Welcome everyone to Cathay Financial Holding Company's IFRS 17 transition conference call. All lines have been placed to mute to prevent background noise. After the presentation, there will be a question and answer session. Please follow the instructions given at the time if you would like to ask the question. Now I would like to introduce Mr. C. K. Lee, President of Cathay Financial Holding Company. Mr. Lee, please begin. Thank you. Good afternoon, and good morning to those in Europe. Welcome to Cathay Financial Holding IFRS 17 transition analyst meeting. I am C.K. Lee. Thank you for joining us today. Before we begin, let me introduce the senior management team joining us today. Ms. Grace Chen, CFO of Cathay Financial Holding. Mr. [Lin Chao-Ting], newly appointed President of Cathay Life. Mr. [Jack Chen], Senior EVP of Cathay Century. Taiwan's insurance industry officially adopted IFRS 17 on January 1st this year. Earlier today, we held a small meeting to brief our Directors on the key financial impacts of the transition. In today's analyst meeting, we would like to walk you through the major changes and the associated impact on the IFRS 17 transition. Now I would like to hand over the call to Yajou from our team for the presentation. Following the presentation, we are open for Q&A session. Yajou, please. Thank you, Mr. Lee. Before the presentation, today's meeting will focus on the IFRS 17 transition and the related impact. A more comprehensive update on our subsidiary's operating performance and outlook will be provided at our regular fourth quarter analyst meeting on March 27. With that, let's begin the presentation. First, let me highlight several key messages from IFRS 17 transition. Please turn to page five. IFRS 17 is a new accounting standard for insurance contracts. The impact is primarily concentrated on Cathay Life. While the impact of Cathay Century, our P&C insurance subsidiary, is limited. Our banking, securities, and asset management subsidiaries are not affected. Under IFRS 17, CSM becomes a key driver of future profitability. At transition, the group CSM balance reached TWD 524 billion. Cathay Life recorded TWD 512 billion, while Cathay Century recorded TWD 1 billion. Although the transition results in a one-off reduction on reported equity, adjusted equity plus after-tax CSM provides a better reflection of economic value and remains higher than the equity reported under IFRS 4. Cathay Life earnings predictability and stability are expected to improve, supporting more stable profitability at the group level over time. Let me move to page five and highlight key points for Cathay Life. As mentioned earlier, although the transition results in a one-off reduction on reported equity, adjusted equity increased to TWD 514 billion, compared with the TWD 479 billion under IFRS 4. On net basis, liability interest costs declined to around 2.2%-2.3% at transition from about 3.4%, supporting a more stable positive spread. We also expect CSM release to grow at around a 10% CAGR over the next five years, supporting future earnings. The break-even ASA yield declined to around 2.2% from about 3% level. The increasing CSM release is expected to help stabilize the break-even ASA yield going forward, increasing by 2-3 basis points per year over the next five years. Turning to page six, which illustrates the key balance sheet changes at transition. Under IFRS 17, insurance liabilities are measured using current market discount rate instead of the locked-in rate at contract issuance. At transition, best estimate liabilities, BEL, amounted to TWD 6.6 trillion, with a risk adjustment, RA, of TWD 60 billion to reflect non-financial risk. Future insurance profits are deferred as CSM within liabilities, with transition CSM balance of TWD 512 billion, which will be recognized in earnings over the insurance coverage period. On the asset side, total assets amounted to TWD 8.7 trillion at transition. The change mainly reflects financial asset redesignation under IFRS 9, together with the reclassification of policy loans into insurance liabilities under IFRS 17. Turning to page seven. At transition, we redesignated financial assets to better align with liability measurements. For the U.S. dollar liability portfolio, most assets are redesignated to FVOCI to better align with underlying liabilities. Overall, the asset and liabilities are quite well matched with a DV01 around TWD 200 million-TWD 300 million. For the Taiwan dollar liability portfolio, given the currency mismatch, a portion of fixed income assets remain at amortized cost, taking into account Taiwan and U.S. dollar interest rate dynamics to mitigate book value volatility. As the overlay approach no longer applies under IFRS 17, equities previously classified as FVTPL with overlay were re-designated to FVOCI, reducing earnings volatility. We also made selective designations to FVTPL as transition to allow portfolio repositioning. For example, we rotated out of weaker equity positions with the flexibility to rebuild position as market opportunity arise. Meanwhile, we replaced asset yield around 3.8% with asset yielding around 5.2% for the fixed income position, while upgrading credit quality from BBB and below to A-rated, enhancing recurring income and reducing potential expected credit loss exposure. In the chart below, you can see a transition. Our amortized cost position reduced from 63%- 41%, while OCI increased to 40%. FVOCI equity rose from 2%- 9%. FVTPL increased from 0.2%- 10%. Following the post-transition reposition, the FVTPL position down to around 8%. Now turning to page eight. The chart shows the bridge from IFRS 4 equity to IFRS 17 equity at transition. The change mainly reflects the remeasurement of insurance liabilities and financial asset redesignation with other subsidiaries contribute a small positive impact. The TWD 70 billion remeasurement of insurance liabilities mainly reflects the negative effect from our legacy Taiwan dollar high guarantee rate policies, which accounted around 28% of our insurance liabilities, partly offsetting by a contribution from other Taiwan dollar and foreign currency denominated portfolios. The 184 billion financial asset redesignation mainly reflects the redesignation of financial assets from amortized cost to FVOCI. With a positive contribution of 9.7% from other subsidiaries, IFRS 7 equity is TWD 504.5 billion. Including after-tax CSM of TWD 409.5 billion, adjusted equity stands at TWD 914 billion, bringing the adjusted equity to asset ratio to around 12% higher than under IFRS 4. Also, provide an update. Since the transition, our equity increased by over TWD 150 billion as of the end of April, supported by strong equity markets and lower U.S. Treasury yields. Turning to page nine, this slide highlights several key changes for earnings under IFRS 17. Under IFRS 17, earnings are mainly composed of insurance service result, financial result, and other operating results. The insurance service result mainly comes from CSM release as insurance profits are recognized over the coverage period. The financial result will reflect a positive spread. With insurance liabilities measured using current market interest rate, liability interest costs decline to a 2.2%-2.3% level on asset basis at transition, supporting a more sustainable positive spread. Other operating results include fee income, indirect expenses, and mortality interest spread of such reserves. Other comprehensive income will reflect the changes in financial assets and discount rate effects of insurance liabilities. Equity realized gains are no longer recognized in P&L, but are recorded in retained earnings and continue to support dividend capacity. Overall, with the earnings driven by CSM release and recurring spread, earnings are expected to become more predictable and stable over time. Page ten. This slide illustrates how CSM contributes to earnings over time. As CSM will play an increasingly important role in earnings contribution, the share of underwriting profit, meaning the insurance service result plus other operating results, will gradually increase. Our CSM release rate is around 6%, and since new business CSM generation exceeds the release, the CSM balance is expected to grow by around 8%-10%. As a result, the underwriting profit will become a larger contributor to overall earnings over time. Page 11. Our product strategy continues to focus on CSM and strong capital contribution, with capital contribution above 100% in enabling us to self-fund our capital. CSM accumulation remains our top priority, and the protection products, including the major product, health insurance, generates the highest CSM and accounting for a larger portion of new business CSM, while also contributing mortality gains. We also focus on U.S. dollar-denominated interest-sensitive life products, which carry no currency risk and are easier for asset liability management and contribute interest spread. In addition, investment-linked products provide steady fee income with very little capital charge. Together, this product strategy generates diversified profit sources across mortality gains, interest spread, and fee income while accumulating CSM and self-funding our capital. Page 12. Our strong insurance franchise and distribution channel support strong CSM generation. Cathay Life has the largest market share in health insurance, which is also higher than our overall FYP market share. We have a strong control over our distribution channels. About 97% of FYP is generated through the group channels, with over 70% coming from our agency force. Health insurance is primarily driven by the agency channel, which position us well in this segment. We also have built a health ecosystem with all our health insurance products structured as wellness-linked policies that reward customers for achieving health targets, enhancing customer engagement and policy consistency. Turning to page 13, our asset allocation strategy to align with liabilities, with fixed income assets remaining the core of our investment portfolio. We continue to focus on enhancing recurring income, including interest and dividend income. In addition, we will gradually increase domestic Taiwan dollar-denominated assets to further strengthen asset liability matching. For the ALM and risk management, for our U.S. dollar liability portfolios, in addition to redesignation as FV assets to FVOCI, we will also target and minimize the DV01 gap between assets and liabilities to reduce interest rate induced equity volatility. For Taiwan dollar liability portfolios, we have already partial designation of amortized cost assets to FVOCI based on the historical Taiwan dollar and U.S. dollar interest rate dynamics to mitigate mark-to-market volatility on equity. We will also focus on U.S. interest-sensitive life products to reduce the currency mismatch exposure. On page 14, let me briefly summarize the key takeaways. Under IFRS 17, our CSM balance will reach TWD 512 billion. Adjusted equity plus after-tax CSM reached TWD 914 billion, higher than under IFRS 4. Our strong CSM generation capabilities continue to support the future earnings. Liability interest costs have declined to our current market levels, providing a stable positive spread. Together, CSM release and recurring spread will become the key driver of earnings, leading to a more predictable and stable profitability, which will also support our ROE at around 10% level. Our strong ALM and risk management capabilities support our financial resilience and help mitigate equity volatility. In addition, the strong CSM generation further strengthens our capital buffer against the potential volatility. Lastly, let me briefly touch on [inaudible] entry. Please turn to page 16. Equity increases by TWD 1.6 billion at transition, mainly reflecting the deferral of acquisition costs and discounting of insurance liabilities. The overall IFRS 17 impact is limited, as most of P&C contracts are short duration with about 80% measured under the PAA model. The combined ratio remains the key profitability metric, and the overall trend remains broadly comparable with IFRS 4. With that, I will conclude the presentation and open the floor for Q&A. Yes, thank you. And ladies and gentlemen, we will now begin the question-and-answer session. If you wish to ask a question, please press star key and number one on your telephone keypad, and you will enter the queue. After you are announced, please ask your question. Should you wish to cancel your question, you may press star key and number two. Thank you. Now please press star one on your keypad if you would like to ask a question. Thank you. To ask a question, you may press star one on your telephone keypad. Thank you. Okay. Suppose there's no question. Thank you very much for your participation in today's analyst meeting. If you have any further question, please feel free to contact our IR team. Thank you. Thank you. Thank you. We thank you for your participation in Cathay Financial Holding Company's conference call. You may now disconnect. Thank you again. Goodbye.