China Pacific Insurance (Group) Co. Joins with Carlyle to Inject a Total of RMB 6.6 Billion New Capital into China Pacific Life Insurance Co.

• CPIC Life establishes strategic partnership with The Carlyle Group


• The Carlyle Group acquires a 24.975% interest in CPIC Life for RMB 3.3 billion (US$410 million)


• China’s largest private equity transaction will allow CPIC Life to realize the full potential of the world’s fastest growing market

Shanghai - China Pacific Insurance (Group) Co., Ltd. (CPIC Group) and global private equity firm, The Carlyle Group (Carlyle), today signed a definitive agreement to equally participate in the injection of RMB 6.6 billion new capital into China Pacific Life Insurance Co., Ltd. (CPIC Life), the country’s third largest life insurer. The Carlyle partnership, which will hold a 24.975 percent stake in CPIC Life after the injection,includes international financial services leader Prudential Financial, Inc. of the United States* as the strategic investor.

The signing ceremony was held at Shanghai International Convention Center. It was attended by Mr. Wei Yingning, Vice Chairman of China Insurance Regulatory Commission, Mr. Hu Wei, Deputy Director of People’s Congress of Shanghai Municipality, Mr. Ji Xiaohui, Deputy Secretary General of Shanghai Municipal Government, Mr. Wang Guoliang, Chairman of CIPC Group and CIPC Life, Mr. Huo Lianhong, General Manager of CPIC Group, Mr. Jin Wenhong, General Manager of CPIC Life, Mr. David M. Rubenstein, Managing Director and Founder of The Carlyle Group, Mr. Yang Xiangdong, Managing Director of The Carlyle Group in Asia and Mr. Timothy Feige, Senior Vice President of Prudential Financial, which operates under the Pramerica Financial brand and service mark in China and select countries outside the United States.

The transaction will significantly enhance CPIC Life’s capital position and establish a far-reaching partnership between the companies. The Carlyle partnership will provide CPIC Life with strategic, operational and industry expertise to strengthen the company’s performance and competitive position. Areas of cooperation will include upgrading corporate governance, risk management, investment management, product sales, marketing and IT systems.

These measures will enable CPIC Life to fully exploit its existing position as China’s third largest life insurer in the world’s fastest growing market for life insurance and related services. Carlyle will nominate a new management team under the leadership of CPIC Life’s chairman, Mr Wang Guoliang. A financially stronger CPIC Life, will also be able to compete more vigorously against international competition, allowed to enter the China market after the full opening of the industry under WTO rules. Currently, CPIC Life has an 11 percent share in China market, of which the top three players combined have over 80 percent.

CPIC Life’s chairman, Mr Wang Guoliang said: "This is the most important development in China Pacific Life’s history. Our agreement with Carlyle will dramatically accelerate CPIC Life’s expansion plans and its participation in the world’s fastest growing life insurance market. Carlyle’s formidable network of relationships and its successful track record will help attract world-class management talent, expertise to transform the business, and future business partners for CPIC Life.

"Our far-reaching and comprehensive partnership with Carlyle, with Pramerica Financial as strategic investor, will also allow us to set a new strategic direction, incorporating the combined strengths of the two world class companies in this historic transaction. At the same time, it is a significant moment for the Chinese insurance industry. It demonstrates how the Government-inspired reform of the financial sector is encouraging world leaders in insurance and global investment institutions to participate in the development of China’s insurance sector. The partnership reflects the acceleration of the opening of Chinese insurance sector, government commitment which encourages mutually beneficial cooperation and skill transfers, and the growth of competitiveness in Chinese business."

"Our experience working with international companies will help CPIC Life incorporate the most advanced management and industry expertise into the Chinese market in order to become a world-class company and a formidable force in Chinese insurance market."

Managing Director and Co-head of The Carlyle Asia Buyout Group, Mr. Yang Xiangdong said: "Carlyle is proud and delighted to have concluded this landmark investment in CPIC Life which will have a profound impact on the Chinese life insurance sector. This is a prime example of Chinese financial reform. The transaction, the largest private equity investment in China to date, is a testimony to the maturing investment and regulatory environment in China and to the Government’s commitment to financial reform.

"We will now join with our partners, CPIC Life and our strategic investor, Pramerica Financial, in the exciting task of creating a model for excellence in the Chinese insurance industry. To achieve this we will call upon a strong management team under the leadership of Chairman Wang, and we will employ the highest international standards to build an industry leader."

The signing today follows the approval by the Chinese Insurance Regulatory Commission (CIRC). The transaction is expected to close within a month. The transaction gained overwhelming approval from shareholders of CPIC Group on Oct. 26, 2005.

In the past few years, CPIC Life’s parent company, CPIC Group has focused on improving its competitiveness for long-term steady and healthy growth. It has upgraded its management systems, optimized its structure, and improved product and service qualities. At the same time, it has actively sought international capital, additional management expertise and technology to achieve a generation leap. After three years of negotiations, CPIC Group has officially formed this strategic partnership with Carlyle that delivers the capital injection for the modernization of CPIC Group to become a financial holding company.

This is Carlyle’s second major investment in China in the past two months and it underlines the company’s long-term commitment to investing in the country. On October 25, 2005, Carlyle signed a definitive agreement to acquire an 85 percent stake in Xugong Group Construction Machinery Co., Ltd for US$375 million.

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About China Pacific Insurance (Group) Co.

China Pacific Insurance (Group) Co. (CPIC Group) is an insurance and investment holding company founded in April 1991 and has its headquarters in Shanghai.

CPIC Group owns controlling stakes in China Pacific Property Insurance, which specializes in non-life insurance business and China Pacific Life Insurance. The company operates in the US market through its wholly owned subsidiary of China Pacific Service Corporation (US) and in Hong Kong through its China Pacific Insurance HK Ltd. In addition, CPIC Group has offices in London and New York. The company has a joint venture with the ING group under the name of Pacific-ING.

CPIC’s core values are built on the motto of "integrity and prudent management." CPIC seeks to maximize profits by prudent management and risk coverage with the objective of promoting social stability and economic development.

The CPIC website is www.cpic.com.cn.

About China Pacific Life Insurance Co.

China Pacific Life Insurance Co. Ltd (CPIC Life) is a national life insurance company. It was founded on November 9, 2001 and has headquarters in Shanghai.

CPIC Life shares the business philosophy of its parent company, CPIC (Group). The company’s core values are "integrity and prudent management," and it is committed to continuous product and service innovation to meet client needs. It has 150 product offerings, covering life, annuity, medical and accident areas.

CPIC Life has a nation wide sales network covering marketing, direct sales and sales through banking agencies. As of the end of 2004, the company had 20,600 employees and 212,000 sales agents in 521 branches, sub-branches and more than 3000 sales offices. In addition, CPIC Life has very strong business relations with many dedicated agents and shared agencies. In 2004, CPIC Life achieved a premium income of RMB 34.49 billion and grew the company assets to RMB 91.31 billion.

CPIC Life’s website is: www.cpic.com.cn.

About Pramerica Financial

Pramerica Financial and its affiliates, with more than $522 billion in total assets under management as of September 30, 2005, serve individual and institutional customers worldwide and include one of the largest life insurance companies in the United States. These companies offer a variety of products and services, including life insurance, mutual funds, annuities, pension and retirement related services and administration, asset management, securities brokerage, banking and trust services, real estate brokerage franchises and relocation services. For more information, visit www.pramerica.com.

*Prudential Financial is not affiliated in any manner with Prudential plc, a company incorporated in the United Kingdom.

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