market share (%) Regional Developed HSBC BOC HK Hang Seng Std Chtd BEA DBS ICBC.%.%.%.%.%.%.% DBS UOB OCBC % % % Kookmin Shinhan Woori Hana KEB IBK Pusan Daegu.%.%.%.%.%.%.%.% First HuaNan Mega trust ChangHwa Fubon SinoPac Esun Taishin.%.%.%.%.%.%.%.%.% CBA Westpac ANZ NAB ING Bendigo BOQ SUN.%.%.%.%.%.%.%.% New Zealand Developing ICBC CCB ABC BOC BoComm CMB CiticBank Minsheng.%.%.%.%.%.%.%.% Bangkok Krugthai Kasikorn Siam ThanaChart Ayudhia Thai Military TISCO.%.%.%.%.%.%.%.% Maybank Public CIMB HLB Alliance.%.%.%.%.% Emerging SBI PNB BOB BOI ICICI HDFC Bank Union Axis Kotak.%.%.%.%.%.%.%.%.% Mandiri BCA Rakyat Negara Panin Danamon.%.%.%.%.%.% Banco do OroMetrobank BPI Landbank PNB Bank Union Bank RCBC Citibank.%.%.%.%.%.%.%.%.% Vietnam Source: Regulators, Company data, Credit Suisse estimates NJA Insurance

22 May Upcoming M&A catalysts While consolidation of the sector will likely take a long time given strategic focus on the NJA region for many companies, we do see some nearer term upcoming potential M&A catalysts in the sector. Specifically, we deem the following to be potential upcoming catalysts: () ING has announced that it is considering an IPO of its Eurasia holdings. We beiieve an IPO in likely (and that it may attract bids ahead of this process); () Aviva s stated focus on core markets may see divestments in Asia, with only and designated as core so far; () New York Life recently exited from, and and may exit from further ones, () Other companies exiting subscale/noncore markets (i.e., Zurich s divisional separation of its n operations (life/p&c) would facilitate sale of life operations should it choose to do so). We highlight that the transaction multiples in Asia tend to be somewhat rich (see and Figure and Figure ); and often are so in M&A situations; hence significant value crystallisation exists in companies who do wish to exit the Asia region as invariably these values are not fully factored into their current share prices. Figure : Asian assets trade on large premium to European ones NJA regional insurers price to earnings (P/E) and embedded value (P/EV).x.x.x.x.x AIA trades on large premium to other regional insurers.x.x.x.x.x.x.x.x.x AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas Aviva.x P/E (x) LHS P/EV (x) RHS Source: Reuters, Credit Suisse estimates (mth forward) Another option for some of the regionals would be to demerge and list the Asian operations, which while we have not seen in this region, has been done in other sectors and markets by various companies. However, giving up full control may create issues down the track (as was the case with AXA and AXA Asia Pacific), where the ambitions of the parent did not always correspond to what the minorities wanted. Having significantly reduced its earnings volatility and regulatory capital concerns (though some still exist), we believe Manulife is in a better position to entertain M&A possibilities. NJA Insurance

23 May In our opinion, the company views the region as its most strategically important and an acquisition could significantly enhance the company's growth prospects (and investor perception thereof). That said, we believe a transaction would need to be funded with nearly % equity. We suspect that dilution concerns that could arise would be offset by the longterm strategic/economic benefits of expansion in NJA. We highlight that the Asian operations account for % of earnings for Prudential, ING and Manulife as highlighted in the table below, with Prudential s new business sales (APE) approaching %. Figure : Group NJA life exposure of major regional insurers NJA regional insurers NB APE, EV and life pretax profit composition (%) by region % % % % % % % % AIA Prudential Allianz ING Manulife Great Eastern AXA Ageas Aviva % APE sales % Embedde value % Life pretax profit Notes: data; AXA proforma for acquisition of APH minorities and disposal of ; ING does not disclose EV, EV figures based on IFRS equity, Manulife sales are firstyear premiums and % of single premiums and wealth sales are new deposits; Life pretax profit for Aviva and Prudential = life IFRS operating profit. Source: Company data, Credit Suisse estimates NJA Insurance

24 May NJA historical transaction multiples () Figure : NJA insurance historical transaction multiples % acquired, investment (US$ mn), P/E (x). P/B (x), P/VIF (x) and P/EV (x) (US$ in millions) Transaction Statistics Date % Shares Investment Price / Announced Target Name Target Type Acquiror Acquired (US$ MM) Hist E Fwd E Book NBV VIF EV // New York Life ( & ) Life insurer ACE Ltd.%. NA NA.x NA.x.x // Hang Seng Life Limited Life insurer Hang Seng Bank.%..x NA.x NA NA.x // Metlife Fubon Ltd Life insurer Metlife Worldwide Holdings.%. NA NA.x NA NA NA // Pacific Century Insurance Life Insurer Fortis Insurance International.%..x.x.x.x NA.x // Winterthur Life Life insurer AXA Asia Pacific Holdings.%..x NA.x.x NA.x // BOC Life Life insurer BOC(HK).%..x NA.x NA NA NA // MLC & Life insurer AXA Asia Pacific Holdings.%..x NA NA.x NA.x Life Insurer Median.x.x.x.x NA.x // MetLife Life insurer trust Financial Holding Co.%. NM NA.x NA NA NA // Nan Shan Life Insurance Life insurer Ruentex led consortium.%,. NM NA.x NA NA.x // MassMutual Mercuries Life insurer Mercuries & Associates Limited.%..x.x.x NA NA NA // MetLife Life insurer Waterland.%. NM NA.x NA.x.x // Hontai Life Life insurer Taiyo Life (Japan).%. NM.x NM NA NA NA // Aegon Life insurer Zhongwei Company.%. NM NA.x NA NA.x // PCA Life Assurance Co Ltd Life insurer Life.%. NM NA.x NA NA.x // Shin Kong FHC Life insurer Daiichi Mutual Life Ins Co.%. NM NA.x NA.x.x // ING Life insurer Fubon FHC.%..x NA.x NA.x.x // Winterthur Swiss Insurance Co Life insurer Life Insurance Co Ltd ().%. NM NA.x NA NA NA // Allianz President Life Insurance Co Ltd Life insurer Allianz SE.%..x NA.x NA NA NA // Singfor Life Insurance Co Ltd Life insurer Palace View Group Ltd.%. NM NA NM NA NA NA // Shin Kong Finl Hldg Co Ltd Life insurer Daiichi Mutual Life Ins Co.%..x NA.x.x NA.x Life Insurer Median.x.x.x.x.x.x // Taikang Life Life insurer Goldman Sachs.%..x NA.x NA NA NA // Haier New York Life (New York Life stake) Life insurer Haier Group and Meji Yasuda Life.% // Pacific Antai Life Insurance (CPIC stake) Life insurer Construction Bank Led Consortium.%..x NA.x NA NA NA // New Life Ins Co Ltd Life insurer Zurich.%..x NA.x NA NA NA // AXAMinmetals Assurance Life insurer ICBC.%. NA NA NA NA NA NA // Ming An Life insurer Consortium including Hana Group.%. NA NA NA NA NA NA // BOC Insurance Life insurer Bank of.%. NA NA NA NA NA NA // Pacific Antai Life Insurance (ING stake) Life insurer Construction Bank.%. NA NA NA NA NA NA // PICC Life Insurance Co Ltd Life insurer People's Ins(Grp)of.%. NA NA NA NA NA NA // Cigna & CMC Life Insurance Life insurer Merchants Bank.%..x NA.x NA NA NA // New Life Ins Co Ltd Life insurer Insurance Regulatory.%. NM NA.x NA NA NA // Pacific Insurance Company Composite insurer Carlyle Consortium.%..x NA.x NA NA.x // PICC Life Insurance Co Ltd Life insurer PICC P&C; PICC Asset Management.%. NA NA.x NA NA NA // Union Life Insurance Co Ltd Life insurer Eurizon Financial Group.%. NA NA NA NA NA NA // Pacific Life Life insurer Carlyle Consortium.%. NM.x.x NA NA.x // Ping An Insurance Group Composite insurer (Majority Life) HSBC Holdings.%,..x.x.x.x.x.x // Sino Life Life insurer Pacific Century Insurance.%. NM NM.x NA NA NA Life Insurer Median.x.x.x NA NA.x Composite Insurer Median.x.x.x.x.x.x // Tong Yang Life Life insurer Vogo Fund.%..x.x.x.x.x.x // Kumho Life Insrance Life insurer KDB Consus Value PEF.%. NM NA.x NA NA.x // New York Life ( & ) Life insurer ACE Ltd.%. NA NA.x NA.x.x // LIG Life Insurance Co Ltd Life insurer Aviva / Woori.%..x NA.x NA NA NA // Hana Life Insurance Co Ltd Life insurer HSBC Ins (AsiaPacific) Hldg Ltd.%..x NA.x NA NA NA // Kyobo Life Insurance Co Ltd Life insurer Corsair Capital.%..x NA.x NA NA.x // ING Life Insurance Life insurer ING Groep NV.%. NM NA.x NA NA NA // Life Insurance Co Ltd Life insurer Hanwha Corp.%..x NA.x NA NA NA // Green Cross Life Insurance Life insurer KTB Network.%. NM NA.x NA NA NA // Kyobo Life Insurance Co Ltd Life insurer SBI Holdings.%..x NA.x NA NA NA // Tong Yang Life Life insurer Vogo & Consortium.%..x NA.x NA NA NA // Shinhan Life Life insurer Shinhan FHC.%..x NA.x NA NA NA // SK Life Insurance Co Ltd Life insurer Mirae Asset Capital Co Ltd.%..x NA.x NA NA NA Life Insurer Median.x.x.x.x.x.x Source: Company data, Credit Suisse estimates NJA Insurance

25 May Figure : NJA insurance historical transaction multiples % acquired, investment (US$ mn), P/E (x). P/BV (x), P/VIF (x) and P/EV (x) (US$ in millions) Transaction Statistics Date % Shares Investment Price / Announced Target Name Target Type Acquiror Acquired (US$ MM) Hist E Fwd E Book NBV VIF EV // United Overseas Bank (life assurance business) Life insurer Prudential.%. NA NA.x NA NA.x // Great Eastern Holdings Life insurer OCBC.%..x.x.x.x.x.x // Asia General Holdings Composite insurer (Majority Life) Tokio Marine & Nichido Fire.%. NA NA NA NA NA NA // Great Eastern Holdings Life insurer OCBC.%,..x.x.x.x.x.x Life Insurer Median.x.x.x.x.x.x Composite Insurer Median NA NA NA NA NA NA // Hong Leong Assurance Berhad Composite insurer MSIG Insurance.%..x NA.x NA NA NA // MAA Takaful Composite insurer (Majority Life) AMG Insurance Berhad.%. NA NA NA NA NA NA // n Assurance Alliance Berhad Composite insurer (Majority Life) AMG Insurance Berhad.%. NA NA NA NA NA NA // PacificMas Bhd Life insurer OSPL Holdings Sdn Bhd.%. NA NA.x NA NA NA // Commerce Life Assurance; Commerce Takaful Life insurer Aviva Asia.%. NA NA.x NA NA NA // AmAssurance Bhd Composite insurer IAG International.%. NA NA.x NA NA NA // National Insurance Composite insurer (Majority Life) Mayban Fortis Holdings Bhd.%..x NA.x NA NA NA Life Insurer Median (based on NTA) NA NA.x NA NA NA Composite Insurer Median (based on NTA).x NA.x NA NA NA Rest of Southeast Asia // PT Asuransi Jiwa Sinarmas Life insurer Mitsui Sumitomo Insurance Co., Ltd..%..x NA.x NA NA NA // Siam Commercial New York Life Life insurer Siam Commercial Bank.%..x NA.x NA NA NA // Siam Commercial New York Life Life insurer Siam Commercial Bank.%..x NA.x NA NA NA // Reliance Life Insurance Life insurer Nippon Life.%. NM NA.x NA NA NA // Mitsui Sumitomo Metlife Life insurer MS&AD.%..x NA.x NA NA NA // AIG Star / Edison Life insurer Prudential Financial.%,. NA NA NA NA NA NA // PT Mayapada Life Life insurer Zurich.% // Bao Viet Life insurer HSBC.%..x NA.x NA NA NA // Ayala Life Assurance Life insurer Philamlife.% NA NA NA NA NA NA NA // Ocean Life Insurance Life insurer Daiichi Mutual Life Insurance.%. NA NA.x NA NA NA // Benlife Life insurer FMF Development; Merje Trading Inc..%. NA NA NA NA NA NA // HDFC Standard Life Insurance Life insurer Standard Life.%. NM NA.x NA NA NA // Vietnam Insurance Corporation Composite insurer (Majority Life) HSBC Insurance (AsiaPacific).%. NA.x.x NA NA NA // Muang Thai Life Life insurer Fortis Group N.V..%..x NA.x NA NA NA Life Insurer Median.x NA.x NA NA NA Composite Insurer Median NA.x.x NA NA NA // AXA Asia Pacific Life AMP Ltd.%,..x.x.x.x.x.x // TOWER Life Daiichi Mutual Life Insurance.%,..x.x.x.x NA.x // AXA Asia Pacific ( and New Zealand) Life National Bank Ltd.%,..x.x NA.x NA.x // AXA Asia Pacific Life AXA.%,..x.x.x NA NA.x // ING and ING NZ JV Life / Wealth Managemnet ANZ.%,..x NA.x.x NA.x // Aviva Ltd Life National Bank Ltd.%..x NA NA.x.x.x // TOWER n SpinOff Life TOWER shareholder.%..x NA.x NA.x NA // PrefSure Life TOWER Limited.%. NA NA NA NA NA.x Life Insurer Median.x.x.x.x.x.x // Ayala Insurance Holdings Composite insurer (Majority Life) Bank of Philippine Islands.%. NA NA NA NA NA NA // ING Life Insurance Co. (PH) Inc Life insurer Pru Life UK.%. NA NA NA NA NA NA // New York Life Insurance (Phils) Inc. Life insurer Allied Banking Corporation.%. NA NA NA NA NA NA // New York Life Insurance (Phils) Inc. Life insurer Allied Banking Corporation.%. NA NA NA NA NA NA // Equitable PCI Life Insurance Co Life insurer Philamlife.%. NA NA NA NA NA NA // New York Life Insurance (Phils) Inc. Life insurer Allied Banking Corporation.%. NA NA NA NA NA NA All Life Insurer Median.x.x.x.x.x.x All Composite Insurer Median.x.x.x.x.x.x Source: Company data, Credit Suisse estimates NJA Insurance

26 May Likely acquirers In terms of potential acquirers, we see AXA and Manulife as likely to be potentially the more aggressive as both are keen to move into the premier league in terms of regional positioning, although funding capacity for very large deals may hinder Manulife. We are of the view that AXA in particular is very keen to boost its Asian presence, having sold its n interests recently to allow it to take full control of the Asian operations. With the AXA Asia Pacific first right of refusal on Asian life insurance acquisitions now removed, AXA is now longer hamstrung in chasing further Asian deals. We also highlight that the Japanese insurers have been more active in the region recently; with DaiIchi acquiring Tower, Nippon part of Reliance in, and MS&AD part of n insurer Sinar Mas. ZFS's regional management has reiterated its desire to expand its footprint through selected M&A, albeit with targets likely to be more at the small to medium end of the market where ZFS can instil its own culture and subsequently grow organically. We would also not rule out the two superregionals AIA and Prudential from and consolidation activity; as the they seek to enhance and consolidate their leading positions. We highlight Prudential s tilt for AIA last year and acquisition of UOB Life as two recent examples. AIA now has a significant excess capital position (>US$ bn), no gearing and a share price currency well above its regional peers (see Figure ), which gives it significant capacity to outbid its competitors for what it considers to be strategically important assets. We deem AXA and Manulife are likely to be aggressors but don't forget about Allianz, AIA and Prudential Figure : AIA solvency coverage >%... AIA solvency coverage (%) Figure : with excess capital > US$ bn AIA excess capital (US$ mn), F'casts %, F'casts % Available regulatoty capital (US$mn),,,,,,,, Solvency margin % (RHS) MCR (LHS) % % % % % % % Solvency margin (%) Excess capital (US$mn),,,,,, % % % % % MCR FY FY FY FY FYF FYF % FY FY FY FY FYF FYF % Tier capital Tier capital Minimum capital required (MCR) Solvency ratio (%) Excess capital % MCR Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates We deem AIA is more likely to utilise this excess capital position in targeting bolton acquisitions in specific markets, but would not rule out potential larger deals should the right ones come along. A larger debt funded acquisition would allow the company to improve its return on equity metric, which are currently still in the low teens; in part a function of its fairly large excess capital position. NJA Insurance

27 May Potential merger scenarios: We have examined some potential mergers, which, in our view, make sound strategic sense in terms of country diversification, scale or synergies. We highlight that we have simply take two scenarios that make sense from a strategic positiion point of view; but are taking no view that these are more likely than other potential scenarios which are equally plausible. Scenario : AXA + ING ING has announced that it is considering an IPO of its Eurasia holdings. We consider it likely that ING will demerge and attempt to launch an IPO for its Eurasian division some time in, which may attract merger proposals ahead of such a process. Figure : AXA + ING would create a third superregional insurer NJA life insurance premiums (US$ mn) and market share (%), Tier Tier Tier AXA + ING would create a third superregional insurer,,,,,,, AIA Prudential AXA+ING Allianz ING Manulife Great Eastern AXA Ageas NY Life New Zealand Vietnam Source: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC Notes: * data used where available data used for,,,, no inforce data for NZ and Vietnam. Takaful inforce in based on Credit Suisse estimates. We believe AXA is ideally suited to consummate such a transaction, given obvious synergies in its European operations and Japan, although we note that AXA seemingly has little interest in bulking up its developed market exposure in Europe. Within Asia, there is little overlap in key markets (,, ) and as such improved the geographic mix considerably, while creating significant scale for the merged entity in Asia. However, we note that Axa currently lacks the internal resources that would be necessary to acquire ING's Asian operations and with the stock trading at only just over x earnings management are unlikely to consider a material equity raising. NJA Insurance

28 May Scenario : Manulife + Great Eastern We highlight that a Great Eastern would be a strong merger target for many of the regional insurers should OCBC ever decide to monetise its investment or focus solely on its banking operations. Great Eastern occupies top positions in both and and as such would be a strong fit for the likes of Manulife and AXA. We note that the current market capitalisation of Great Eastern is just shy of US$ bn, and is trading on just x embedded value; so any potential transaction would likely go well above this level. We highlight that OCBC could also just sell part of its stake to allow it a continuing interest in the entity. For MFC, the acquisition of Great Eastern could offer several strategic benefits including: () an added bancassurance distribution channel for a company that has historically embraced the agency model; () # market positions in and (on a pro forma basis) in would diversify Manulife's NJA earnings stream away from its mature operations; and () the addition of would offer more exposure to a developing market with high growth potential." Figure : Manulife + Great Eastern would also create a third superregional insurer NJA life insurance premiums (US$ mn) and market share (%),, Tier Tier Tier Manulife + Great Eastern would also create a third superregional insurer,,,,,, AIA Prudential MAN+GE Allianz ING Manulife Great Eastern AXA Ageas NY Life New Zealand Vietnam Source: OCI, MAS, KLIA, TII, Plan for Life, ISI, CIRC, TLAA, LIAM, IRDA, BAPEPAMLK, PIC Notes: * data used where available data used for,,, NJA Insurance