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THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular,makes no representation as to its accuracy or completeness and expressly disclaims any liabilitywhatsoever for any loss howsoever arising from or in reliance upon the whole or any part of thecontents of this circular.

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you shouldconsult a stockbroker or other registered dealer in securities, bank manager, solicitor, professionalaccountant or other professional adviser.

If you have sold all your shares in China Insurance International Holdings Company Limited, youshould at once hand this circular, together with the enclosed form of proxy to the purchaser or to thebank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

CHINA INSURANCE INTERNATIONAL HOLDINGS COMPANY LIMITED中保國際控股有限公司(Incorporated in Hong Kong with limited liability)

DISCLOSEABLE AND CONNECTED TRANSACTIONAND ONGOING CONNECTED TRANSACTIONS

ACQUISITION OFCHINA INSURANCE GROUP ASSETS

MANAGEMENT LIMITED

Financial adviser to China Insurance International Holdings Company Limited

The Hongkong and Shanghai Banking Corporation Limited

Independent financial adviser to the Independent Board Committee

YU MING INVESTMENT MANAGEMENT LIMITED

A letter from the Independent Board Committee is set out on pages 14 to 15 of this circular.

A letter from Yu Ming Investment Management Limited, the independent financial adviser, containingits advice to the Independent Board Committee is set out on pages 16 to 23 of this circular.

A notice convening an extraordinary general meeting of the Company to be held at 24th Floor, MingAn Plaza Phase II, 8 Sunning Road, Causeway Bay Hong Kong at 11:00 a.m. on 21 August, 2002 toconsider and, if thought fit, to pass the ordinary resolution as set out on pages 30 to 31 of this document.Whether or not you intend to attend the meeting, you are requested to complete and return theaccompanying form of proxy in accordance with the instructions printed thereon as soon as possibleand in any event not less than 48 hours before the time appointed for holding the meeting or anyadjournment thereof. Completion and return of the form of proxy shall not preclude you from attendingand voting in person at the meeting or any adjourned meeting should you so desire.

29 July, 2002

CONTENTS

– i –

Page

Definitions ................................................................................................................................. ii

Letter from the Board

Introduction ..................................................................................................................... 1

The Sale and Purchase Agreement ................................................................................. 3

Change of the Company’s Shareholding Structure ....................................................... 6

Information on CIGAML ................................................................................................ 7

Reasons for the Proposed Acquisition ........................................................................... 7

Particulars of the Loan .................................................................................................... 8

Particulars of the Ongoing Connected Transactions ..................................................... 9

Benefits of the Ongoing Connected Transactions ......................................................... 10

Waiver Application .......................................................................................................... 10

Businesses of the Company ............................................................................................ 11

Appointment of Director ................................................................................................. 11

Approval by the Independent Shareholders ................................................................... 12

Extraordinary General Meeting ...................................................................................... 12

Recommendations ........................................................................................................... 13

Additional Information ................................................................................................... 13

Letter from the Independent Board Committee ................................................................. 14

Letter from Yu Ming ............................................................................................................... 16

Appendix — General Information ...................................................................................... 24

Notice of Extraordinary General Meeting ........................................................................... 30

DEFINITIONS

– ii –

In this circular, unless the context otherwise requires, the following expressions have the following

meanings:

“associates” has the meaning ascribed under the Listing Rules

“Board” the board of directors of the Company

“Business Day” a day (other than a Saturday or Sunday) on which banks are open for

business in Hong Kong

“CICL” China Insurance Company, Limited (中國保險股份有限公司), a

company established in the PRC and the ultimate holding company

of the Company

“CIGAML” China Insurance Group Assets Management Limited, a company

incorporated in Hong Kong, a registered investment adviser under

the Securities Ordinance and a wholly-owned subsidiary of the CIHK

“CIGAML Shares” share(s) of HK$1.00 each in the share capital of CIGAML

“CIGSL” China Insurance Group Securities Limited, a company incorporated

in Hong Kong which carries on business as a securities dealer

registered under the Securities Ordinance, which is a wholly-owned

subsidiary of CIHK

“CIHK” China Insurance H.K. (Holdings) Company Limited, a company

incorporated in Hong Kong with limited liability and a wholly-owned

subsidiary of CICL, controlling shareholder of the Company which

owns, directly and indirectly approximately 52.99% of the issued share

capital of the Company prior to Completion

“CLTL” China Life Trustees Limited, a company incorporated in Hong Kong

and a wholly-owned subsidiary of CICL

“Company” China Insurance International Holdings Company Limited, a company

incorporated in Hong Kong, the shares of which are listed on the Stock

Exchange

“Completion” the completion of the Sale and Purchase Agreement in accordance

with its terms

DEFINITIONS

– iii –

“Consideration Shares” 51,620,000 new Shares to be issued to CIHK credited as fully paid

pursuant to the Sale and Purchase Agreement

“Directors” the directors of the Company

“EGM” an extraordinary general meeting of the Company convened to

approve, among other things, the Sale and Purchase Agreement and

the transactions contemplated thereunder

“Fees” the management fees, the performance bonus fees and other fees to

be received by CIGAML for its services in managing the Trust Fund

“Group” the Company together with its subsidiaries

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“HK GAAP” generally accepted accounting principles in Hong Kong

“HKCIG” Hong Kong C.I.G. International Investment Company Limited, a

company incorporated in the British Virgin Islands and a subsidiary

of CIHK

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

“HSBC” The Hongkong and Shanghai Banking Corporation Limited, an exempt

dealer under the Securities Ordinance and a licensed bank under the

Banking Ordinance (Chapter 155 of the Laws of Hong Kong) and the

financial adviser to the Company

“Independent Board the independent committee of the board of directors of the Company,

Committee” comprising Dr. Wu Jiesi and Mr. Lau Wai Kit

“Independent Shareholders” the Shareholders other than CIHK and its associates as well as any

Shareholder who is a director of CIHK on the date of the EGM

DEFINITIONS

– iv –

“Investment Management the agreements entered into between CIGAML and CLTL or C.I.G.

Agreements” (Nominee) Limited or to be entered into between CIGAML and CICL

or its subsidiaries for investment advice and investment management

services provided by CIGAML in managing the Trust Fund

“Latest Practicable Date” 25 July, 2002, being the latest practicable date before the printing of

this circular for ascertaining certain information contained in this

circular

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

“Loan” a loan in the total sum of US$3,556,900.00 and HK$129,175,808.22

that is currently due and payable by CIGAML to HKCIG

“Ming An” Ming An Insurance Company (HK) Limited, a company incorporated

in Hong Kong and a wholly-owned subsidiary of CIHK which holds

approximately 6.50% of the issued shares of the Company prior to

Completion

“Ongoing Connected the transactions pursuant to the Investment Management Agreements

Transactions” entered into or to be entered into between CIGAML and CICL or its

subsidiaries regarding the provision of services by CIGAML in

managing the Trust Fund

“PRC” The People’s Republic of China

“Proposed Acquisition” the acquisition of the Sale Shares by the Company under the terms

and conditions of the Sale and Purchase Agreement

“Sale Shares” 10,000,000 CIGAML Shares which are beneficially owned by CIHK

“Sale and Purchase the conditional agreement dated 8 July, 2002 entered into between

Agreement” CIHK and the Company, regarding, among other things, the acquisition

of the entire issued share capital of CIGAML by the Company from

CIHK

DEFINITIONS

– v –

“SDI Ordinance” Securities (Disclosure of Interests) Ordinance (Chapter 396 of the

Laws of Hong Kong)

“Securities Ordinance” Securities Ordinance (Chapter 333 of the Laws of Hong Kong)

“SFC” The Securities and Futures Commission of Hong Kong

“Share(s)” share(s) of HK$0.05 each in the capital of the Company

“Shareholder(s)” holder(s) of the Shares

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“subsidiary(ies)” if a company controls the composition of the board directors of another

company, or controls more than half of the voting right or holds more

than half of issued share capital in another company (excluding any

part of it which carries no right to participate beyond a specified

amount in a distribution of either profits and capital), the second

mentioned company is regarded as a subsidiary of the first mentioned

company

“Trust Fund” the investment fund of not less than 20 trusts (including but not limited

to private trust funds and MPF trust funds) of which CLTL or CICL

or any of its subsidiary is the trustee

“Yu Ming” Yu Ming Investment Management Limited, an investment adviser and

a dealer registered under the Securities Ordinance and the independent

financial adviser to the Independent Board Committee

LETTER FROM THE BOARD

– 1 –


Executive Directors:— Registered Office:

Yang Chao, Chairman 12/F, Ming An Plaza Phase II

Zhang Xiaoshu, Vice Chairman 8 Sunning Road

Miao Jianmin, Chief Executive Officer Causeway Bay

Ng Yu Lam Kenneth, Deputy Chief Executive Officer Hong Kong

Dong Ming, Deputy Chief Executive Officer

Lau Siu Mun Sammy

Shen Koping Michael

Non-Executive Directors:—

Zheng Changyong

Wu Jiesi*

Lau Wai Kit*

* Independent Non-Executive Directors

29 July, 2002

To the Shareholders

Dear Sir/Madam,


ACQUISITION OFCHINA INSURANCE GROUP ASSETS MANAGEMENT LIMITED

1. INTRODUCTION

On 8 July, 2002, the Company entered into the Sale and Purchase Agreement with CIHK,

pursuant to which the Company has conditionally agreed, among other things, to acquire the

Sale Shares from CIHK for a total consideration of HK$403,200,000 which will be satisfied on

Completion by (a) a cash payment of HK$201,623,900; and (b) the issuance and allotment of

the Consideration Shares to CIHK by the Company credited as fully paid. Immediately after

Completion, CIGAML will become and will be accounted for as a wholly-owned subsidiary of

the Company.


– 2 –

Following the Completion, CIGAML will enter into or continue to enter into the Ongoing

Connected Transactions with CICL or its subsidiaries as part of the normal operation of

CIGAML.

As CIHK is the controlling shareholder of the Company, the Company’s entering into of the

Sale and Purchase Agreement constituted a connected transaction of the Company for the purpose

of the Listing Rules. As the consideration of the Proposed Acquisition exceeds 15% of the

consolidated net tangible assets of the Company as disclosed in its latest published annual

report, the Proposed Acquisition also constituted a discloseable transaction for the purpose of

the Listing Rules.

The Sale and Purchase Agreement and the transactions contemplated thereby (including but

not limited to the Proposed Acquisition and the issuance and allotment of the Consideration

Shares) are subject to, among other things, the approval of the Independent Shareholders. In

view of the interests of CIHK in the Sale and Purchase Agreement, CIHK and its associates as

well as any Shareholder who is a director of CIHK on the date of the EGM will abstain from

voting at the EGM in respect of such resolution.

HSBC has been appointed as the financial adviser to the Company for the Proposed Acquisition.

The Independent Board Committee has been formed to advise the Independent Shareholders

on whether or not the terms of the Sale and Purchase Agreement and the transactions

contemplated thereunder (including but not limited to the Proposed Acquisition and the issuance

and allotment of the Consideration Shares) are in the best interest of the Company and are fair

and reasonable so far as the Independent Shareholders are concerned. Yu Ming has been

appointed as the independent financial adviser to advise the Independent Board Committee in

respect of the terms and conditions of the Sale and Purchase Agreement including the existing

Investment Management Agreements.

The purpose of this circular is (a) to provide you with further information relating to the Proposed

Acquisition and the On-going Connected Transactions; (b) to set out the letter of advice from

Yu Ming to the Independent Board Committee and the recommendation and opinion of the

Independent Board Committee as advised by Yu Ming in respect of the Proposed Acquisition;

and (c) to give notice to the Shareholders of the EGM at which ordinary resolution will be

proposed to approve, among other things, the Sale and Purchase Agreement and the transactions

contemplated thereunder (including but not limited to, the Proposed Acquisition, the issuance

and allotment of the Consideration Shares).


– 3 –

2. THE SALE AND PURCHASE AGREEMENT

(a) Date

8 July, 2002

(b) Parties

CIHK as the vendor

The Company as the Purchaser

(c) Proposed Acquisition

Pursuant to the Sale and Purchase Agreement, the Company has conditionally agreed, among

other things, to acquire the Sale Shares from CIHK for a total consideration of HK$403,200,000

which will be satisfied on Completion by (a) a cash payment of HK$201,623,900, which will

be financed by internal resources of the Group; and (b) the issuance and allotment of the

Consideration Shares to CIHK by the Company credited as fully paid. Immediately after

Completion, CIGAML will become and will be accounted for as a wholly-owned subsidiary of

the Company.

The terms of the Sale and Purchase Agreement (including the consideration payable by the

Company for the Proposed Acquisition) have been determined after arm’s length negotiations

between the Company and CIHK. The principal terms of the Sale and Purchase Agreement,

including the consideration payable, are set out below.

The Directors consider that the terms of the Sale and Purchase Agreement are based on normal

commercial terms and are fair and reasonable so far as the Shareholders are concerned.


– 4 –

(d) Consideration and payment terms

The total consideration payable by the Company to CIHK for the Sale Shares under the Sale

and Purchase Agreement is HK$403,200,000, and was determined at a price-earning ratio of

12, based on the projected net profit of CIGAML of HK$33.6 million for the financial year

ending on 31 December, 2002 and taken into account the existing Investment Management

Agreements. HK$201,623,900 of such consideration are to be satisfied by a cash payment and

the balance of HK$201,576,100 of such consideration are to be satisfied by the issuance and

allotment of 51,620,000 Shares credited as fully paid to CIHK at an agreed issue price of

HK$3.905 per Share. If the Consideration Shares were issued at the closing price as at 8 July,

2002, the date of the Sale and Purchase Agreement, of HK$3.975, the Consideration Shares

would amount to HK$205,189,500 and the consideration for the Proposed Acquisition would

be HK$406,813,400.

The Consideration Shares will rank pari passu in all respects with the then existing issued

Shares. The agreed issue price per Consideration Share of HK$3.905 represents (a)

approximately 1.76% discount to the closing price per Share at HK$3.975 on 8 July, 2002,

being the date of the Sale and Purchase Agreement; (b) approximately 1.14% discount to the

average closing price per Share at HK$3.950 for the five trading days ended on 8 July, 2002,

being the last five trading days prior to and including the date of the Sale and Purchase

Agreement; and (c) approximately 13.19% premium to the closing price of the Shares at HK$3.45

on the Latest Practicable Date. The Consideration Shares represent approximately 4.05% of

the existing issued share capital of the Company and about 3.90% of the issued share capital of

the Company as enlarged by the issue of the Consideration Shares pursuant to the Proposed

Acquisition.

The Directors consider that taking into account the business potential of CIGAML such

consideration is fair and reasonable so far as the Shareholders as a whole are concerned. The

agreed value of 100% interest in CIGAML being HK$403,200,000 has been determined after

arm’s length negotiations between the Company and CIHK.


– 5 –

(e) Conditions

Completion of the Proposed Acquisition is conditional upon, among other things, the following

occurring on or before 31 December, 2002 (or such other date as CIHK and the Company may

agree in writing):—

(i) the Listing Committee of the Stock Exchange granting listing of, and permission to deal

in, the Consideration Shares;

(ii) the passing by the Independent Shareholders of an ordinary resolution at the EGM to

approve the Sale and Purchase Agreement and the transactions contemplated thereunder

(including the Proposed Acquisition and the issue and allotment of the Consideration

Shares);

(iii) the obtaining of the approval of the SFC to the change in a substantial shareholder of

CIGAML pursuant to section 26A(1) of the Securities and Futures Commission Ordinance

(Chapter 24 of the Laws of Hong Kong), if applicable;

(iv) the submission of a notification by CIGAML to the SFC of the change in the ultimate

holding company of CIGAML pursuant to section 63(1)(b) of the Securities Ordinance

and section 7(c)(i) of the Securities (Miscellaneous) Rules, if applicable; and

(v) the completion to the satisfaction of the Company of such due diligence (legal, financial,

business or other conditions) as the Company may consider necessary in relation to

CIGAML by the Company.

If all the above conditions of the Sale and Purchase Agreement are not fulfilled or waived by

the Company within the deadline set out above, the Sale and Purchase Agreement will

automatically terminate and all the obligations and liabilities of the parties to the Sale and

Purchase Agreement will lapse, save in respect of antecedent breaches.

(f) Completion Date

If all the above conditions of the Sale and Purchase Agreement have been fulfilled or waived

within the deadline set above, Completion will take place within five Business Day (or such

other date as the Company and CIHK may agree in writing) after all such conditions are so

fulfilled or waived.

(g) Application for listing

Application has been made by the Company to the Stock Exchange for grant of approval for

listing of and permission to deal in the Consideration Shares.


– 6 –

3. CHANGE OF THE COMPANY’S SHAREHOLDING STRUCTURE

Set out below is the simplified shareholding structure of the Company immediately before and

after the issuance and allotment of the Consideration Shares (assuming that no further Shares

will be issued after the date of this Announcement other than the Consideration Shares).

Immediately before the issuance and allotment of the Consideration Shares

CICL

CIHK Public

Ming AnCIGAML

Company

100%

46.49%

(directly and indirectly)

47.01%

6.50%

100% 100%

Immediately after the issuance and allotment of the Consideration Shares

CICL

CIHK Public

Ming An

CIGAML

Company

100%

48.57%

(directly and indirectly)45.18%

6.25%

100%

100%


– 7 –

4. INFORMATION ON CIGAML

CIGAML was incorporated in Hong Kong on 22 October, 1996. It has an authorised and issued

share capital of HK$10,000,000 divided into 10,000,000 CIGAML Shares. CIGAML is a wholly-

owned subsidiary of CIHK.

(a) Business of CIGAML

CIGAML is a duly registered investment advisor with the SFC and its principal business is the

provision of management services for the investment of funds of various trusts.

(b) Financial Information of CIGAML

The audited net asset of CIGAML prepared under the Hong Kong GAAP as at 31 December,

2001 and 31 December, 2000 was HK$25.2 million and HK$11.1 million respectively. The

audited profit before and after tax of CIGAML prepared under the Hong Kong GAAP for the

financial year ended on 31 December, 2001 amounted to approximately HK$17.8 and HK$15.6

million respectively and for the financial year ended 31 December, 2000 amounted to

approximately HK$0.6 million. The assets under management of the CIGAML amounted

approximately HK$1,412.2 million as at 31 December, 2001.

Furthermore, the unaudited net asset of CIGAML as at 30 June, 2002 was approximately

HK$35.5 million and the unaudited profit of CIGAML for the period between 1 January, 2002

and 30 June, 2002 amounted to approximately HK$20.3 million with assets under management

of approximately HK$2,967.3 million.

5. REASONS FOR THE PROPOSED ACQUISITION

The Directors are of the view that the Proposed Acquisition will enable the Company to diversify

into the complementary business of fund management. The purchase of CIGAML provides the

Group with (a) the expertise and the required license to carry on a fund management business

in Hong Kong; (b) a recurrent revenue stream from its Hong Kong fund management operations;

(c) the ability to offer customised fund management products to members of the Group in order

to enhance risk management and improve investment returns; and (d) a platform to enter the

fast growing PRC fund management industry.


– 8 –

Synergies exist between the businesses of insurance and fund management. As the premium

income to be received under the insurance businesses increases, the Group will require a

professional body to manage such premiums, therefore, the acquisition of CIGAML may further

enhances the Group’s core insurance operations. With the recent acquisition of life insurance

and general insurance operations in the PRC, namely, Tai Ping Life Insurance Company, Limited

and The Tai Ping Insurance Company, Limited, premium income from the PRC is expected to

grow and accumulate significantly. The Group intends to provide advisory services for managing

the premiums received from its PRC insurance business, using the expertise of CIGAML.

Furthermore, the acquisition of a fund management company by the Company in Hong Kong

may pave way in due course for the Company to obtain the necessary license to manage funds

for PRC entities in the PRC.

6. PARTICULARS OF THE LOAN

A loan in the total sum of US$3,556,900.00 and HK$129,175,808.22 is currently due and

payable by CIGAML to HKCIG. The Loan bears interest at a rate equivalent to that charged by

a bank, which is an independent third party not connected with the Company or CIHK or their

respective directors, chief executive and substantial shareholders or their respective subsidiaries

or an associate of any of them, in Hong Kong on a loan in the sum of US$25,000,000 granted

to HKCIG. Since HKCIG is a subsidiary of CIHK, the Loan will constitute financial assistance

by HKCIG to CIGAML under Chapter 14 of the Listing Rules. The Directors consider that the

terms of the Loan are based on normal commercial terms and are fair and reasonable so far as

the Shareholders as a whole are concerned. As the Loan was granted by HKCIG to CIGAML

on normal commercial terms and no security has been given by the Company or its subsidiaries

for the Loan, under Rule 14.24(8) of the Listing Rules, the continuance granting of the Loan by

HKCIG to CIGAML is not subject to any disclosure and shareholders’ approval requirements

under Chapter 14 of the Listing Rules.

The proceeds of the Loan have been used to finance the acquisition of fixed income securities

by CIGAML over the past two years, generating returns in excess of 9% resulting in a positive

spread of approximately 6%. The Directors believe that the financial implications of the Loan

has been positive and intend to continue the arrangement until the end of the year.


– 9 –

7. PARTICULARS OF THE ONGOING CONNECTED TRANSACTIONS

CIGAML has previously entered into certain Investment Management Agreements and the

Directors expect that following Completion, CIGAML will continue to enter into new Investment

Management Agreements and will in its ordinary and usual course of business receive the Fees

from the Investment Management Agreements, which will constitute connected transactions

for the Company for the purpose of the Listing Rules.

The amount of Fees received or to be received by CIGAML per annum shall principally be (a)

a management fee calculated on the basis of a certain percentage of the net asset value of each

Trust Fund; and/or (b) a performance bonus fee representing a certain percentage of the amount

of net investment return at the end of the relevant calendar year in excess of an amount equivalent

to a certain percentage of the daily average balance of settlor’s subscription monies (including

fund balance as at 1 January of the year in issue ) or the increase in the net asset value of the

relevant Trust Fund managed by CIGAML. The estimated amount of Fees to be received by

CIGAML from CICL or its subsidiaries each year, based on the current anticipated growth in

the size of the Trust Funds, will not exceed 3% of the consolidated net tangible assets of the

Company as disclosed in its latest published audited accounts from time to time.

Furthermore, following Completion, CIGAML will deal with or continue to deal with certain

Hong Kong listed equity securities. The Directors intend that such dealing will be handled

primarily by CIGSL. As CIGSL is an associate of CIHK, the brokerage services to be provided

by CIGSL to the Group from time to time will constitute connected transactions for the Company

under the Listing Rules.

The Stock Exchange has granted a waiver dated 10 August, 2000 to the Company from the

relevant requirements of the Listing Rules in respect of brokerage services provided by CIGSL

to the Group provided that the fees paid by the Group including CIGAML on such brokerage

services shall be less than the higher of (a) HK$10 million; and (b) 3% of the book value of the

net tangible assets of the Group. Such waiver shall remain valid as the provision of brokerage

services by CIGSL to CIGAML after Completion will fall within the ambit as set out therein.


– 10 –

8. BENEFITS OF THE ONGOING CONNECTED TRANSACTIONS

The Directors (including the independent non-executive Directors) consider that the existing

Investment Management Agreements as a whole have been entered into and the new Investment

Management Agreements will be entered into on normal commercial terms. The Directors

consider it to be in the interest of CIGAML to engage in the Ongoing Connected Transactions

as these transactions and the Fees to be received by CIGAML will facilitate the smooth operation

of CIGAML’s business in terms of generating a steady stream of income.

9. WAIVER APPLICATION

The Directors expect that the transaction amount of the Ongoing Connected Transactions for

each year will be less than 3% of the consolidated net tangible asset of the Company as disclosed

in its latest published audited accounts from time to time. Under Chapter 14 of the Listing

Rules, the Ongoing Connected Transactions will constitute connected transactions of the

Company which would normally require disclosure by way of press announcement. Since the

Ongoing Connected Transactions will be in the ordinary course of business of the parties thereto,

it would be impractical and unduly onerous on the part of the Company if it is required to

comply with Rule 14.25(1) of the Listing Rules and issue a press announcement on each occasion

when the aggregate transaction amounts exceeds HK$1,000,000 or 0.03% of the consolidated

net tangible assets of the Company as disclosed in its latest published audited accounts from

time to time. The Company has applied to the Stock Exchange for a general waiver from the

requirement to issue a press announcement pursuant to Rule 14.25(1) of the Listing Rules in

respect of the Ongoing Connected Transactions on the conditions that:—

(a) the existing Investment Management Agreements as a whole have been and the new

Investment Management Agreements to be entered in the future will be:—

(i) entered into in the ordinary and usual course of business of the Group;

(ii) conducted either on normal commercial terms or on terms no less favourable than

terms available to (or from, as appropriate) independent third parties;

(iii) on terms that are fair and reasonable so far as the Shareholders are concerned;

(b) the aggregate amount of Fees received by CIGAML each year will not exceed the higher

of HK$10 million and 3% of the consolidated net tangible assets of the Company as

disclosed in its latest published audited accounts from time to time;


– 11 –

(c) the details of the transactions will be disclosed in the Company’s annual report as set out

in Rule 14.25(1)(A) to (D) of the Listing Rules for the relevant financial year of the

Company;

(d) the independent non-executive Directors will review annually and confirm in the

Company’s annual report of the relevant financial year that the Investment Management

Agreements have been entered into and the Fees have been received in the manner as

stated in (a) and (b) above respectively;

(e) the auditors of the Company shall review the transactions annually and provide a letter

to the Board stating that:—

(i) the Investment Management Agreements are on normal commercial terms or on

terms no less favourable than terms available to (or from, as appropriate)

independent third parties;

(ii) the aggregate amount of the Fees received by CIGAML each year have not exceeded

the cap referred to in (b) above;

(iii) where, for whatever reasons, the auditors decline to accept the engagement or are

unable to provide the auditors’ letter, the Directors shall contact the Stock Exchange

immediately.

10. BUSINESSES OF THE COMPANY

The principal activity of the Company is investment holding. The principal activities of the

Group are the underwriting of treaty and facultative reinsurance of all classes of general business,

including non-marine and marine, and certain classes of long term business and life insurance

business. The Group also carries on reinsurance broking and, to support its reinsurance activities,

holds security, money market and property investments.

11. APPOINTMENT OF DIRECTOR

Mr. Shen Koping, Michael was appointed as an Executive Director with effect from 23 July,

2002. The biography of Mr. Shen is as follows:

Mr. Shen Koping Michael, aged 33, joined the Company on 23 July 2002. Mr. Shen is also the

Chief Financial Officer of the Company. Prior to joining the Company, Mr. Shen was an

Executive Director in the Financial Institutions Group of the Investment Banking Division at

Goldman Sachs (Asia) L.L.C. (“Goldman Sachs”). Mr. Shen was responsible for marketing


– 12 –

and executing corporate finance and mergers/acquisitions transactions for financial institutions

in the Asia ex-Japan region. During his seven years at Goldman Sachs, Mr. Shen developed in-

depth knowledge in advising insurance and asset management companies on strategic and

operational matters. Mr. Shen received a Juris Doctorate degree in 1994 from Harvard Law

School, where he was an Executive Editor of the Harvard Law Review. Mr. Shen graduated as

the valedictorian of his class and received a Bachelor of Science in Foreign Service in 1991

from Georgetown University, where he majored in International Politics/Relations. Mr. Shen

is also a director and the Deputy General Manager of CIGAML.

12. APPROVAL BY THE INDEPENDENT SHAREHOLDERS

CIHK is the controlling shareholder of the Company. Accordingly, the Company’s entering

into of the Sale and Purchase Agreement constituted connected transaction of the Company for

the purpose of the Listing Rules. As the consideration of the Proposed Acquisition exceeds

15% of the consolidated net tangible assets of the Company as disclosed in its latest published

annual report, the Proposed Acquisition also constitutes a discloseable transaction for the purpose

of the Listing Rules and the Proposed Acquisition, the issuance and allotment for the

Consideration Shares are subject to, among other things, the approval of the Independent

Shareholders.

In view of the interests of CIHK in the Sale and Purchase Agreement, the Independent Board

Committee has been appointed to advise the Independent Shareholders on whether or not the

terms of the Sale and Purchase Agreement and the transactions contemplated thereunder

(including but not limited to the Proposed Acquisition and the issuance and allotment of the

Consideration Shares) are in the interests of the Company and are fair and reasonable so far as

the Independent Shareholders are concerned. Yu Ming has been appointed to advise the

Independent Board Committee in respect of the terms and conditions of the Sale and Purchase

Agreement including the existing Investment Management Agreements.

13. EXTRAORDINARY GENERAL MEETING

Set out on pages 30 and 31 of this circular is a notice convening the EGM which is to be held

at 24th Floor Ming An Plaza Phase II, 8 Sunning Road, Causeway Bay, Hong Kong on 21

August, 2002 at 11:00 am. The EGM will be held for the purpose of considering and, if thought

fit, approving the Sale and Purchase Agreement and the transactions contemplated thereby

(including but not limited to, the Proposed Acquisition, the issuance and allotment of the

Consideration Shares).


– 13 –

A form of proxy for use at the EGM is enclosed. Whether or not you are able to attend the

meeting in person, you are requested to complete and return the form of proxy in accordance

with the instructions printed thereon to the Company’s registered office at 12th Floor, Ming An

Plaza Phase II, 8 Sunning Road, Causeway Bay, Hong Kong as soon as possible and in any

event not less than 48 hours before the time appointed for the holding of the EGM. Completion

of the form of proxy will not preclude you from attending and voting at the meeting or any

adjourned meeting should you so desire.

CIHK and its associates as well as any Shareholder who is a director of CIHK on the date of

the EGM will abstain from voting at the EGM in respect of such resolution to be proposed at

the EGM to approve the Sale and Purchase Agreement and the transactions contemplated

thereunder.

14. RECOMMENDATIONS

Your attention is drawn to (a) the letter from the Independent Board Committee set out on page

14 of this circular which contains the recommendation of the Independent Board Committee to

the Independent Shareholders regarding the resolution to approve the Sale and Purchase

Agreement and the transactions contemplated thereunder; and (b) the letter from Yu Ming set

out on pages 16 to 23 of this circular which contains its recommendation to the Independent

Board Committee in relation to the Sale and Purchase Agreement and the existing Investment

Management Agreements, and the principal factors and reasons considered by Yu Ming in

arriving at its recommendation.

The Independent Board Committee, having taken into account the advice of Yu Ming, considers

that the terms of the Sale and Purchase Agreement (including existing Investment Management

Agreements taken as a whole) are fair and reasonable so far as the Independent Shareholders

are concerned.

15. ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendix to this circular.

Yours faithfully,

By Order of the Board

Yang Chao

Chairman

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

– 14 –


29 July, 2002

To the Independent Shareholders

Dear Sir/Madam,

CONNECTED AND DISCLOSEABLE TRANSACTION

ACQUISITION OFCHINA INSURANCE GROUP ASSETS MANAGEMENT LIMITED

We refer to the circular to the Shareholders dated 29 July, 2002 (the “Circular”), of which this letter

forms part. Unless the context requires otherwise, terms used in this letter shall have the same meanings

given to them in the definitions section of the Circular.

In view of the interests of CIHK in the Sale and Purchase Agreement, the Sale and Purchase Agreement

entered into between the Company and CIHK constituted connected transaction of the Company for

the purpose of the Listing Rules.

In view of the interests of CIHK in the Sale and Purchase Agreement, we have been appointed by as

the Independent Board Committee to consider the Sale and Purchase Agreement and the transaction

as contemplated thereby (including but not limited to the Proposed Acquisition, the issuance and

allotment of the Consideration Shares) and to advise the Independent Shareholders in respect thereof.

Rule 14.30(7) of the Listing Rules requires an independent financial adviser to opine on whether a

connected transaction is fair and reasonable to the Independent Shareholders. Accordingly, Yu Ming

has been appointed to advise us in respect of the terms governing the Proposed Acquisition.

As CIHK is the controlling shareholder of the Company, the Company’s entering into of the Sale and

Purchase Agreement constituted connected transaction of the Company for the purpose of the Listing

Rules. As the consideration of the Proposed Acquisition exceeds 15% of the consolidated net tangible

assets of the Company as disclosed in its latest published annual report, the Proposed Acquisition

also constituted a discloseable transaction for the purpose of the Listing Rules. Accordingly, pursuant

to the Listing Rules, the Proposed Acquisition, the issuance and allotment of the Consideration Shares

are subject to, among other things, the approval of the Independent Shareholders.

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

– 15 –

We urge you to read the letter from the Board set out on pages 1 to 13 of the Circular, which sets out

the information relating to the Sale and Purchase Agreement, the reasons for the Proposed Acquisition

as well as the actions to be taken by the Independent Shareholders.

As members of your Independent Board Committee, we have discussed with the management of the

Company as to the terms and conditions of the Sale and Purchase Agreement, the reasons for the

Proposed Acquisition and the basis upon which the terms and conditions governing the Proposed

Acquisition have been determined. We have also discussed with Yu Ming as to the basis upon which

its advice has been given to us. We have also considered the key factors taken into account by Yu

Ming in arriving at its opinion regarding the Proposed Acquisition as set out in the letter from Yu

Ming on pages 16 to 23 of the Circular, which we urge you to read carefully.

We concur with the views of Yu Ming and consider that the terms and conditions of the Sale and

Purchase Agreement are fair and reasonable so far as the Independent Shareholders are concerned

and that the Proposed Acquisition is in the interests of the Company and the Independent Shareholders

as a whole, and it will benefit the Company in its long term development. Accordingly, as the members

of your Independent Board Committee, we recommend the Independent Shareholders to approve the

Sale and Purchase Agreement and the transactions contemplated thereby (including but not limited to

the Proposed Acquisition and the issuance and allotment of the Consideration Shares) and to vote in

favour of the ordinary resolution approving the Sale and Purchase Agreement and the transactions

contemplated thereby to be proposed at the EGM.

Yours faithfully,

For and on behalf of

Independent Board Committee

Wu Jiesi Lau Wai Kit

LETTER FROM YU MING

– 16 –

The following is the text of the letter from Yu Ming, the independent financial adviser to the

Independent Board Committee, in relation to the terms of the Sale and Purchase Agreement and the

existing Investment Management Agreements prepared for the purpose of inclusion in this circular.


禹銘投資管理有限公司

29th July, 2002

The Independent Board Committee

China Insurance International Holdings Company Limited

12th Floor, Ming An Plaza Phase II

8 Sunning Road

Causeway Bay

Hong Kong

Dear Sir/Madam,


INVOLVING THE ACQUISITION OFTHE ENTIRE ISSUED SHARE CAPITAL OF

CHINA INSURANCE GROUP ASSETS MANAGEMENT LIMITED

INTRODUCTION

We have been appointed to advise the Independent Board Committee in respect of the Sale and

Purchase Agreement, details of which are set out in the Letter from the Board in the circular to the

Shareholders dated 29th July, 2002 (the “Circular”), of which this letter forms part. Terms used in

this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

In formulating our opinion, we have relied on the statements, information, opinions and representations

contained in the Circular and the information, representations and opinions provided to us by the

Directors. We have assumed that all statements, information, opinions and representations contained

or referred to in the Circular and all information, representations and opinions which have been

provided by the Directors for which they are solely responsible are, to the best of their knowledge,

true and accurate at the time they were made and continue to be so on the date of this letter.

LETTER FROM YU MING

– 17 –

We consider that we have been provided with sufficient information on which to form a reasonable

basis for our opinion. We have no reason to suspect that any relevant information has been withheld,

nor are we aware of any fact or circumstance which would render the information provided and the

representations and opinions made to us untrue, inaccurate or misleading. Having made all reasonable

enquiries, the Directors have further confirmed that, to the best of their knowledge, they believe

there are no other facts or representations the omission of which would make any statement in the

Circular, including this letter, misleading. We have not, however, carried out any independent

verification of the information provided by the Directors, nor have we conducted an independent

investigation into the business and affairs of the Group or CIGAML.

PRINCIPAL FACTORS AND REASONS CONSIDERED

The Sale and Purchase Agreement

On 8th July, 2002, the Company entered into the Sale and Purchase Agreement with CIHK, pursuant

to which the Company conditionally agreed, among other things, to acquire from CIHK the entire

issued share capital of CIGAML for a consideration of HK$403.2 million which will be satisfied by

a cash payment of approximately HK$201.6 million and the issue and allotment of the Consideration

Shares at HK$3.905 each, credited as fully paid.

CIGAML

CIGAML is an investment adviser registered with the SFC and is principally engaged in the provision

of investment management services to funds of various trusts and provident fund schemes.

Reasons for the Proposed Acquisition

The Directors are of the view that the Proposed Acquisition will enable the Company to diversify

into a complementary business of fund management and provide the Company with (i) the expertise

and the required license to carry out fund management business in Hong Kong; (ii) a recurrent revenue

from its Hong Kong fund management operations; (iii) the ability to offer customised fund management

products to members of the Group in order to enhance risk management and improve investment

returns; and (iv) a platform to enter the fast growing PRC fund management industry.

LETTER FROM YU MING

– 18 –

Terms of the Sale and Purchase Agreement

(i) The Consideration

The Directors consider that the consideration of HK$403.2 million is fair and reasonable so far

as the Shareholders as a whole are concerned. The valuation of CIGAML has been determined

after arm’s length negotiations between the Company and CIHK.

Since fund management is not an asset based business, comparing the consideration with its

net assets is irrelevant. In forming our opinion, we have not compared the consideration with

the audited net assets of CIGAML, which was approximately HK$25.2 million as at 31st

December, 2001.

Based on the existing Investment Management Agreements and the management accounts of

CIGAML for the six months ended 30th June, 2002, CIGAML has projected a net profit of

HK$33.6 million for the year ending 31st December, 2002 (the “Projected Net Profit”). We

have reviewed the basis and assumptions of the Projected Net Profit and are of the view that

they are reasonable.

Based on publicly available information on the Bloomberg, we have done a research on listed

assets management companies worldwide whose principal business is investment management

and/or provision of investment advice and found 33 comparable companies. Their shares are

traded at an average price to earnings multiple of approximately 37.5 times. If the highest two

and the lowest two multiples were excluded, the average price to earnings multiple would be

approximately 32.4 times. If the highest five and the lowest five multiples were excluded, the

average price to earnings multiple would be approximately 27.0 times (the “Average P/E Ratio”).

The consideration of HK$403.2 million represents 12 times (the “Acquisition P/E Ratio”) the

Projected Net Profit. The Acquisition P/E Ratio is approximately 56 per cent. lower than the

Average P/E Ratio which we consider is sufficient to offset the discount for illiquidity of the

Sale Shares.

Having considered the above, we consider that the consideration is fair and reasonable.

LETTER FROM YU MING

– 19 –

(ii) The Issue Price

The following chart shows the daily closing price per Share and the volume of Shares traded

on the Stock Exchange for the six months ended on 5th July, 2002, being the date on which the

parties determined the issue price of the Consideration Shares:

The issue price of the Consideration Shares:

(a) represents a discount of approximately 3.6 per cent. to the closing price of HK$4.05 per

Share on 5th July, 2002 as quoted on the Stock Exchange;

(b) is equal to the average closing price of HK$3.905 per Share for the 5 trading days ended

on 5th July, 2002 as quoted on the Stock Exchange;

(c) represents a premium of approximately 3.0 per cent. to the average closing price of

HK$3.7925 per Share for the 10 trading days ended on 5th July, 2002 as quoted on the

Stock Exchange;

(d) represents a discount of approximately 3.8 per cent. to the average closing price of

HK$4.061 per Share for the 30 trading days ended on 5th July, 2002 as quoted on the

Stock Exchange;

LETTER FROM YU MING

– 20 –

(e) represents a premium of approximately 116.2 per cent. to the audited net asset value per

Share of HK$1.81 as at 31st December, 2001; and

(f) represents a premium of approximately 13.20 per cent. to the closing price of HK$3.45

per Share on the Latest Practicable Date as quoted on the Stock Exchange.

Having considered the significant premium to the audited net asset value per Share and

insignificant discount to recent average closing prices, we consider that the issue price of the

Consideration Shares is fair and reasonable.

After taking into account the above factors, we are of the opinion that the terms of the Sale and

Purchase Agreement are fair and reasonable so far as the interest of the Company and the

Independent Shareholders are concerned.

Financial Impacts of the Proposed Acquisition on the Group

(i) Net Tangible Assets

Based on the audited consolidated net tangible assets of the Company of approximately HK$2.11

billion and 1,272,372,592 Shares in issue as at 31st December, 2001, the net tangible asset

value per Share was approximately HK$1.66.

Based on the audited consolidated net tangible assets of the Company and the audited net

tangible assets of CIGAML as at 31st December, 2001 after adjustment for the cash consideration

for the Proposed Acquisition, the pro forma consolidated net tangible assets of the Company

would be approximately HK$1.94 billion.

Based on 1,325,091,592 Shares in issue immediately after completion of the Proposed

Acquisition, the pro forma consolidated net tangible asset value per Share is approximately

HK$1.46, representing a decrease of approximately 12.0 per cent.

LETTER FROM YU MING

– 21 –

(ii) Profit and Loss

Based on the audited consolidated net profit of the Company of approximately HK$230.2 million

for the year ended 31st December, 2001 and 1,272,372,592 Shares in issue as at 31st December,

2001, the earnings per Share was approximately HK$0.18.

Based on the audited consolidated net profit of the Company for the year ended 31st December,

2001 as stated above and the Projected Net Profit, the pro forma consolidated net profit of the

Company (before amortization of goodwill mentioned below) would be approximately

HK$263.8 million. Based on 1,325,091,592 Shares in issue immediately after completion of

the Proposed Acquisition, the pro forma consolidated net profit per Share (before amortization

of goodwill mentioned below) is approximately HK$0.20, representing an increase of

approximately 10.0 per cent.

Based on the consideration of approximately HK$403.2 million and the audited net tangible

asset value of CIGAML of approximately HK$25.2 million as at 31st December, 2001, goodwill

in an amount of approximately HK$378.0 million will be created as a result of completion of

the Proposed Acquisition. Amortization of such goodwill will have a negative impact on the

profit and loss account of the Company in the future.

As we consider that the consideration is fair and reasonable for the reasons set out above, we

consider that the goodwill and the reduction in the pro forma consolidated net tangible assets

per Share are only a reflection of the intangible value of CIGAML, which is common in

acquisition of asset management companies. Fund management is not an asset based business

and revenue generating Investment Management Agreements would not be recorded on the

balance sheet as assets.

(iii) Working Capital

The cash consideration of approximately HK$201.6 million payable to CIHK will be funded

by internal resources. Based on the audited consolidated balance sheet of the Company as at

31st December, 2001, the Group had approximately HK$1.5 billion cash on hand. Therefore,

the payment of the cash consideration for the Proposed Acquisition will not have significant

negative impact on the working capital of the Group.

LETTER FROM YU MING

– 22 –

(iv) Dilution

Immediately before completion of the Proposed Acquisition, the Independent Shareholders are

interested in approximately 47.0 per cent. of the issued share capital of the Company.

Immediately after completion of the Proposed Acquisition, the Independent Shareholders will

be interested in approximately 45.2 per cent. of the issued share capital of the Company as

enlarged by the issue of the Consideration Shares, representing a reduction of approximately

1.8 per cent.

Having considered that the consideration and the issue price of the Consideration Shares are

fair and reasonable, we are of the opinion that the benefits of the Proposed Acquisition to the

Company as set out in the paragraph headed “Reasons for the Proposed Acquisition” outweigh

the dilution effect on the Independent Shareholders.

Ongoing Connected Transactions

After completion of the Proposed Acquisition, CIGAML will become a wholly-owned subsidiary of

the Company and the Investment Management Agreements will constitute ongoing connected

transactions for the Company under the Listing Rules. The Company has applied to the Stock Exchange

for a waiver from strict compliance with the disclosure requirements pursuant to Rule 14.25(1) of the

Listing Rules on the conditions set out in the Letter from the Board. We consider that they are normal

and standard conditions applicable to connected transactions of similar nature.

The aggregate of annual management fees (as a certain percentage of the net asset value of the relevant

Trust Funds based on the terms of the existing Investment Management Agreements and the size of

assets under the management of CIGAML as at 30th June, 2002) and performance bonuses (as the

amount of net investment return or a certain percentage of increase in the net asset value of the

relevant Trust Funds based on the projections for CIGAML for the year ending 31st December, 2002)

to be received by CIGAML would be approximately HK$45.7 million, representing about 1.54 per

cent. of the assets under the management of CIGAML of approximately HK$2.97 billion as at 30th

June, 2002.

Pursuant to the terms of the existing Investment Management Agreements and the investment strategy

of CIGAML, a majority of the assets of the Trust Funds are invested in bonds and the remaining

assets in other securities and instruments. The 19 samples of bond funds and balanced funds (either

investing wholly in bonds or primarily in bonds and secondarily in equity securities) managed by

five international fund houses in Hong Kong in our research charge an annual management fee

(including maintenance charge) in the range of 0.50 per cent. to 1.80 per cent. of average net assets of

the relevant funds, of which six charge in the range of 0.50 per cent. to 1.00 per cent., 12 charge more

than 1.00 per cent. but less than 1.80 per cent. and 1 charges 1.80 per cent. Since the annual percentage

LETTER FROM YU MING

– 23 –

of Fees to be received by CIGAML falls within the range charged by the market, we concur with the

view of the Directors that the terms of the existing Investment Management Agreements as a whole

were entered into on normal commercial terms.

Since the existing Investment Management Agreements are contracts underlying the core asset

management business of CIGAML, we concur with the view of the Directors that the continuance of

the existing Investment Management Agreements is in the interest of CIGAML (or the Company

after completion of the Proposed Acquisition).

When formulating our opinion on the fairness and reasonable of the consideration payable by the

Company to CIHK for the Sale Shares, we have taken into account the terms of the existing Investment

Management Agreements because the consideration was determined based on the Projected Net Profit

which has taken into account the terms of the existing Investment Management Agreements.

Regarding the Investment Management Agreements to be entered into in the future, we are not in a

position to comment because the terms and conditions are not determined yet. Shareholders are advised

to refer to the conditions of the waiver application made to the Stock Exchange set out in the Letter

from the Board. In particular, the independent non-executive Directors and the auditors of the Company

have to be satisfied that the Investment Management Agreements are conducted either on normal

commercial terms or on terms no less favourable than terms available to (or from, as appropriate)

independent third parties.

RECOMMENDATION

Having taken into account the information and representations provided to us and the above principal

factors, we are of the opinion that the terms of the Sale and Purchase Agreement are fair and reasonable

so far as the Company and the Independent Shareholders are concerned and the Proposed Acquisition

is in the interest of the Company and the Independent Shareholders. Accordingly, we advise the

Independent Board Committee to recommend the Independent Shareholders to vote in favour of the

resolution to approve the Proposed Acquisition and the transactions contemplated thereunder.

Yours faithfully,

For and on behalf of


Warren Lee

Director

APPENDIX GENERAL INFORMATION

– 24 –

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of

giving information with regard to the Group. The Directors collectively and individually accept

full responsibility for the accuracy of the information contained in this circular and confirm,

having made all reasonable enquiries, that to the best of their knowledge and belief, there are

no other facts not contained herein the omission of which would make any statement contained

in this circular misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date were,

and immediately after completion of the Sale and Purchase Agreement assuming that no further

Shares, other than the Consideration Shares, will be issued up to the date of completion of the

Sale and Purchase Agreement, will be, as follows:

Authorised: HK$

2,000,000,000 Shares as at the Latest Practicable Date 100,000,000.00

Issued and fully paid and to be issued:

1,273,471,592 Shares in issue as at the Latest Practicable Date 63,673,579.60

51,620,000 Shares to be issued upon Completion 2,581,000.00

1,325,091,592 66,254,579.60

All the Shares currently in issue rank pari passu in all respects with each other, including in

particular, as to dividends, voting rights and capital. The Consideration Shares when allotted

will rank pari passu in all respects with the then existing Shares, including in particular, as to

dividends, voting rights and capital.

Application will be made to the Listing Committee of the Stock Exchange for Listing of and

permission to deal in the Consideration Shares to be issued upon completion of the Sale and

Purchase Agreement. Save as disclosed herein, no part of the share capital of the Company is

listed or dealt in on stock exchange other than the Stock Exchange and no application is being

made or is currently proposed or sought for the Shares to be listed in or on any other stock

exchange.


– 25 –

3. DISCLOSURE OF INTERESTS

(a) As at the Latest Practicable Date, the interests of Directors, chief executive and their

associates in the share capital of the Company or its associated corporations (within the

meaning of the SDI Ordinance) which have been notified to the Company and the Stock

Exchange pursuant to Section 28 of the SDI Ordinance (including interests which they

are deemed or taken to have under Section 31 of or Part I of the Schedule to the SDI

Ordinance) or which were recorded in the register required to be kept pursuant to Section

29 of the SDI Ordinance or as otherwise notified to the Company and the Stock Exchange

pursuant to the Model Code for Securities Transactions by Directors of Listed Companies

as set out in appendix 10 of the Listing Rules were as follows:—

Share Options

Price per Market value

No. of Period during Share to be per share at

options Date which options paid on exercise date of grant

Name outstanding granted exercisable of options of options

Yang Chao 2,670,000 26 Sep 2000 26 Sep 2000 to HK$1.11 HK$1.37

25 Sep 2010

Zhang Xiaoshu 2,200,000 28 Sep 2000 28 Sep 2000 to HK$1.11 HK$1.41

27 Sep 2010

Miao Jianmin 1,740,000 26 Sep 2000 26 Sep 2000 to HK$1.11 HK$1.37

25 Sep 2010

Ng Yu Lam Kenneth 1,300,000 28 Sep 2000 28 Sep 2000 to HK$1.11 HK$1.41

27 Sep 2010

500,000 12 Feb 2001 12 Feb 2001 to HK$0.95 HK$1.33

11 Feb 2011

Dong Ming 1,500,000 27 Sep 2000 27 Sep 2000 to HK$1.11 HK$1.40

26 Sep 2010

400,000 12 Feb 2001 12 Feb 2001 to HK$0.95 HK$1.33

11 Feb 2011

Lau Siu Mun Sammy 1,100,000 27 Sep 2000 27 Sep 2000 to HK$1.11 HK$1.40

26 Sep 2010

400,000 12 Feb 2001 12 Feb 2001 to HK$0.95 HK$1.33

11 Feb 2011

Zheng Changyong 1,000,00 28 Sep 2000 28 Sep 2001 to HK$1.11 HK$1.41

27 Sep 2010


– 26 –

Shares

Number of

Name Type of interests ordinary shares held

Ng Yu Lam Kenneth Personal 466,000

Lau Siu Mun Sammy Personal 400,000

Apart from the foregoing, at no time up to the Latest Practicable Date was the Company,

any of its holding company, subsidiaries or fellow subsidiaries a party to any arrangement

to enable the Directors of the Company or any of their spouses or children under eighteen

years of age to acquire benefits by means of the acquisition of shares in or debentures of

the Company or any other body corporate.

(b) Save as disclosed herein, as at the Latest Practicable Date, none of the Directors or the

chief executive of the Company or their respective associates had any interest in the

share capital of the Company and its associated corporations (within the meaning of the

SDI Ordinance) notified to the Company and the Stock Exchange pursuant to section 28

of the SDI Ordinance (including interests which they are deemed or taken to have under

section 31 of, or Part I of the Schedule to, the SDI Ordinance) or pursuant to the Model

Code for Securities Transactions by Directors of Listed Companies or which are required,

pursuant to section 29 of the SDI Ordinance, to be entered in the register referred to

therein.

4. DIRECTORS’ INTERESTS IN CONTRACTS

(a) Each of Messrs Yang Chao, Zhang Xiaoshu, Miao Jianmin, Ng Yu Lam Kenneth, Dong

Ming and Lau Siu Mun Sammy entered into a service contract with the Company on 29

May 2000 for an initial period of three years commencing from 1 April 2000. Each such

contract will continue after its initial period unless and until terminated by either party

to it by giving three months’ written notice to the other party. Mr. Shen Koping Michael

entered into a service contract with the Company on 23 July 2002 for an initial period of

two years commencing from 15 July 2002. Such contract can be terminated by either

party to it by giving three month’s written notice to the other party.


– 27 –

(b) Save as disclosed herein, as at the Latest Practicable Date, none of the Directors is

materially interested in any contract, secrecy contract (excluding contracts expiring or

determinable by the Company or any of its Subsidiaries within one year without payment

of compensation (other than statutory compensation) or arrangement entered into with

the Company or any of its subsidiaries which contract or arrangement is subsisting at the

date of this circular and which is significant in relation to the business of the Group

taken as a whole.

(c) Save as disclosed herein, as at the Latest Practicable Date, neither the Directors nor Yu

Ming has any direct or indirect interest in any assets which have been, since 31 December

2001, the date to which the latest published audited accounts of the Company were made

up, acquired or disposed of by, or leased to the Company or any of its subsidiaries, or are

proposed to be acquired or disposed of by, or leased to, the company or any of its

subsidiaries.

5. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, according to the register maintained by the Company pursuant

to Section 16(1) of the SDI Ordinance, the shareholders who had or were deemed to have

interest in 10% or more of the Shares in issue were as follows:

Number of Percentage

Name of ordinary of existing

substantial shareholder Shares held issued capital

China Insurance Company, Limited 674,769,705 52.99%

(note 1)

China Insurance H.K. (Holdings) 674,769,705 52.99%

Company Limited (note 2)

Notes:

1. CICL’s interest in the Company is held by CIHK, Ming An and Toplap Investments Limited, all of which

are wholly owned subsidiaries of CICL.

2. 82,794,000 Shares were held by Ming An and 170,000 Shares were held by Toplap Investments Limited,

both of which are wholly owned subsidiaries of CIHK.

Save as disclosed above, there was no person known to the Directors who as at the Latest

Practicable Date was directly or indirectly interested in 10% or more of the Shares in issue of

the Company.


– 28 –

6. MATERIAL CHANGE

So far as the Directors are aware, there is no material adverse change in the financial or trading

position of the Company since 31 December 2001, the date to which the latest published audited

financial statements of the Group were made up.

7. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in

any litigation or arbitration of material importance and there is no litigation or claim of material

importance known to the Directors to be pending or threatened by or against the Company or

any member of the Group.

8. EXPERT

(a) The following are the qualifications of the experts who have given opinion or advice

which are contained in this circular:

Name Qualification

Yu Ming an investment adviser and a dealer registered under the

Securities Ordinance

(b) As at the Latest Practicable Date, Yu Ming was not interested beneficially or non-

beneficially in any shares in the Company or any of its subsidiaries or associated

corporations or any right (whether legally enforceable or not) or option to subscribe for

or nominate persons to subscribe for any shares in the Company or any of its subsidiaries

or associated corporations.

(c) As at the Latest Practicable Date, Yu Ming did not have any direct or indirect interest in

any assets which have been since 31 December 2001, the date to which the latest published

audited account of the Group were made up, acquired or disposed of by, or leased to, or

which are proposed to be acquired or disposed of by, or leased to, the Company or any of

its subsidiaries.

(d) Yu Ming has given and has not withdrawn its written consent to the issue of this circular

with inclusion of its letter and/or report and the references to its name included herein in

the form and context in which it is included.


– 29 –

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business

hours at the offices of Woo, Kwan, Lee & Lo at 27th Floor, Jardine House, 1 Connaught Place,

Central, Hong Kong up to and including 21 August 2002:

(a) the service contracts referred to in paragraph 4(a) of this appendix;

(b) the Sale and Purchase Agreement;

(c) the existing Investment Management Agreements;

(d) the letter from Yu Ming, the text of which as set out in this circular; and

(e) the written consent from Yu Ming referred to in paragraph 8(d) of this appendix.

10. MISCELLANEOUS

(a) The registered office and head office of the Company is situated at 12/F, Ming An Plaza

Phase II, 8 Sunning Road, Causeway Bay, Hong Kong.

(b) The share registrars and transfer office of the Company in Hong Kong is Computershare

Hong Kong Investor Service Limited at Rooms 1901-5, 19th Floor, Hopewell Centre,

183 Queen’s Road East, Hong Kong.

(c) The secretary of the Company is Mr. Tam Chiu Tai Richard who is a qualified accountant

in the United Kingdom and Hong Kong.

(d) In the event of any inconsistency, the English language text of this circular shall prevail

over the Chinese language text.

NOTICE OF EXTRAORDINARY GENERAL MEETING

– 30 –

CHINA INSURANCE INTERNATIONAL HOLDINGS COMPANY LIMITED中保國際控股有限公司

(Incorporated in Hong Kong with Limited Liability)


NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “Meeting”) of China

Insurance International Holdings Company Limited (the “Company”) will be held at 24th Floor,

Ming An Plaza Phase II, 8 Sunning Road, Causeway Bay, Hong Kong at 11:00 a.m. on 21 August,

2002 (or any adjournment thereof) for the purpose of considering and, if thought fit, passing, with or

without modification, the following resolution as ordinary resolution of the Company, namely:—

ORDINARY RESOLUTION

“THAT

(a) the terms of the sale and purchase agreement dated 8 July 2002 (the “Sale and Purchase

Agreement”) entered into between the Company and China Insurance H.K. (Holdings) Company

Limited (“CIHK”), a copy of which has been produced to the meeting and contained in the

document marked “A” and for the purpose of identification signed by the Chairman thereof,

and the transactions contemplated under the Sale and Purchase Agreement, including but not

limited to the allotment and issue of 51,620,000 shares of HK$0.05 each in the capital of the

Company at an issue price of HK$3.905 each credited as fully paid (the “Consideration Shares”)

to CIHK for the settlement of part of the consideration payable under the Sale and Purchase

Agreement to the extent of HK$201,576,100, be and are hereby approved;

(b) the directors of the Company be and are hereby authorised for and on behalf of the Company to

sign, execute, perfect and deliver all such documents and deeds, and do all such acts, matters

and things as they may in their discretion consider necessary or desirable to carry the Sale and

Purchase Agreement into effect and to allot and issue the Consideration Shares to CIHK credited

as fully paid as aforesaid; and


– 31 –

(c) the directors of the Company be and are hereby further authorised to make and agree to such

variations of a non-material nature in the terms of the Sale and Purchase Agreement as they

may in their discretion consider to be desirable and in the interests of the Company.”

Yours faithfully,

By Order of the Board

Tam Chiu Tai Richard

Company Secretary

29 July, 2002

Registered office and head office:—

12/F, Ming An Plaza Phase II,

8 Sunning Road,

Causeway Bay,

Hong Kong

Notes:

1. A member who is entitled to attend and vote at a meeting of the Company is entitled to appoint up to two proxies

if he holds two or more shares of the Company, to attend and, on a poll, to vote instead of him in accordance with

the articles of association of the Company. A proxy need not be a member of the Company.

2. In the case of joint holders of a share the vote of the senior who tenders a vote, whether in person or by proxy, shall

be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined

by the order in which the names stand in the register in respect of the joint holding.

3. To be valid, a form of proxy and the power of attorney or other authority (if any) under which it is signed (or a

notarially certified copy thereof) must be deposited at 12/F, Ming An Plaza Phase II, 8 Sunning Road, Causeway

Bay, Hong Kong not less than 48 hours before the time appointed for the holding of the above meeting or any

adjournment thereof.

4. The register of members will be closed from 19 August, 2002 to 21 August, 2002 inclusive during which period no

share transfers can be registered. In order to be eligible to vote in the above ordinary resolution, holders of shares

whose transfers have not been registered shall deposit the transfers at the Company’s Share Registrars,

Computershare Hong Kong Investor Services Limited at Rooms 1901-5, 19th Floor, Hopewell Centre, 183 Queen’s

Road East, Hong Kong together with the relevant share certificates not later than 4:00 p.m. on Friday, 16 August,

2002.

5. CIHK and its associates (within the meaning of the Rules Governing the Listing of Securities on the Stock Exchange

of Hong Kong Limited), will abstain from voting at the EGM in respect of the ordinary resolution to be proposed

at the EGM to approve the Sale and Purchase Agreement and the transactions contemplated thereunder.

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