IFRS 17 Impact and OPAT Analysis

Participating Business (VFA) Accounting Treatment Participating Business (VFA) Accounting Treatment of Insurance Contract Liabilities and Invested Asset Movements Insurance Contract Liabilities Assumption Changes Invested Assets Mark-to-Market Movement Operating Discount Rates Fixed Income Equities & Real Estate (1) Implications IFRS 17 vs IFRS 4 Reduced net profit volatility AIA IFRS 17 CSM CSM CSM CSM ◉ IFRS 4 Locked-in Locked-in Net Profit / OCI(2) ◉ Net Profit Discount rate changes and asset mark-to-market absorbed within CSM and gradually released into OPAT Interest rate hedges in participating business also absorbed within the CSM Notes: Excludes unit-linked and short-term contracts under PAA approach for simplicity (1) The classification of real estate under IFRS 17 in the table represents investment properties and certain properties held for own use for participating contracts. Classification of properties held for own use generally follows IAS 16. The classification of real estate under IFRS 4 in the table represents investment properties only (2) Net profit for participating funds, OCI for Hong Kong participating business 26 26

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