MEASURES ON GOVERNING INSURANCE PROTECTION FUND

China Insurance Regulatory Commission

Decree of the China Insurance Regulatory Commission

No. 16

The Measures for the Administration of Insurance Protection Fund, which were deliberated and adopted at the chairmen’s executive meeting
of the China Insurance Regulatory Commission on December 29, 2004, are hereby promulgated and shall come into force as of January
1, 2005.

Chairman Wu Dingfu

December 30, 2004

Measures on Governing Insurance Protection Fund

Chapter I General Provisions

Article 1

With a view of regulating the payment, administration and use of insurance protection fund, guaranteeing the interests of policyholders,
effectively dissolving financial risks and maintaining the financial stabilization, the present Measures are formulated in accordance
with Article 97 and other provisions of the Insurance Law of the People’s Republic China (hereinafter referred to as the Insurance
Law).

Article 2

For the purpose of the present Measures, the “insurance companies” shall refer to the commercial insurance companies established upon
approval of the insurance regulatory institution and registered according to law, including Chinese-funded insurance companies, Chinese-foreign
joint venture insurance companies, solely foreign-funded insurance companies and branches of foreign insurance companies.

For the purpose of the present Measures, the “insurance protection fund” refers to the statutory fund paid by insurance companies
in accordance with the Insurance Law and to be paid for providing relief to the policyholders or companies with ceded policies according
to the principles of centralized management and planned use as a whole when an insurance company is revoked, goes bankruptcy or is
under any of circumstances as recognized by the China Insurance Regulatory Commission (hereinafter referred to as the CIRC) in accordance
with Article 20 of the present Measures.

For the purpose of the present Measures, the “policyholders” shall refer to the parties of insurance contracts who have the power
to claim for policy-related benefits when an insurance company is revoked or goes bankruptcy, including the applicants for insurance,
the insured or the beneficiaries.

For the purpose of the present Measures, the “company with ceded policies”shall refer to a life insurance company that accepts the
legally transferred life insurance contracts from an insurance company that is revoked or goes bankruptcy.

Article 3

The insurance protection fund shall be fallen into the protection fund of property insurance companies and the protection fund of
life insurance companies.

The protection fund of property insurance companies shall be formed by the payments from property insurance companies, comprehensive
reinsurance companies and property reinsurance companies.

The protection fund of life insurance companies shall be founded by the payments from life insurance companies, health insurance companies
and life reinsurance companies.

Article 4

The administration and use of the insurance protection fund shall adhere to the principles of openness, reasonableness and effectiveness.

Article 5

The insurance protection fund shall be subject to the CIRC’s centralized management and planned use as a whole.

Chapter II Payment

Article 6

In the case of insurance business under the scope of relief from the insurance protection fund, an insurance company shall pay the
insurance protection fund according to the following proportions:

(1)

1% of self-retaining premiums for the property insurance, accidental injury insurance and short-term health insurance;

(2)

0.15% of self-retaining premiums for long-term life insurance with a guaranteed interest rate and long-term health insurance;

(3)

0.05% of self-retaining premiums for long-term life insurance without a guaranteed interest rate; and

(4)

The payment proportion for other insurance business of insurance companies shall be separately prescribed by the CIRC.

Article 7

The CIRC shall open a special account for the insurance protection fund, which shall be assessed on the basis of different accounts
of insurance companies.

Article 8

An insurance company shall in time and sufficiently pay the insurance protection fund into the special account for the insurance protection
fund, however if the insurer is under any of the following circumstances, its payment of the insurance protection fund can be paused:

(1)

in case the insurance protection fund surplus of a property insurance company, comprehensive reinsurance company or property reinsurance
company amounts to 6% of its total assets; or

(2)

in case the insurance protection fund surplus of a life insurance company, health insurance company or life reinsurance company amounts
to 1% of its total assets.

Where the insurance protection fund surplus of an insurer reduces or its total assets increase and thus the proportion of the insurance
protection fund to the total assets cannot satisfy the requirements as provided for by the preceding Paragraph, its payment of the
insurance protection fund shall be automatically resumed.

The insurance protection fund surplus of an insurance company equals to the accumulatively paid insurance protection fund plus the
apportioned investment incomes minus the various expenses.

Article 9

In case an insurance company is revoked or declared bankrupt and its insurance protection fund surplus is not enough for the relief
that should be granted to policyholders or the company with ceded policies, the insufficient amount shall be the market share calculated
upon the self-retaining premiums of other companies in the previous year, minus the insurance protection fund surplus.

Article 10

The insurance protection fund paid by an insurer shall be calculated on a yearly basis and be prepaid on a quarterly basis.

The insurance protection fund shall be prepaid by an insurer within 15 working days after the following quarter, and shall settle
it within four months after the end of each year.

Article 11

The CIRC may adjust the payment proportion, the upper limit of scale and the payment methods of the insurance protection fund on the
basis of the actual situations of insurance industry development and the risk.

Chapter III Administration and Supervision

Article 12

The principles of safety, profitability and fluidity shall be adhered to in using the insurance protection fund, and the guarantee
of asset safety is the precondition of the maintenance and increment of asset values.

The use of insurance protection fund shall be confined to the bank deposits, dealings of government bonds and other forms as prescribed
by the CIRC for using the fund. No insurance protection fund may be used for the investments in equities, real estate or other industries.

The CIRC may authorize a professional investment management institution for the use of insurance protection fund.

Article 13

The insurance protection fund council shall undertake the responsibility for supervising the administration and use of insurance protection
fund.

Article 14

The insurance protection fund council consists of such institutions as the insurance companies, the Legislative Affairs Office of
the State Council, the Ministry of Finance, the People’s Bank of China and State Administration of Taxation.

The measures for the work of the insurance protection fund council shall be separately prescribed by the CIRC.

Article 15

The CIRC shall, within five months after the end of each fiscal year, complete the audited financial report about the insurance protection
fund, and make it public to the council, member entities and all insurance companies.

Chapter IV Use

Article 16

In case an insurance company is revoked or declared bankrupt, and its liquidation properties are insufficient for paying the policy-related
benefits, the insurance protection fund shall offer relief to the policyholders of non-life insurance contracts in accordance with
the following principles:

(1)

Policyholders’ losses that are no more than 50,000 yuan will be fully covered by the insurance protection fund;

(2)

For individual policyholders, in the case of the losses in excess of 50,000 yuan, the insurance protection fund will cover 90 percent
of the extra part; for corporate policyholders, in the case of the losses in excess of 50,000 yuan, the insurance protection fund
will cover 80 percent of the extra part.

The policyholders’ losses as mentioned in the preceding Paragraph refer to the balance between the policyholders’ policy-related benefits
and the compensations recovered from the liquidation properties.

Article 17

In case a life insurance company is revoked or declared bankrupt, its life insurance contracts shall be transferred to another life
insurance company. If it cannot reach an assignment agreement with other life insurance company, the CIRC will designate a life insurance
company to take over the said life insurance contracts.

Article 18

In case the liquidation assets of an insurance company that is revoked or declared bankrupt are insufficient to reimburse the policy-related
benefits under life insurance contracts, the insurance protection fund shall offer relief to the companies with ceded policies in
accordance with the following principles:

(1)

For individual policyholders, relief from the policy-related benefits after the transfer shall not exceed 90 percent of policy-related
benefits prior to the transfer; and

(2)

For corporate policyholders, relief from the policy-related benefits after the transfer shall be no more than 80 percent of policy-related
benefits prior to the transfer.

A company with ceded policies shall evaluate policyholders’ policy-related benefits after the transfer in light of the standards as
prescribed in the preceding Paragraph, and hereby revise life insurance contracts with the policyholders.

Article 19

In case an insurance company is revoked or declared bankrupt, the policyholders shall sign agreements for transferring debts and credits
prior to the end of liquidation, the insurance protection fund shall offer relief to the policyholders and policyholders shall transfer
debts and credits of the insurance company to the insurance protection fund.

After the liquidation, if the compensations obtained by the insurance protection fund exceed the paid relief, the insurance protection
fund shall return the balance to policyholders.

Article 20

In the event of a significant crisis facing the insurance industry that may seriously endanger social public interests and financial
stabilization, the CIRC can draw on the insurance protection fund.

Article 21

The insurance protection fund will not cover losses from any of the following businesses of an insurance company:

(1)

insurance businesses that are directly undertaken overseas by an insurance company and inward transactions from abroad;

(2)

policy insurance businesses of an insurance company; and

(3)

any other insurance business as identified by the CIRC that is not under the scope of relief from the insurance protection fund.

Chapter V Legal Liabilities

Article 22

Any insurance company in violation of this Measures shall be ordered to correct and be imposed upon a fine of 50,000 yuan up to 300,000
yuan; in case the circumstances are serious, its scope of businesses may be restricted and it may be ordered to stop undertaking
new businesses or its business permit for insurance businesses shall be withdrawn.

The senior management personnel and persons directly responsible for the illegal acts shall be given warnings or ordered to be dismissed
or replaced and be imposed upon a fine of 20,000 yuan up to 100,000 yuan in light of the different circumstances.

Chapter VI Supplementary Articles

Article 23

The insurance companies shall, within three months as of the implementation day of this Measures, pay 50% of the submitted insurance
protection fund into a special account for the insurance protection fund as opened by the CIRC, and the remaining part shall be paid
off within one year as of the implementation day of this Measures.

Article 24

The power to interpret this Measures shall be vested in the CIRC.

Article 25

The present Measures shall be implemented as of January 1, 2005.