Bangkok Life Assurance PCL : Financial Statement Yearly 2016 (Audited) L February 23, 2017

Bangkok Life Assurance Public Company Limited Report and financial statements‌‌‌‌‌‌

31 December 2016

To the Shareholders of Bangkok Life Assurance Public Company Limited

I have audited the accompanying consolidated financial statements of Bangkok Life Assurance Public Company Limited and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31 December 2016, and the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, and have also audited the separate financial statements of Bangkok Life Assurance Public Company Limited for the same period.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bangkok Life Assurance Public Company Limited and its subsidiaries and of Bangkok Life Assurance Public Company Limited as at 31 December 2016, their financial performances and cash flows for the year then ended in accordance with Thai Financial Reporting Standards.

I conducted my audit in accordance with Thai Standards on Auditing. My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Group in accordance with the Code of Ethics for Professional Accountants as issued by the Federation of Accounting Professions under the Royal Patronage of His Majesty the King as relevant to my audit of the financial statements, and I have fulfilled my other ethical responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

I draw attention to Notes 2 and 3 to the financial statements. During the year, the Company reclassified transactions in accordance with the new format of financial statements as specified in the Notification of the Office of Insurance Commission dated 4 March 2016 which effective on 1 January 2016 onward. The Company adopted these revised and new financial reporting standards issued by the Federation of Accounting professions. My opinion is not qualified in respect of this matter.

Key audit matters are those matters that, in my professional judgement, were of most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters.

I have fulfilled the responsibilities described in the Auditor's Responsibilities for the Audit of the Financial Statements section of my report, including in relation to these matters. Accordingly, my audit included the performance of procedures designed to respond to my assessment of the risks of material misstatement of the financial statements. The results of my audit procedures, including the procedures performed to address the matters below, provide the basis for my audit opinion on the accompanying financial statements as a whole.

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Key audit matters and how audit procedures respond for each matter are described below.

As described in Note 20 to the financial statements, as at 31 December 2016, the Company had reserves for long-term insurance contracts of Baht 233,412 million, representing 94% of its total liabilities. These reserves are accumulated for policies in force, from the inception of the insurance policies to the end of the reporting period. They are calculated based on the net level premium valuation (NPV), which is an actuarial method using locked-in assumptions, plus 4% of NPV to buffer the risk of actual assumptions being different from actual circumstances. In addition, the Company conducts a liability adequacy test (LAT) on the reserve at the end of every reporting period, and if the liability is not sufficient, the shortfall is recognised as additional expense in the statements of income. The liability adequacy test (LAT) is performed based on the gross premium valuation (GPV), which uses the current best estimate assumptions of the contractual obligations. The assumptions include mortality, discount rate, lapse or surrender rates and rate of selling and administration expenses etc. As changes to assumptions could significantly affect the reserves for long-term insurance contracts. The Company's management has to exercise judgment in determining appropriate assumptions and regularly reviews the applied assumptions based on the best estimates, in order to avoid the risk of inadequate recognition of these reserves, which may resulting in liabilities being understated.

I assessed key data and assumptions and financial models using the gross premium valuation method (GPV), which was applied by the management for the liability adequacy test. I also checked the data used in estimating the gross premium reserve against its sources, evaluated the assumptions underlying the selected financial models and the methods used for premium reserve estimation by performing analytical procedures on the Company's application of the experience analysis method, the methods used in determining past assumptions, and benchmarking of the management's assumptions to the data on the life insurance industry overall. For economic assumptions, I performed analytical procedures on the assumptions and the financial and economic data, reviewed the selected financial models and assessed whether the method used in the reserve calculation was consistent with an actuarial approach and in accordance with the notification of the Insurance Commission. In addition, I analysed and reviewed reserve movements and assessed the Company's disclosures of its accounting policies and key information relating to reserve for long-term insurance contracts.

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