New March towards the Future

The year of 2006 was a very special year for the insurance industry of China. In this year, the State Council issued “Guidelines on Reform and Development of Insurance Industry”. This epoch-making programmatic document will exert an enormous influence on the insurance industry of China in a long run. It indicates China’s insurance industry enters a new prime of development.

The year of 2006 was also a special year for Huatai. The year saw the 10th anniversary of Huatai. In the 10 years Huatai has matured. It has achieved excellent operating results and established scientific business strategies. Its management capabilities have been improved and a consistent innovation capability has been built. With a group company structure and a unique corporate culture in place, Huatai entered into a new period of even more profitable growth. Ten years of market experiences firmed our belief in the business philosophy of "intensive management, professional operation, and profitable growth".

The year of 2006 was a very rewarding year for Huatai. The Company’s insurance business achieved a healthy and fast development, its investment income reached the historically high, and the branding construction work also had outstanding achievement. The Company’s direct premium income increased 25.58% compared to prior year to RMB 1.478 billion, and the balance of investment-type insurance products increased to RMB 6.656 billion. The Company had a best-ever investment performance since it was founded, with a record investment income of RMB 303 million. The Company’s total assets reached RMB 19.29 billion, its net worth reached RMB 1.827 million, and the net profit after tax reached RMB 168 million representing a ROE of 10.50%. Huatai became the only insurance company in China which managed to have profit and dividend distribution for ten consecutive years since its establishment. This extraordinary achievement is a pride for Huatai, and also brings exceptional returns to our shareholders. Meanwhile, Huatai’s business philosophy of "professional management, steady operation, and innovative development" has gained extensive awareness in the market and high praise from regulators and the public. In 2006, the Company was awarded as the "Excellent Enterprise of China", “Annual Top Ten Brands (Insurance) of China in the World Market" and "Top Ten Reliable Brands in China’s Insurance Market".

The year of 2006 was a reforming year for Huatai. The reform of marketing expense management has historical significance in enhancing the Company’s transparency and sales capability. The establishment of Commercial Line Unit, Casualty Unit, Automobile Business Unit, and the centralization of claims service will effectively improve the Company’s management to a more intensive, professional and elaborate level. The new performance-based compensation appraisal program also provided momentum to the future development of Huatai.

The year of 2006 was also an innovative year for Huatai. Facing ever-fierce market competition, the Company has been firmly implementing the "Blue Ocean Strategy" by promoting initiatives in its management, product and service. The success of "Huatai No.1" once again demonstrated the innovation strength of Huatai in investment-type products. Huatai also extended its product portfolio by introducing products with high technological components, large market potentials and strong government support. As for customer service, there are initiatives to promote the growth of personal lines business, such as setup of customer service centers and service shops inside residential communities.

In 2007, Huatai is turning to a new page for the next 10 years and moving forward from a higher starting point. In the new stage of development, our top priority is to achieve fast and healthy development. Not only insurance premium will grow at a faster speed, but also product mix will be optimized and ROE will hit new high.

The year of 2007 is an execution and exploration year for Huatai. With our new mission under the new market conditions, the Company officially launched its long-term incentive plan and established its new performance appraisal mechanism. Our corporate culture is turning into a new stage of "performance-oriented culture" from previous "discipline-oriented culture" and "responsibility-oriented culture". We will continue our entrepreneurial spirit, work arduously and collaboratively to implement our “Blue Ocean Strategy”. We are dedicated to achieve our 2007 business plan and try to realize ahead of our plan the goal of “Doubling production in three years and quadrupling in five years”.

In 2007, let us start our new march towards the future.

Huatai Insurance Company of China, Limited, incorporated in Beijing on August 29, 1996 with a registered capital of RMB 1.333 billion, is the first nationwide joint-stock property insurance company in China. The Company's 53 shareholders engage in 24 industries including petroleum, power, metallurgy, chemicals, aviation, shipping etc., most of which are powerful and profitable enterprises or enterprise groups, with total assets exceeding RMB 2 trillion. Currently, the Company has formed a nationwide network by establishing branches in 35 cities.

In May 2002, ACE Group, a world-known insurance group, became Huatai’s biggest shareholder. As a strategic partner, it provided Huatai with advanced management concepts and global business support network. In 2006, the Company’s insurance business maintained continuous and steady growth, while its investment business registered a record-breaking year in the history, which enabled Huatai to become the only insurance company in China to realize profit and dividend distribution for ten consecutive years.

In January and April 2005, Huatai Asset Management Company and Huatai Life Insurance Company opened business successively ,indicating that the Company has made a great approach to the development of a group-company structure.