Bupa Arabia FY 2018 Earnings Conference Call and Webcast

April 9, 2019 Disclaimer

This presentation has been prepared by the management of Arabia (“The Company”). It does not constitute or form part of, and should not be construed as, an offer, solicitation or invitation to subscribe for, underwrite or otherwise acquire, any securities of the Company or any member of its group nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of the Company or any member of its group, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. The information included in this presentation has been provided to you solely for your information and background and is subject to updating, completion, revision and amendment and such information may change materially. Unless required by applicable law or regulation, no person is under any obligation to update or keep current the information contained in this presentation and any opinions expressed in relation thereto are subject to change without notice. No representation or warranty, express or implied, is made as to the fairness, accuracy, reasonableness or completeness of the information contained herein. Neither Bupa Arabia nor any other person accepts any liability for any loss howsoever arising, directly or indirectly, from this presentation or its contents. This presentation may include forward-looking statements that reflect the Company's intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, performance, growth, strategies and the industry. These forward- looking statements are subject to risks, uncertainties and assumptions and other factors that could cause the Company's actual results of operations, financial condition, liquidity, performance, prospects, growth or opportunities, as well as those of the markets it serves or intends to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. The Company cautions you that forward- looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if the Company's results of operations, financial condition, liquidity and growth and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The Company and each of its directors, officers and employees expressly disclaim any obligation or undertaking to review, update or release any update of or revisions to any forward-looking statements in this presentation or any change in the Company's expectations or any change in events, conditions or circumstances on which these forward-looking statements are based, except as required by applicable law or regulation. The distribution of this document in certain jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe any such restrictions. This document and any materials distributed in connection with this document are not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.

FY 2018 Webcast 2 Agenda

• Financial Performance

• Market Outlook

• Other Highlights

• Abbreviations & Glossary

FY 2018 Webcast 3 KPIs Full year 2018 reports healthy GWP, contribution and loss ratio SR mn GWP Contribution +10.8% +7.4%

8,567 1,361 7,733 1,267

Combined Ratio

+10.5% 96.5% 98.0% 94.9% 95.2% 19.4% 7.3% 9.7% 11.4% 11.9% 1,110 1,226 211 252

Q4 2017 Q4 2018 2017 2018 Q4 2017 Q4 2018 2017 2018

EBT1 & EBT margin Dividends 89.2% 88.3% +4.8% 83.5% 83.3% 2,0 2,0

525 501 1,5 32% -8.5% 6.5% 6.5% 26% Q4 2017 Q4 2018 2017 2018 5.2% 19% 4.3% Expense Loss ratio ratio 101 92

Q4 2017 Q4 2018 2017 2018 2015 2016 2017 EBT margin Dividend payout ratio Dividend per share

1Earnings Before Taxes and Zakat or EBT represent net income attributed to the shareholders FY 2018 Webcast 4 EBT EBT on the rise (+5% YoY) through favorable contribution and investment income SR mn

Contribution 93.9m +5.0%

477.9 -384.0 500.6 40.4 1.7 525.4 -111.2

1 2017 Earned Premium Claims Incurred Expenses Investment & PH Surplus Payable 2018 Other Income

-13.8 -53.6 -28.5 -15.3

S&M G&A BDP Other

Contribution 40.5m -8.6%

193.3 -152.8 101.1 2.0 92.4 -64.8 13.6

1 Q4 2017 Earned Premium Claims Incurred Expenses Investment & PH Surplus Payable Q4 2018 Other Income

-21.5 -18.6 -2.5 -22.2

S&M G&A BDP Other 1PH: Policyholders’ share of surplus from operation FY 2018 Webcast 5 Investment Portfolio and Results Improved investment income through further portfolio diversification and local equity performance

Investment Income Income Breakdown1 Asset Allocation

6% +16.6% 17% 184 696 551 574 2018 2% 75% 158 19% 51 29% 32%

130 42 2% 15% 44 2% 63 35 81% 2017

81% 45 71% 40 68% 21 11% 39 1% 2% 16 35 44 10 41 2016 4 9 12 86% 2015 2016 2017 2018 2016 2017 2018 Investment Income Q4 Q3 Q2 Q1 Funds Equities Underwriting results Sukuk Deposit 1Income breakdown represents net income attributed to the shareholders and policyholders FY 2018 Webcast 6 Market Share and Positioning Bupa Arabia is leading the Saudi market

Total Insurance Market Share (QoQ) Total Insurance Market Share (YoY)

14% 16% 21% 24% 6% 35% 36% 39% Q4 Q4 7% 40% 2017 7% 2018 2017 2018 6%

36% 9% 8% 33% 23% 22% 9% 9%

Health Insurance Market Share (QoQ) Health Insurance Market Share (YoY)

18% 18% 17% 19% 25% 26% 5% 2% 4% 3% Q4 Q4 41% 43% 2017 2018 5% 2017 2018 8% 30% 29% 43% 48% 9% 7%

Bupa Arabia Medgulf Tawuniya Al Rajhi Takaful Others

Source: respective insurance companies’ filings, and Bupa Arabia estimates FY 2018 Webcast 7 Insurance Market Comparative Figures Bupa Arabia realized more than half of total health insurance market contribution SR mn Health Insurance Market Total Insurance Market GWP Contribution Investment income Net profit +5.2% -17.8% -12.8% -56.3%

20,041 2,255 1,004 1,101 19,056 158 875 501 1,854 8,567 43% 184 21% 7,733 1,267 183 482 448 1,362 73% 246 525 109% 67 71 952 5,747 5,757 24 18 80 44 185 33 190 1,020 1,719 1,434 694 -147 -213 450 578 336 341 3,407 3,589 -388 -205 -80 -170 -39 2017 2018 2017 2018 2017 2018 2017 2018

Bupa Arabia Tawuniya Medgulf Al Rajhi Takaful Others

Source: respective insurance companies’ filings, and Bupa Arabia estimates FY 2018 Webcast 8 Loss Ratio and Technical Reserves Bupa Arabia reports favorable loss ratios and consistent reserving profile

Loss Ratio – Health Insurance Market

103% 101% 103% 97% 94% 91% 87% 81% 84% 83% 86% 79% 77% 81% 77% 80% 76% 79% 68% 72%

Bupa Arabia Tawuniya Medgulf Al Rajhi Takaful

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

OCP (reserves)/TTM Claims – Health Insurance Market

39% 37% 32% 33% 31% 31% 26% 28% 27% 26% 24% 25% 25% 24% 22% 20% 21% 21% 22% 22%

Bupa Arabia Tawuniya MedGulf AlRajhi Takaful

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

Source: respective insurance companies’ filings, and Bupa Arabia estimates FY 2018 Webcast 9 Bad debt provision (BDP) Analysis The growth in receivables as % GWP overtime suggests weaker collection, yet it wasn’t accompanied with growth in BDP for some companies in the insurance market ∆ BDP % Rec (16-18) 40 Enaya 35

30 Sabb Takaful AIG-ANB Metlife 25 Alinma Tokio M 20 Medgulf

15 AMANA Insurance -Cooperative Trade Union CHUBB Ace 10 SAICO Gulf General Wataniya AICC Al Alamiya Tawuniyah 5 Buruj ACIG SF Bupa Walaa Insurance U C A 0 -22 -20 -18 -16 -14 -12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 Gulf Union -5 Al-Ahlia Saudi Re SALAMA ATC (Alahli) ∆ Rec % GWP (16-18) AlJazira Takaful Al Rajhi Takaful Malath Insurance -10

-15 Arabian Shield

-20 Solidarity

-25 Sagr Insurance -30 Source: respective insurance companies’ filings FY 2018 Webcast 10 Agenda

• Financial Performance

• Market Outlook

• Other Highlights

• Abbreviations & Glossary

FY 2018 Webcast 11 Saudi Health Insurance Market Trends (1/2) Total insured lives declined by 8% over 12 months period driven by expats departure

+14% -8% -15% 12,012 3,130 9,278 11,034 2,734 7,904

2017 2018 2017 2018 2017 2018

Total Insured Lives Saudi - Total Expat - Total -20% -5% +15% -10% +14% -13% 7,959 1,946 6,923 7,198 1,698 6,014

1,184 4,053 3,836 1,036 2,355 1,890

2017 2018 2017 2018 2017 2018

Total - Primary Saudi - Primary Expat - Primary Total - Dependents Saudi - Dependents Expat - Dependents

Source: Stats.gov.sa, GOSI, MoL, CCHI, and Bupa Arabia estimates FY 2018 Webcast 12 Saudi Health Insurance Market Trends (2/2) Expats departure has slowed down in the second half of 2018, Saudi enforcement expected to officially kick off in April 2019

Expats

-550K -1.3M 9,828 9,744 9,577 9,411 9,323 9,278 9,278 9,230 9,060 8,852 8,745 8,281 8,195 8,272 8,245 8,150 8,153 7,925 7,904

Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

Saudis

+384K +197K 3,130 2,850 2,852 2,870 2,868 2,691 2,696 2,735 2,734 2,746 2,743 2,779 2,779 2,772 2,747 2,834 2,537 2,661 2,652

Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Source: GOSI and CCHI Website FY 2018 Webcast 13 Saudi Health Insurance Market Forecast CCHI’s ToB1 impact to be washed away by expats departure despite a favorable pricing environment in 2018

Total Health GWP (SAR bn) Total Insured Lives (m)

+5% +12% -0.3% +20% -8% +2% -2% 20.0 +12% 12.1 12.0 19.0 19.0 18.6 11.0 +22% +13% -2% 10.8 9.9 15.8 9.6 +15% 8.7 12.9

11.3

2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018

1CCHI updated TOB starting July 2018 to include organ transplantation, Alzheimer’s disease, Autism, Heart valves, and Neonatal Early screening Source : CCHI Annual Reports & Bupa Arabia estimates FY 2018 Webcast 14 Agenda

• Financial Performance

• Market Outlook

• Other Highlights

• Abbreviations & Glossary

FY 2018 Webcast 15 Major Highlights

Foreign Foreign ownership limit increased exceptionally to 60% allowing for Bupa Ownership Arabia’s stock inclusion in the Emerging Markets indices

CCHI Enhanced CCHI has updated the minimum TOB that all Saudi insurance companies TOB adopted by July 1st 2018

Zakat and New GAZT implementing regulations in relation to statutory deposits and Tax update investments are being assessed

• Best Investor Relations Insurance Company 2019 (GBO) Awards • Best Healthcare Insurance Service Provider Saudi Arabia 2019 (IFM) • Ranked 1st in FY16 public disclosure & transparency CGI (Alfaisal University)

FY 2018 Webcast 16 Agenda

• Financial Performance

• Market Outlook

• Other Highlights

• Abbreviations & Glossary

FY 2018 Webcast 17 Abbreviations

BDP Bad Debt Provision BOD Board Of Directors CCHI Council Of Cooperative Health Insurance CGI Corporate Governance Index EBT Earnings Before Tax GAZT General Authority Of Zakat And Tax GBO Global Business Outlook G&A General And Administrative Expenses GWP Gross Written Premium IFM International Finance Magazine KPI Key Performance Indicator NCB National Commercial Bank NEP Net Earned Premiums OCP Outstanding Claims Provision (Known As Technical Reserve) S&M Selling And Marketing Expenses TOB Table Of Benefits TTM Trailing Twelve Months

FY 2018 Webcast 18 Glossary of terms

Understanding our Financial Statements

A customer buys a one-year medical insurance policy for SR 5,000 on July 1, 2017. The coverage ends on June 30, 2018. The annual reporting period for the business in this example is for the year ended December 31, 2017.

A Gross written premium 5,000 When a customer buys a health insurance policy on July 1, the total (GWP) premium for the duration of the contract assuming no additions or deletion is SR 5,000. This amount is classified as Gross Written Premium (GWP). Market share is measured using GWP. B Premiums ceded to reinsurers -50 A* rate The portion of risk that is transferred to a reinsurance company in exchange for a stated premium. In this case the reinsurer has been paid SR 50 and will be responsible for a specified risk according to the agreement with the reinsurer (reinsurance is mandatory per SAMA regulations) C Net written premium (NWP) 4950 A-B The total value of the written premium that will be earned by the insurer during the duration of the contract (12 months) between July 1, 2017 and June 30, 2018 D Unearned premium (UEP) 2475 C*50% The portion of the premium that has not been earned in the reporting period and is recorded as a liability on the insurer’s balance sheet. Since the contract was written on 1 July 2017, only half of the premium is earned in 2017 E Net earned premium (NEP) 2475 C*50% The net earned portion represents the expired i.e. completed amount of the net written premium; The portion of the total premium that was exposed to a potential claim loss during the completed period. If a customer is enrolled mid-year, as is the case in this example, then half of the exposure will be in the year he enrolled (2017) and half will be reflected in the year after (2018)

FY 2018 Webcast 19 Glossary of terms

F Gross claims paid 1825 The actual amount of all paid claims on behalf of the customers. There are two types of claims; 1. Provider claims on direct billing and to be refunded to the customer 2. Reimbursement claims requested by the member A claim is a request for payment received by the insurer to pay for services that were provided by a health care professional to an insured member. A claim may be sent by a medical provider at which the treatment was offered as a provider claim, or directly submitted by the insured member as a reimbursement claim. G Reinsurance share -25 F*% The portion of claims the reinsurers are responsible for in exchange for certain premium (as mentioned in Reinsurance ceded -B) H Net claims paid 1800 F-G Net amounts paid for claims requests after deducting the reinsurer’s share I Outstanding claims provision 200 Based on actuarial The outstanding claims provision incudes the “Incurred But Not (OCP) estimates Reported” claims (IBNR), which is defined as all claims that have taken place but have not been reported yet, either because the claim was not yet received by the insurer, or it has been received but not yet processed or paid by the insurer. This is also referred to as an insurer’s claims reserve, and is recorded as a liability on the insurer’s balance sheet. Before final payment to providers, the insurer adjudicates the claims. This is the process by which the claim is compared to the patient's health plan benefits to verify that the required information is available to process the claim, that the claim is not a duplicate, that the insurer’s rules and procedures have been followed, and that the procedures performed or the services provided are for covered benefits

FY 2018 Webcast 20 Glossary of terms

J Net claims incurred 2000 H+I All payment requests received from hospitals or members to pay for a certain service or projected to be received for the duration of the earned portion of the contract (July 1, 2017 to Dec 31, 2017)

K Underwriting result 475 E-J The surplus of net earned premium less net claims incurred is the (Contribution) contribution. It measures profitability of the policy before accounting for overhead costs. L Costs and expenses 250 Includes selling & marketing, general & administration expenses, and regulatory levies, etc. M Underlying trading results 725 K-L (excluding non- The total profit excluding one-time charges and investment income recurring item) N Surplus from insurance 225 K-L The excess amounts from the earned premium less the medical costs operations and all expenses (including non-recurring items) plus other income (i.e. insurance operations, investment income and all other sundry income) O Distribution of surplus 22.5 N*10% The SAMA regulatory required surplus to be distributed to (Cooperative Distribution) policyholders is 10% of the surplus from insurance operations and the full surplus is distributed as follows:  Transfer to Policyholders’ payables 10%  Transfer to Shareholders’ operation 90% Ratios Loss ratio (LR) 81% J/E The net claims incurred divided by the net earned premium. It measures the % of medical claims cost versus the earned portion of all policyholders Expense ratio 10% L/E The operating expenses divided by the net earned premium Combined ratio 91% (J+L)/E The loss ratio plus the expense ratio. It is a proxy for the surplus from insurance operations Return on Equity (ROE) ROE is trailing twelve months net income after tax / average equity

FY 2018 Webcast 21 Glossary of terms

Understanding Bupa Arabia’s Balance Sheet

Goodwill Goodwill represents the intangible asset which resulted from the Bupa Arabia purchase of the Saudi Health insurance portfolio from Bupa Middle East Limited E.C. in accordance with the assessment by SAMA and the prescribed SAMA guidelines of 2008. The insurance portfolio transfer agreement was completed during 2009

Fixed Assets Fixed assets include the company’s investment in new retail outlets, IT, and fixtures, equipment, machinery, etc. Cash & Investments All cash in the banks, investments, and statutory deposits

Working Capital The working capital represents the operating liquidity available to the organization. The current assets include the receivables, net of bad debt provision, deferred acquisition costs, and other pre-paid expenses. The current liabilities include the technical reserves of outstanding claims provision (OCP) and unearned premium (UEP) and other accrued liabilities. Unlike many businesses, working capital is not favourable in an insurance business. This is because the premium is usually received before the claims liabilities are incurred and ultimately paid

Equity Shareholders' equity represents the paid up capital, plus retained earnings, statutory reserve, and is net of accumulated Zakat/Income tax charges since inception

Borrowings Generally speaking, insurance companies do not need the support of bank borrowings due to the favourable funding of working capital by customers

FY 2018 Webcast 22 THANK YOU

Bupa Arabia Business Advisory & Investor Relations Tel: +966 920 000 456 Ext: 3583 [email protected] www.bupa.com.sa