- 2 - There were two auditors from KPMG Phoomchai Audit Limited attending the meeting, namely Mr. Nicholas Bellamy and Miss Wilaiwan Srimongkolsiri.

Transcription

1 -Translation- Minutes of the 2017 Annual General Meeting of Shareholders The SCB Life Assurance Public Company Limited Friday 21 April 2017 Kaomai Room 3-4, 3 rd Floor, Tower D Building, Plaza East The Siam Commercial Bank Public Company Limited, Head Office No. 9 Ratchadapisek Road, Jatujak Subdistrict, Jatujak District, Bangkok Khunying Jada Wattanasiritham, Chairman of the Board of Directors, presided as the Chairman of the meeting. The directors, senior executives, and auditors who attended the meeting were as follows: There were eight directors attending the meeting, namely: 1. Khunying Jada Wattanasiritham Chairman of the Board and Independent Director 2. Mr. Anucha Laokwansatit Vice Chairman of the Board and Director 3. Mr. Utid Tamwatin Independent Director, Chairman of the Audit Committee, and Member of the Nomination, Compensation and Corporate Governance Committee 4. Mr. Weerawong Chittmittrapap Independent Director and Chairman of the Nomination, Compensation and Corporate Governance Committee 5. Miss Amornthip Chansrichawla Independent Director and Member of the Audit Committee 6. Mr. Verachai Tantikul Director, Member of the Audit Committee, and Member of the Nomination, Compensation and Corporate Governance Committee 7. Mr. Narong Srichukrin Director 8. Mr. Sarut Ruttanaporn Director There was a director being absent with apology, namely: 1. Miss Phanporn Kongyingyong Director There were five senior executives attending the meeting, namely: 1. Mr. Lee Tse Tiong Acting Managing Director and Chief Financial Officer 2. Mr. Keilic Wong Deputy Managing Director, Actuarial, Product Development and Risk Management Group 3. Mr. Pongchai Koohachaiskun Executive Vice President, Life Insurance Administration Group 4. Mr. Pricha Ruthiraphong Executive Vice President, Marketing Group 5. Mr. Sahapol Polpathapee Executive Vice President, Agency Group

2 - 2 - There were two auditors from KPMG Phoomchai Audit Limited attending the meeting, namely Mr. Nicholas Bellamy and Miss Wilaiwan Srimongkolsiri. The Chairman expressed her appreciation to the shareholders for attending the meeting and informed the meeting that 31 shareholders were present in person and by proxy, altogether holding 65,958,990 shares, equivalent to percent of the total issued shares, thus constituting a quorum of the meeting pursuant to the Company s Articles of Association. The Chairman then declared the 2017 Annual General Meeting of Shareholders opened. The meeting commenced at hrs. The Chairman introduced to the meeting the directors, the senior executives and the auditors who attended this meeting. The Chairman then asked the Secretary to the Meeting (Mrs. Phatchada Muenthong) to inform the meeting of the procedural guidelines applied as the rules for vote casting on each agenda, key essences of which could be summarized as follows: According to Article 47 of the Company's Articles of Association, a decision or resolution of the meeting of shareholders shall be made by voting, and one share shall be counted as one vote, notwithstanding the manner of voting. In voting for each agenda item, after the Chairman asked whether there is any shareholder or proxy who wishes to disapprove or abstain the vote, the shareholders or proxies who wish to disapprove or abstain their voting in such agenda item must, on an agenda item by item basis, identify themselves by raising their hands so that the Company s officers will then collect the ballots from such shareholders or proxies and record the number of votes contained therein. It will be deemed that the shareholders or proxies who do not either raise their hands or deliver the ballots to the Bank s officers cast their approval votes on such agenda item. In the event where a shareholder appoints a proxy to attend the meeting and vote on his/her behalf pursuant to his/her intention as correctly marked in the proxy form for the relevant agenda item, the Company will not hand over the ballot to the proxy in respect of such agenda item because the Company has already recorded such votes as marked or specified by the shareholder in the proxy form. The vote counting for each agenda item in this meeting could be divided into 2 categories according to the Public Limited Companies Act B.E as follows: 1. For agenda items which require a simple majority of the votes of shareholders who attend the meeting and cast their votes, i.e. agenda items nos. 2, 3, 5 and 6, only the approval and disapproval votes of the shareholders who are entitled to vote will be applied as the base number of votes for calculation purpose, while the abstention votes will be excluded.

3 For an agenda item which requires a vote of not less than two-thirds of the total number of votes of shareholders who attend the meeting, i.e. agenda item no. 4, the total number of votes of the shareholders who attend the meeting will be applied as the base number of votes for calculation purpose. The total number of shareholders or proxies in each agenda item may vary since some shareholders or proxies may attend the meeting after the meeting commencement or leave the meeting before the meeting adjournment. Shareholders and proxies leaving the meeting before the meeting adjournment were requested to contact the officers at the early exit counter to record their early exit and return all the remaining ballots. The Chairman then requested the meeting to consider the matters on the agenda according to the notice of the meeting as follows: Agenda No. 1 To acknowledge the Annual Report of the Board of Directors The Chairman requested the meeting to consider the 2016 Annual Report of the Board of Directors as shown in the Company s 2016 Annual Report which had been distributed to the shareholders together with the notice of the meeting. The Chairman invited the Acting Managing Director and Chief Financial Officer (Mr. Lee Tse Tiong) to give a presentation in respect of this agenda item to the meeting, details of which could be summarized as follows: In 2016, the life insurance market registered a decline in new business premium for the first time in 10 years. The market s new business premium decreased by 7.7 percent while that of the Company dropped by 35.7 percent. The prolonged low interest rate environment and the market volatility in 2016 prompted the Company to strategically shift to protection products, gradually decrease the proportion of savings products, and stop the sale of tactical products. In the second half of 2016, The Siam Commercial Bank Public Company Limited which was the Company s primary distributor, revamped its branch business model by separating sale from service and this affected the Company s insurance sales volume. At the end of 2016, the Company s total year premium stood at Baht 52.2 Billion, a decrease of 0.5 percent YOY. Renewal premiums grew 14 percent but was not sufficient to cover the shrinkage in the new business premiums. In 2016, the bancassurance channel remained the largest distribution channel of the Company, contributing approximately 89 percent of both new business premiums and total year premiums. However, new business premiums from the bancassurance channel registered a decline of 39 percent. In 2016, the Company s capital adequacy ratio (CAR) was percent, lower than percent in The low interest rate environment resulted in the Company s need for higher reserves for its insurance liabilities and capital for its investments.

4 - 4 - The decline in interest rates, as evidenced by the 10-year government bond yield which declined from 3.60 percent in 2012 to 2.23 percent in 2016, was a primary reason behind the Company s strategic shift from savings products to high-protection products. Since there were no questions raised by any shareholders on this agenda item, the Chairman then proposed to the meeting to acknowledge the Annual Report of the Board of Directors without voting. The meeting resolved to acknowledge the Annual Report of the Board of Directors as proposed. Agenda No. 2 To consider and approve the financial statements for the year ended 31 December 2016 The Chairman requested the meeting to consider and approve the audited financial statements for the year ended 31 December 2016 as shown in the Annual Report that also contained the management discussion and analysis (MD&A) and had been submitted to the shareholders together with the notice of the meeting. The Acting Managing Director and Chief Financial Officer (Mr. Lee Tse Tiong) was requested to give a presentation in respect of this agenda item to the meeting. Details were as summarized below: Statement of financial position as of 31 December 2016: The Company s total assets were Baht billion, an increase of 17 percent YOY. The asset portfolio was mainly comprised of investment assets which totaled Baht billion (an increase of 16 percent). Key items on the liabilities and shareholders equity were life insurance liabilities which stood at Baht 217 billion (an increase of 17 percent) and the shareholders equity which stood at Baht 25.2 billion (an increase of 17 percent). Statement of comprehensive income for 2016: The Company s income totaled Baht 62.4 billion, representing an increase of 2 percent YOY, mainly from renewal premiums and investment gains. The Company s expenses totaled Baht 53.8 billion (an increase of 2 percent), comprised of the insurance expense of Baht 51.1 billion (an increase of 2 percent) as a result of insurance product diversification and the operating expense of Baht 2.7 billion (an increase of 11 percent), mainly from IT-related expenses associated with the implementation the Integral Life system for insurance management. The Company registered a net profit of Baht 6,881 million (an increase of 1 percent). Key Financial Highlights: Change (%) Net Profit After Tax (Million Baht) 6,881 6,838 1 Earnings Per Share (Baht) Book Value Per Share (Baht) Return on Equity (Percent) pts Capital Adequacy Ratio (Percent) pts

5 - 5 - Shareholders made inquiries; and the Chairman of the Board, the Vice Chairman of the Board and the Acting Managing Director and Chief Financial Officer jointly provide clarifications which could be summarized as follows: 1. A shareholder inquired about reasons behind the decrease in the Company s CAR. The Chairman of the Board and the Acting Managing Director and Chief Financial Officer jointly explained that the computation of the Company s capital was in accordance with the guidelines stipulated by the Office of Insurance Commission or OIC and was based on several variables such as the shareholders equity and the unrealized investment gains/losses under a mark-to-market (MTM) valuation as at the end of last year. In addition, the low interest rate environment caused the Company s investment in debt instrument portfolio to record lower yields and the rising interest trend in 4Q2016 resulted in the Company having to record unrealized mark-to-market or losses at year-end. 2. A shareholder asked which of the interest rate movements, i.e. upward movement or downward movement, was more favorable for the Company. The Vice Chairman of the Board responded that the upward movement of interest rates was generally favorable for the insurance business. However, the MTM valuation of the Company s investment in debt instrument portfolio as explained earlier was a standard accounting practice for reflecting the fair value of the assets based on the changing market prices. In brief, the upward movement of interest rates was favorable for life insurance business but, at the same time, might affect the recorded asset value. Therefore, the implications of interest rate movement should be viewed from a long-term perspective. Since there were no further questions raised by any shareholder, the Chairman requested the meeting to approve the financial statements for the year ended 31 December 2016 as proposed. The meeting of shareholders resolved to approve the financial statements for the year ended 31 December 2016 pursuant to the following number of votes: 0 Vote Agenda No. 3 To consider and approve the allocation of profit from the Company s operational results for the year 2016 and the non-payment of dividend The Chairman informed the meeting that the Company s net profit for the year ended 31 December 2016, according to the Company s financial statements, was Baht 6,881 million and there was no accumulated loss.

6 - 6 - The Company had a policy to pay dividend in any year when, after the allocation of net profit as legal reserve and regulatory capital funds, it recorded net profit and had no accumulated loss. The dividend payout shall be in line with economic conditions and business opportunities by taking into account the Company s capital needs for long-term benefits. Subsequently, the Chairman reported to the meeting that the Company s capital adequacy ratio (CAR) as of 31 December 2016 was 236 percent and the ratio of investment assets to insurance reserve was 115 percent; and that the ratios met the requirements of the OIC governing dividend payments. However, as the supervisory stress test under the worst-case scenario revealed that the Company s CAR after dividend payment would be below 140 percent, the Company, according to the OIC s requirements, could not make a dividend payment. The table below summarized the key indicators regarding dividends: (Proposed) Net Profit (Million Baht) 6,881 6,838 5,833 Dividend (Baht/Share) Total Dividend Payment (Million Baht) 0 1,025 1,458 Dividend Pay-out Ratio (% of Net Profit) Stressed CAR before Dividend Payment (%) Therefore, the Board deemed it appropriate to request the meeting of shareholders to approve the non-payment of dividend from the Company s 2016 operational results. With regard to the allocation of net profit as legal reserve, as the Company s reserve had reached the amount prescribed by laws and the Company s Articles of Association, the Company was not required to allocate its 2016 net profit as legal reserve. A shareholder inquired whether the Company s current CAR level was considered appropriate. The Vice Chairman of the Board explained that, as mentioned earlier, one of the variables of the capital computation was the interest rate which had been highly volatile in 2016 and that the volatility in the global economy and the interest rate movements still existed amid the anticipation about the Federal Reserve s interest rate hikes. Therefore, the Company was not concerned about its CAR which stood at 236 percent at the end of 2016 because the level was considered strong and above the OIC s minimum requirement. Since there were no further questions raised by any shareholder, the Chairman requested the meeting to approve the non-payment of dividend and to acknowledge the non-allocation of the Company s 2016 profit as legal reserve as detailed above.

7 - 7 - The meeting of shareholders resolved to approve the non-payment of dividend and to acknowledge the non-allocation of the Company s 2016 profit as legal reserve pursuant to the following number of votes: Approved 65,963,842 votes equivalent to percent 1,150 Votes Agenda No. 4 To consider and approve the directors remuneration for the year 2017 and the directors rewards based on the year 2016 operational results The Chairman informed the meeting that the Board assigned the Nomination, Compensation and Corporate Governance Committee to consider the directors remuneration to be proposed to the meeting of shareholders. The Chairman of the Nomination, Compensation and Corporate Governance Committee (Mr. Weerawong Chittmittrapap) was requested to give a presentation in respect of this agenda item to the meeting. The Chairman of the Nomination, Compensation and Corporate Governance Committee then proposed for the meeting s consideration and approval the three types of remuneration, namely the remuneration for members of the Board and the Board committees for the year 2017, and the rewards based on the year 2016 operational results. The proposed rates of remuneration were the same as the previous year as follows: Remuneration of Directors: Baht 240,000 per year per director (Baht 20,000 per month) and, in case of the Chairman of the Board, Baht 480,000 per year (Baht 40,000 per month), to be paid monthly Remuneration of Board Committee Members: 2.1 Audit Committee: Monthly Fee: o Chairman Baht 30,000 per month o Member Baht 15,000 per month per member 2.2 Nomination, Compensation and Corporate Governance Committee: Monthly Fee: o Chairman Baht 16,000 per month o Member Baht 12,000 per month per member 2.3 Investment Committee: Monthly Fee: o Chairman Baht 20,000 per month o Member Baht 10,000 per month per member

8 Directors rewards for the year 2016 operational results: o Chairman Baht 550,000 o Member Baht 330,000 Directors representing The Siam Commercial Bank Public Company Limited which was the major shareholder of the Company had declared their intent to waive their rights to receive the monthly remuneration and directors rewards associated with all types of the remuneration mentioned above. The Board concurred with the Nomination, Compensation and Corporate Governance Committee s proposal that the meeting of shareholders should approve the rates of the remuneration of members of the Board and the Board committees for the year 2017 and the directors rewards based on the year 2016 operational results as recommended since they were appropriate and reflected the duties and responsibilities of the members of the Board and the Board Committees. Since there were no questions raised by any shareholder, the Chairman requested the meeting to approve the remuneration of members of the Board and the Board committees for the year 2017 and the directors rewards based on the year 2016 operational results as detailed above. The meeting of shareholders resolved to approve the remuneration of members of the Board and the Board committees for the year 2017 and the directors rewards based on the year 2016 operational results pursuant to the following number of votes: 0 vote equivalent to percent Not entitled to vote 0 vote equivalent to percent Agenda No. 5 To consider and elect the directors in replacement of those retiring by rotation The Chairman informed the meeting of the voting procedures for this agenda item that the shareholders were requested to vote on the election of each individual director in a consecutive order. After the shareholders had finished casting their votes for all directors, shareholders who cast disapproval or abstention votes would be requested to raise their hands so that the Company s officers would then collect their ballots altogether and record the votes on the election of each director. The Board assigned the Nomination, Compensation and Corporate Governance Committee to nominate qualified candidates for directorship in replacement of those retiring by rotation which would be proposed to the shareholders for approval. The Chairman of the Nomination, Compensation and Corporate Governance Committee (Mr. Weerawong Chittmittrapap) was requested to give a presentation in respect of this agenda item to the meeting.

9 - 9 - The Chairman of the Nomination, Compensation and Corporate Governance Committee proposed for the meeting s consideration the election of directors to replace the following three directors to retire by rotation this year: 1) Khunying Jada Wattanasiritham Chairman of the Board and Independent Director 2) Mr. Anucha Laokwansatit Vice Chairman of the Board and Director 3) Mr. Narong Srichukrin Director In addition, Mr. Deepak Sarup resigned as the Company s director on 25 February 2016 and his directorship was due for retirement by rotation at the 2017 AGM. Therefore, the vacant directorship was also due for retirement by rotation at this AGM. After due consideration, the Nomination, Compensation and Corporate Governance Committee was of the view that the Board should propose to the meeting of shareholders the re-election of the three directors to retire by rotation to continue their office for another term. For the vacant directorship from the resignation of Mr. Deepak Sarup, the Nomination, Compensation and Corporate Governance Committee resolved to recommend the Board to nominate Mrs. Kittiya Todhanakasem to the meeting of shareholders for election as a director to fill the vacant directorship. The Nomination, Compensation and Corporate Governance Committee was of the view that the four nominees possessed suitable knowledge and abilities and were fully qualified for being the Company s directors pursuant to the applicable laws and the Company s Articles of Association. Pursuant to the Charter of the Board, the tenure of an independent director was limited to three consecutive terms from the first date of appointment as an independent director. With regard to the Company s nomination of Khunying Jada Wattanasiritham as an independent director for another term after her tenure had reached the limit of three consecutive terms, the Nomination, Compensation and Corporate Governance Committee was of the view that, in addition to her remarkable credentials which were widely recognized, Khunying Jada had been heralded for her integrity. In addition, it was essential for the Company to be led by leaders who possessed the depth and breadth of knowledge and professional experience. Therefore, it was deemed appropriate to nominate Khunying Jada to the meeting of shareholders for re-election as an independent director for another term. After due consideration, the Board concurred with the proposal of the Nomination, Compensation and Corporate Governance Committee that the meeting of shareholders should re-elect the three directors retiring by rotation in 2017, namely 1) Khunying Jada Wattanasiritham, 2) Mr. Anucha Laokwansatit, and 3) Mr. Narong Srichukrin, to continue their office for another term and to elect Mrs. Kittiya Todhanakasem as a director to fill the vacant directorship. Since there were no questions raised by any shareholder, the Chairman requested the meeting to approve the election of directors as proposed.

10 The meeting of shareholders resolved to approve the election of the four directors pursuant to the following number of votes: 1. Khunying Jada Wattanasiritham 0 vote 2. Mr. Anucha Laokwansatit 0 vote 3. Mr. Narong Srichukrin 0 vote 4. Mrs. Kittiya Todhanakasem 0 vote Agenda No. 6 To consider and appoint the auditors and fix the audit fee for the year 2017 The Chairman informed the meeting that the Board assigned the Audit Committee to consider and nominate external auditors, and propose the audit fee which would be proposed to the meeting of shareholders for approval. The Chairman of the Audit Committee (Mr. Utid Tamwatin) was requested to give a presentation in respect of this agenda item to the meeting. The Chairman of the Audit Committee proposed for the meeting s consideration the appointment of the auditors and fixing the audit fee for the year 2017 as follows: 1. To appoint the auditors from KPMG Phoomchai Audit Limited, namely Mr. Winid Silamongkol, license no. 3378, or Mr. Charoen Phosamritlert, license no. 4068, or Miss Pantip Gulsantithamrong, license no. 4208, as the Company s auditors for the year The above-named auditors and KPMG Phoomchai Audit Limited did not have any relationship or interest or transaction that might create a conflict of interest with the Company, executives, major shareholder or any persons related thereto.

11 To fix the Company's audit fee for the year 2017 at Baht 2.46 million, and acknowledge other service fees for the year 2017 in the amount of Baht 2.44 million. The Board concurred with the proposal of the Audit Committee that the meeting of shareholders should approve the appointment of the auditors and fixing the audit fee for the year 2017 as proposed because the auditors from KPMG Phoomchai Audit Limited demonstrated high standard of work and independence, duly performed their duties under their responsibilities, and completed the review and audit of the financial statements in a timely manner. In addition, the proposed audit fee was appropriate in view of the audit scope. Since there were no questions raised by any shareholder, the Chairman requested the meeting to approve the appointment of the auditors and the audit fee for the year 2017 as detailed above. The meeting of shareholders resolved to approve the appointment of the auditors and the audit fee for the year 2017 pursuant to the following number of votes: 0 vote The Chairman informed the shareholders that all items on the meeting agenda as specified in the notice of the meeting were completely considered, and invited the shareholders to raise questions or express opnions. Shareholders made inquiries; the Vice Chairman of the Board and the Acting Managing Director and Chief Financial Officer jointly provide clarifications which could be summarized as follows: 1. Clarification was sought in response to the news published by the media that The Siam Commercial Bank Public Company Limited might sell its stake in the Company to an insurance company. The Vice Chairman of the Board responded that SCB had never made such announcement. SCB had a policy to enhance and strengthen its insurance arm and there were several viable options that were being considered, including an option of partnering or forming an alliance with established insurers to better serve customers. Such an alliance or partnership was not necessarily limited to a stake sale. 2. With reference to the sale of life insurance products with retirement savings plan by other insurers through SCB s distribution network, did the Company have a plan to offer such life insurance products? The Acting Managing Director and Chief Financial Officer answered that the Company planned to offer life insurance products with retirement saving plans. However, considering the prevailing interest rate environment, the Company must exercise extra prudence and careful consideration when designing life insurance products that involved long-term implications. Under circumstances where the

12 Company was unable to offer such products to the Bank s customers, the Bank could source the required products from other parties. 3. Please provide the Company s directions or strategy for product development in The Acting Managing Director and Chief Financial Officer explained that in 2017 the Company would focus on protection products. Recently, the Company had launched new high-protection products which provided health coverage called Pro Huang Yai and products that basically offered cancer coverage. The Company planned to continuously develop new products, primarily focusing on highprotection products which were also part of risk mitigation for the Company in light of the continued low interest rate environment. 4. It was requested that, in subsequent years, information about the embedded value (EV) and the value of new business (VONB) be included in the financial information presented to shareholders. Since there was neither further question nor comment raised by any shareholder, the Chairman expressed her appreciation to the shareholders for attending the meeting and for their questions and valuable opinions which the Board would take into consideration. The Chairman then declared the meeting adjourned. The meeting was adjourned at hrs. Chairman (Khunying Jada Wattanasiritham) Secretary to the Meeting (Mrs. Phatchada Muenthong)