Central China Securities : CONNECTED TRANSACTION ESTABLISHMENT OF the LIFE INSURANCE COMPANY

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

(a joint stock company incorporated in 2002 in Henan Province, the People's Republic of China with limited liability under the Chinese corporate name "中原證券股份有限公司" and carrying on business in Hong Kong as "中州證券")

On the Capital Contribution Agreement Date, the Company entered into the Capital Contribution Agreement with Henan Investment Group and Other Founders pursuant to which the Promoters agreed to establish the Life Insurance Company with a registered capital of RMB3 billion. Upon completion of the transaction contemplated under the Capital Contribution Agreement, the Company would hold 12% of the equity interest in the Life Insurance Company.

As at the Capital Contribution Agreement Date and the date of this announcement, Henan Investment Group holds approximately 27.017% of the issued share capital of the Company and is a substantial shareholder and thus a connected person of the Company under Rule 14A.07(1) of the Listing Rules. The transaction contemplated under the Capital Contribution Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

Calculated with reference to the Company's capital contribution amount and preparation fees incurred during the preparation phase for the Life Insurance Company, as one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) (other than the profits ratio) in respect of the transaction contemplated under the Capital Contribution Agreement are more than 0.1% but less than 5%, the entering into of the Capital Contribution Agreement is subject to the reporting and announcement requirements but exempt from the circular and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

Reference is made to the announcements of the Company dated 28 October 2015 and 12 December 2016 in relation to the Company obtaining the consent from the Henan Government to take lead in the establishment of the Life Insurance Company. On the Capital Contribution Agreement Date, the Company entered into the Capital Contribution Agreement with Henan Investment Group and Other Founders pursuant to which the Promoters agreed to establish the Life Insurance Company with a registered capital of RMB3 billion, within which the Company would contribute RMB360 million and hold 12% of the equity interest in the Life Insurance Company upon completion of the capital contribution.

The major terms of the Capital Contribution Agreement are set out as follows:

1. Henan Investment Group; and

2. Other Founders

Proposed name : Central China Life Insurance Co., Ltd.* (中原人壽保險股份有限

公司) (subject to the final approval from the CIRC and the State Administration for Industry and Commerce with the pre-approved name as the actual name)

health insurance; accidental injury insurance; dividend insurance; universal insurance; the reinsurance business of the above mentioned businesses; fund application businesses as permitted by national laws and regulations and other businesses as approved by the insurance regulatory authorities, subject to the final approval by the insurance regulatory authorities and verified by the company registration authorities

The registered capital of the Life Insurance Company would be RMB3 billion, divided into a total of 3 billion shares at the nominal value of RMB1 each, all being RMB ordinary shares. Details of the Promoters, their amounts of capital contribution, number of shares subscribed for and percentage of shareholding at the establishment of the Life Insurance Company are listed below:

The registered capital of the Life Insurance Company would be fully paid up in cash. Upon obtaining the approval from the CIRC for the establishment of the Life Insurance Company, each Promoter is required to make payment in cash at the full amount of the capital contribution to which it has agreed to the bank account to be designated by the preparatory committee within the period prescribed by the payment notice to be issued by the preparatory committee.

The capital contribution amount of the Company would be funded by internal resources of the Group. Upon the completion of the transaction contemplated under the Capital Contribution Agreement, the Company would hold 12% of the equity interest in the Life Insurance Company.

The Promoters have agreed to establish a preparatory committee, which is authorised to take specific responsibility for such matters which are relevant to the establishment of the Life Insurance Company. The roles and responsibilities of the preparatory committee include but are not limited to:

1. arrange for the drafting of the agreements, articles of association, application papers and other relevant documents necessary for the establishment of the Life Insurance Company, and mediate between each Promoter for the application, registration and preparation for the establishment of the Life Insurance Company;

2. open bank accounts for the Life Insurance Company and manage the capital contributed by each Promoter;

3. engage and communicate with agencies on behalf of the Promoters;

4. communicate with shareholders, address the advice of shareholders on the composition of the board of directors and the supervisory committee and on the candidates for the senior management and make recommendations accordingly at the first general meeting of the Life Insurance Company in order to ensure fair and reasonable appointments of the relevant personnel for the Life Insurance Company;

5. process such issues which are relevant to the establishment of the Life Insurance Company and obtain all necessary approvals, licenses and consents from the relevant competent authorities or organisations in accordance with the law;

6. coordinate the settlement of preparation fees, refund of monies already paid for and other relevant matters in the event of failure to establish the Life Insurance Company; and

7. perform any other matters related to the establishment of the Life Insurance Company.

Preparation fees incurred during the application phase

Pursuant to the Capital Contribution Agreement, the preparation fees incurred during the application phase for establishing the Life Insurance Company shall be advanced by the Company at an interest calculated based on the prevailing interest rate for bank borrowings, which shall be charged as its preliminary expenses to be repaid after the establishment of the Life Insurance Company. If, for any reason, the establishment of the Life Insurance Company fails to proceed following the failure to obtain approval from the CIRC for its establishment, the fees incurred in relation to its establishment during the application phase shall be borne by the Company.

Preparation fees incurred during the preparation phase

The preparation fees incurred during the preparation phase for establishing the Life Insurance Company shall be advanced by each Promoter as to 5% of their respective amount of capital contribution at an interest calculated based on the prevailing interest rate for bank borrowings, which shall be charged as its preliminary expenses to be repaid after the establishment of the Life Insurance Company. Each Promoter shall deposit its respective share of the preparation fees to the bank account designated by the preparatory committee within 15 business days after the approval of the CIRC is received by the preparatory committee. If, after obtaining the approval from the CIRC, the Life Insurance Company fails to be established or to commence operation for any reason, each Promoter shall be jointly responsible for the fees and relevant liabilities actually arising from the establishment, and such fees arising from the act of establishment shall be shared according to its respective proportion of capital contribution.

The board of directors of the Life Insurance Company shall be composed of 11 directors, with one chairperson to be nominated by the Company and elected by all directors in a majority vote. The chairperson shall also be the legal representative of the Life Insurance Company.

The supervisory committee of the Life Insurance Company shall consist of 5 supervisors, 3 of which will be appointed among the shareholders and 2 of which will be appointed among employees. The employees' supervisors shall be appointed by election at an employee representatives' meeting of the Life Insurance Company or other forms of democratic election. A supervisory chairperson will be appointed by election by all supervisors in a majority vote.

A general manager of the Life Insurance Company will be appointed. All senior management staff of the Life Insurance Company will be appointed by its board of directors.