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A WINNING YEARThe joint venture formed in 2009 between Bank of the Philippine Islands (BPI) and The Philippine American Life and General Insurance Company (Philam Life) became the largest bancassurance operations in the country in 2015. With its vision of becoming the benchmark in bancassurance, BPI-Philam is consistently working towards making insurance more accessible and personalized to BPI’s valued clients.

To be able to win despite hardships is the mantra that BPI-Philam lives by. To win the moment is to stay focused on the long-term goal, never giving up no matter how hard and how far.

In 2016, BPI-Philam moved up the third rank in the life insurance industry in total premium income despite a number of challenges. This proved that success can be reached with the right values of grit, upliftment, innovation, and authenticity.

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GRIT

UPLIFTING

INNOVATIVE

AUTHENTIC

BPI-Philam at a GlanceBPI at a GlancePhilam Life at a GlanceAIA at a GlanceMessage from the CEOFinancial Highlights

Business Highlights

Financial Statements

Board of Directors

Corporate Governance & Operating Philosophy

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TABLE OF CONTENTS

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GRITWe aggressively deliver excellent service through a prepared and dynamic mind.

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BPI-PHILAM AT A GLANCEBPI-Philam Life Assurance Corporation is a strategic alliance between two leading financial companies in the Philippines – The Philippine American Life and General Insurance Company (Philam Life) and Bank of the Philippine Islands (BPI).

#1#3

800292,589

BancassuranceSales Executive

Policies Sold

in Bancassurance

in Life Insurance

(BSEs) Nationwide

Our VisionTo be the leading life

insurance company in the country by making

insurance accessible and personalized to every Filipino

Our MissionWe make insurance easy

to get and easy to have for every Filipino no matter

what class they belong to

60 YEARSMARKET LEADER 160 YEARS

EXPERIENCE800 branches

ATMs1,50018 MARKETSIN ASIA PACIFIC

Philam Life is a premier life insurance company in the Philippines and a market leader for over 60 years.

A Member of the AIA Group

BPI-Philam is the bancassurance arm of AIA in the Philippines. AIA is the second largest life insurance company in the world that operates in18 markets in Asia Pacific.

Bank of the Philippine Islands is a leading commercial bank in the country with over 160 years of experience in the local banking industry and an extensive branch network of more than 800 branches and 1,500 ATMs.

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BPI AT A GLANCE

PHILAM LIFE AT A GLANCE

7.9

1.39

3

Million

Million

Foreign

Clients

Capital

Offices

831

700,000

3,061

8,000

Branches

ATMs & CAMs

in the Philippines

AIA AT A GLANCELargest Listed

#1 Worldwide

16 Million

2 Largest

30 Million

Provides Protection

for its life insurance license

Phpindividual policies

more than

Overalmost

agents nationwide2.5 Million

insured group members

The

Over

company on the Hong Kong Stock Exchange

for MDRT Members

participating members of group insurance schemes

nd

Life Insurer in the world

Serving over

individual policyholders

to people across the region with total sum of over USD 1T

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ATMs & CAMs

MESSAGE FROM THE CEO

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MESSAGE FROM THE CEO

To our valued stakeholders,

We would like to thank our policyholders, our partners BPI, Citibank, Philam Life, the AIA Group, our employees, our Board of Directors, our shareholders, and a host of resource and supply partners who continue to make our vision possible. Your support and commitment has made BPI-Philam what it is today. You are and have been our inspiration in 2016 and in the years ahead.

The year 2016 was full of ups and downs. With the Presidential Elections taking place, the economy, and ultimately the insurance industry faced a number of challenges. Despite this, BPI-Philam managed to move up to the 3rd rank in the Life Insurance industry by total premium income. BPI-Philam remained focused in narrowing the protection gap in the country in 2016. In addition we strengthened our foundations for growth:

Surendra MenonChief Executive Officer

I am also pleased to have worked with our Board of Directors to establish the highest standards of corporate governance. In addition to stringent internal controls and risk management discipline, we were able to prudently analyze the company’s operational, financial, and compliance controls for the whole year. We continuously made sure that we sustain regular internal and external reviews of our company’s controls and risk management principles and practices. These reviews served as benchmarks appropriate to our business. Alongside with our risk management reviews and the assessment of effectiveness of the company’s internal controls, we continuously identify and closely monitor controls to ensure that risks are mitigated and control gaps are addressed. The Board of Directors, senior management and all employees share a commitment to maintain, enhance and strengthen the integrity of the company’s control environment.

In 2017, with the continuous rise in demand for protection brought by the increasing working population, we remain true to our mission of making insurance accessible and personalized for every Filipino. Our primary focus for the coming years is to bring real value and better protection to our customers as we encourage them to live longer, healthier, and better lives. We are a company that embraces change as we work on establishing better foundations along with our goals. BPI-Philam aims to further expand and grow its efforts, ensuring that we conduct our business in a deliberate pace with compliance to the industry’s policies and regulations.

This is only the beginning for BPI-Philam. We are excited to achieve more winning moments for our policyholders, partners, employees, and shareholders.

BPI-Philam remained focused in narrowing the protection gap in the country.

Products - we launched 5 new products to meet the needs of our clients;

Distribution - we increased lead generation by 55%, ran over 400 Financial Clinics for families of overseas Filipinos, launched the first Bancassurance Month, and strengthened corporate partnerships that created 194% growth in ANP by the end of the year. We also significantly increased our BSE salesforce to meet the growing number of customers of BPI;

Infrastructure – we launched new platforms such as the iCare app for our salesforce, so they can provide service anywhere for our clients. We also introduced ePlan, a self-service portal for our clients, and we kept upgrading iPos, which we also launched for our Corporate and SME partners.

a.

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FPOFINANCIAL HIGHLIGHTS

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FINANCIAL HIGHLIGHTS

Revenue

Total Assets Net Income Shareholders’ Equity

First Year Premiums

RenewalPremiums

Gross Investment Income

Fee Income

Php 2.8 Billion

Php 2.6 Billion

Php 4.5 Billion

Php 2.5 Billion

Php 88.8 Billion

Php 1.4 Billion

Php 1.7 Billion

Php 1.7 Billion

Php 9 Billion

16%increase

47%increase 6%

increase

30%increase

26%increase

2015

2015

20152015

2015

2015

2015

2016

2016

20162016

2016

2016

2016

6%increase

83%increase

Php 8.4Billion

Php 1.2Billion

Php 1.4BillionPhp 1.1

Billion

Php 76.4Billion

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INNOVATIVEBPI-Philam takes leaps to improve through new technology, methods, and products.

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BUSINESS HIGHLIGHTS

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BUSINESS HIGHLIGHTS

PRODUCTSThe growing demand for health protection, income protection, wealth transfer, and savings is what inspires BPI-Philam to continuously develop new products for our customers. We shifted our priorities in such a way that would better cater to these demands, dedicating our efforts towards health protection in line with longer, better, healthier lives. That’s why in 2016, we launched five (5) new products to cover our clients’ different needs and circumstances, making each product relevant and meaningful for our audience.

BPI-Philam’s offers extend beyond health products; we offer health solutions as well. Our company aims for total wellness for our customers through a holistic program called Philam Vitality. The challenge of making life insurance more relevant to more Filipinos has always been present, and Philam Vitality addresses this by making insurance more than just a matter of security, but a more engaging and rewarding experience. It is a science-backed wellness program that provide benefits such as discounts for premium life insurance, additional insurance coverage, and rewards provided by our partner establishments. With Philam Vitality, we encourage our clients to have a healthier lifestyle, and consequently, better health.

Health and protection products were showcased under the PowerHealth campaign namely Assure Protect, Critical Care Plus and Critical Care Max. As part of the campaign, audio-video presentations, magazine campaigns, button pins, and table-toppers were developed. To make people aware of the total wellness program, BPI-Philam murals were also strategically placed in Makati underpasses.

Products in focus are Assure Protect and Critical Care Max: Assure Protect provides premium discounts and rewards, and high value life insurance. It helps families ensure their future while working to protect them from life’s uncertainties. Critical Care Max is a comprehensive plan that provides financial benefits at the early stage of a critical illness, helping you recover faster and enjoy more moments with your loved ones.

While customers build their asset base, their need for protection coverage becomes greater. Build Estate Plus (BEP), and Premier Benefit Life (PBL) were also launched in 2016 to better focus on wealth transfer and protection of our High Net Worth bank customers.

For customers who need protection of their dollar investments, we also launched Invest Dollar Max.

All these products aim to help our clients live longer, better and healthier lives.

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SEGMENTS

Overseas Filipino

BPI-Philam continues its efforts to provide financial security and prosperity to our Overseas Filipino clients. One of our biggest efforts in 2016 is the Overseas Filipino (OF) Financial Clinic, a one-on-one financial health check consultation for OF customers conducted by the Bancassurance Sales Executive in the presence of the referring Bank Officer. It is held outside the bank and is geographically organized, represented by different branches within the given area. The success of OF Financial Clinics rely on the quality of referred customers, who have been identified as having a high propensity to purchase an insurance plan. The Bank Officer’s role is equally valuable, as their endorsement of BPI-Philam is considered an extension of the Bank’s hospitality.

In 2016, 475 Financial Clinics were ran, with an attendance of 4,875 on record. These OF Financial Clinics have been instrumental in engaging our bank partners, their customers and our sales team, so that more OF families are served and given the opportunity to win the moment with BPI-Philam.

TPM Booster

The Target Process Map (TPM) Booster was strengthened in 2016 to further expand BPI- Philam’s customer base. This effort focused on key points of lead generation and governance. We cascaded this program through comprehensive workshops for our salesforce as well as bank partners. To address the challenge from all angles, ways to broaden lead sources were mapped; they were trained in oral communication; and taught to use tools and forms that can enhance the experience of lead generation. It established a governance system that rallied everyone, encouraging a culture that monitors and takes accountability of performances on a regular basis.

Upon its rollout in the first half of 2016, notable results were immediately seen. By the end of the fiscal year, monthly lead generation volume increased by 55%, accounting from 8,800 in 2015 to 13,700 on average in 2016. The TPM Booster supported the transition of BPI branches from being operations-oriented to becoming sales-oriented.

Life Talks (Events Management in a Pack)

Life Talks is BPI-Philam’s campaign to continuously empower our Bancassurance Area Managers (BAMs) in becoming experts and leaders on financial literacy. Through Life Talks, BAMs are able to conduct the same financial planning learning forums for clients nationwide.

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Marketing

Brand Development

BPI-Philam went through a journey and defined its own identity in 2016, resulting to the new brand framework and values: Grit, Innovation, Upliftment, and Authenticity.

The new framework challenges BPI-Philam to be accessible and agile in the way it does business. Our brand development poses renewed principles in making insurance easy to have for every Filipino hero, as well as communicating with our internal teams the principles we live by. This framework embodies our company’s own image and personality, as well as our perspective in approaching our ways of working.

The new brand was launched internally through a series of events in the Bancassurance Month.

Bancassurance Month

In October, BPI-Philam held the first ever bancassurance month through activities aimed to create awareness about bancassurance and financial planning. This kicked-off with the company’s first media conference followed by the unveiling of the new building signage following the renaming of the home office building to BPI-Philam Life Makati, and a “bancassurance walk” along Ayala avenue participated by 200 employees wearing BPI-Philam merchandise.

Website

BPI-Philam also relaunched its corporate website. The new website uses vibrant colors and cards layout for users to easily scan and digest information. Most importantly, the website is made for all kinds of devices with its responsive web design (RWD) that makes sure the site provides optimal viewing and interaction experience, even through a mobile device.

One of the most important highlights of the website is the Key Moments section. It is the landing page that introduces BPI-Philam’s products through themes and topics that are relevant to each customer’s personal journeys. We at BPI-Philam believe that life’s key moments should be met and celebrated with peace of mind, that’s why the website emphasizes 6 important stages of a person’s life where we can offer security, namely:

BUSINESS HIGHLIGHTS

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STRENGTHENED SALESFORCEBPI-Philam continues to recognize its excellent salesforce and referrers for an outstanding performance.

In October of 2016, over 100 delegates were sent to New Zealand. This convention was inclusive of premier housing, the best restaurants, cultural and heritage tours, as well as visits to famous landmarks of the country.

In BPI-Philam, it’s always our duty to bring to our people the best that they deserve and will continue to reward our best performers.

CORPORATE SOLUTIONSIn 2016, the team strengthened its partnership with BPI’s Corporate Banking and introduced new bundled products: BPI Pamana, and BPI Pamana Padala. These initiatives contributed to an outstanding 194% growth in ANP for the year.

INSTITUTIONAL DISTRIBUTIONWith BPI-Philam’s aim to make insurance easy to get and easy to have for every Filipino, BPI- Philam started tapping into Small and Medium-sized Enterprises (SMEs). The company set a milestone in January 2016 as we inked a partnership with the 2 Tambunting brothers, Jose Tambunting, Jr. (Primemaster) and Miguel Tambunting (JPT Central).

We first launched the distribution of Microinsurance Packages of Tambunting under the product name, “Bayan Family Protect” in mid-2016. For as low as P30, a client can already purchase peace of mind. There are also

BUSINESS HIGHLIGHTS

• Building My Wealth – Setting yourself up for success.• Getting Married – Embark on a beautiful journey as husband and wife.• Becoming a Parent – Preparing your child’s future.• Working Abroad – Setting aside in order to come home for good.• Planning for Retirement – Having time to do things that you have always wanted to do.• Running a Business – Take care of your most important asset.

To learn more about what we can offer, our website’s Product Section gives prospective and existing customers a clear idea of what they are looking for. A special function called the “product curator” lets a customer personalize his/her insurance needs based on the key moments filter.

The company’s website not only provides information about our profile and products, it also recognizes that client inclusion is important. Sections such as Press Releases, Media Center, BPI-Philam & You (online newsletter), our current campaigns, career opportunities as well as Corporate Solutions are highlighted in the portal. We always ensure that communication with customers is simple yet clear, precise and effective. On top of that, a Content Management System allows us to update contents in real-time, enabling a fast and reliable experience for our customers through their devices. As for existing clients, we pose a Help & Support section to communicate that we are always ready to lend assistance. In the same sense, the website also places importance to its BSEs through the Bancassurance Portal. Various contact details about BPI-Philam and its affiliates are also visible in the lower part of the website, inviting inquiries and providing more information to its visitors.

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CUSTOMER EXPERIENCE & EASE OF DOING BUSINESSBPI-Philam is always focused on enhancing the end-to-end experience of our customers. We expanded our services in 2016 by providing more touch points and continuously do so through on-going automation.

The Electronic Policy Contract (eContract) was developed in order to fast-track the delivery of a policy to its client; no need to set another schedule after approval, instead it can be accessed easily through a digital device. In BPI-Philam, we stay in touch with our customers to make sure that they fully understand the benefits of their plan, check information about their service needs, and keep them updated about the latest financial and health trends. Some of our efforts in taking better care of clients are Welcome Calls for new customers, Anniversary Calls on significant policy milestones, and on-going newsletters throughout the policy duration.

We also launched the Customer Portal called ePlan, which provides quick and easy access to policy values and allows common after-sales transactions to be filed. Clients who file their requests in BPI branches could also be assisted by BSEs via iCare, an online policy request submission facility. It is the first policy owner after-sales servicing application in the Philippines where clients can easily request changes to their policies via electronic tablet devices. Clients can also avail of a wide menu of payment options, including Auto Debit Arrangement (ADA), Auto Credit, and BPI Express Online. This follows the introduction of AIA’s highly successful interactive point of sale (iPos) proprietary technology that improved the customer experience and promoted increased efficiency during the sales process, making BPI-Philam’s customers’ experience unrivalled convenience in terms of service.

P60 premiums for individuals and P90 for a Family Package Plan, covering families with at least 5 members. All packages extend up to 4 months, with Life, TPD, Personal accident with Accident Daily Hospital Income Benefit. Tambunting now has over 500 networks nationwide wherein BPI-Philam’s products are offered, reaching a wide audience of Filipino families.

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Creating a Safe and Healthy Workplace

Promoting health and wellness is a core objective of Philam Life and is showcased through their arm, Philam Vitality. This objective is greatly supported by BPI-Philam and is incorporated through the following initiatives, among others:

• Annual Physical Exam• Flu Vaccination• Annual Blood Drive• Regular Fire and Earthquake Drills• Larong Philam – Metro Manila and Provincial runs• Philippine Life Insurance Association (PLIA) Events• The Music Run

The Culture and Synergy department of Philam Life and BPI-Philam continues to promote, improve and augment activities and initiatives to ensure that a safe and healthy workplace is sustained. We in the company believe that total wellness is an advocacy that needs to be top of mind of every BPI-Philam employee, highlighting the importance of a work-life balance that will translate into better productivity and overall good health.

OUR PEOPLE

Employee Engagement

BPI-Philam prides itself in investing on an engaged and highly-effective work culture. We aim to increase the number of engaged employees that emanate commitment, loyalty and productivity in a youthful, dynamic, and innovative environment.

Our managers are uniquely positioned to influence and inspire their team’s engagement and actions. We focus on creating actionable workplace elements with research-proven links to performance outcomes, namely the Gallup Q12 Employee Engagement Survey. Managers create high engagement levels over time by continuously focusing on these workplace needs.

In 2016, our engagement activities were the following:

• Annual Impact Plan Submission• Annual Awards• Monthly Town Hall Meetings – Umagang Kay Sarap• Monthly Department MVP Awards• Lunch with the CEO• Mid-Year Review• BAM Congress • Annual Sales Rally• Anniversary Celebration• Family Day• Hype Sales Teambuilding

These activities were based on internal employee feedback and research, tailoring them year after year to better communicate and encourage everyone to be engaged within the workplace.

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CORPORATE SOCIAL RESPONSIBILITY

Giving Back and Touching Lives

We at BPI-Philam, along with Philam Foundation, the CSR arm of Philam Life, are passionate about promoting financial security and social well-being of communities we serve. We are committed to bringing positive change in the lives of Filipinos of every stage and every class. To make this so, we donate a portion of our profit every year to assist in funding Philam Foundation’s projects. In 2016, we pledged Php 4.4 million, contributing to a total sum of Php 31 million to Philam Foundation in expanding their CSR efforts. BPI-Philam also joined in building 36 classrooms nationwide through the Philam Paaralan project, benefiting hundreds of schoolchildren across the country, especially those who reside in areas heavily affected by natural disasters. Through Philam Foundation’s collaboration with new and established partners, both locally and internationally, we were able to surpass the commitment in 2012 of building 65 classrooms in five years. By the end of 2016, Philam Paaralan helped build 121 classrooms all over the country.

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NEW CLASSROOMS AND PARTNERS IN 2016

Name of School ClassroomsBuilt

Partner

Setan Elementary School

Gubat North Central School

Severo High School

Oas Polytechnic School

Santa Monica Elementary School

Tulariquen Elementary School

Camansihay Elementary School

Lucio Vivero Memorial School

Bonifacio Bulante Elementary School

Bayugan Comprehensive National High School

Narra Elementary School

Camp Crame Elementary School

Bulacan Agriculture State College

Sumilao Elementary School

Babahagon Elementary School

Total

Happy Hearts Fund

Happy Hearts Fund

Happy Hearts Fund

Happy Hearts Fund

BPI Foundation

BPI Foundation

BPI Foundation

BPI Foundation

BPI Foundation

Embassy of Japan

Eagle Cement Corporation

PSSLAI

Eagle Cement Corporation

DOLE Stanfilco/ Kasilak Foundation

DOLE Stanfilco/ Kasilak Foundation

3

2

2

2

2

2

3

3

2

5

2

2

2

2

2

36

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UPLIFTINGBPI-Philam holds a bigger purpose to provide financial empowerment,

prosperity and security to Filipinos of all classes.

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CORPORATE GOVERNANCE& OPERATING PHILOSOPHY

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List of Stock Holders

Capital Structure

CORPORATE GOVERNANCE& OPERATING PHILOSOPHY

Authorized Capital Stock Subscribed & Paid-Up Capital Stock Par ValueTreasury Share

P1Billion P749,993,979.00 P1.00 per share P6,000.00

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NAME

THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE COMPANY (Philam Life)

Darren ThomsonNon-Executive DirectorVice-Chairman

Surendra MenonExecutive DirectorChief Executive Officer

Ariel G. CantosNon-Executive Director

Ryan Robert Quinn Non-Executive Director

Jesus P. Tambunting Independent Director

Andreas RosenthalExecutive Director

BANK OF THE PHILIPPINE ISLANDS (BPI)

Aurelio Luis R. Montinola III Non-Executive DirectorChairman

Simon R. PaternoNon-Executive Director

Romeo L. Bernardo Independent Director

Natividad N. Alejo Non-Executive Director

Cezar P. ConsingNon-Executive Director

OTHERS (Minority Stockholders)

TOTAL

Shares Held

382,496,924

1

1

1

1

1

1

357,554,232

100

100

100

100

100

9,942,317

749,993,979

Class

Common

Common

Common

Common

Common

Common

Common

Common

Common

Common

Common

Common

Common

Common

Amount Paid(Php)

382,496,924.00

1.00

1.00

1.00

1.00

1.00

1.00

357,554,232.00

100.00

100.00

100.00

100.00

100.00

9,942,317.00

749,993,979.00

% of Ownership

51.00%

47.67%

1.33%

Nationality

Hong Kong SAR

British

Singaporean

Filipino

American

Filipino

German

Filipino

Filipino

Filipino

Filipino

Filipino

Filipino

Filipino

Beneficiary Ownership

Philam Life

Philam Life

Philam Life

Philam Life

Philam Life

Philam Life

BPI

BPI

BPI

BPI

BPI

Date of First Appointment

08 July 2014

22 January 2016

01 July 2013

18 April 2016

27 November 2009

18 July 2016

25 April 2000

15 April 2015

24 April 2006

10 April 2007

03 April 2014

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BOARD OF DIRECTORS

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Aurelio R. Montinola III, 65, Filipino, is a Director of Bank of the Philippine Islands (BPI). His other affiliations, among others include, Chairman, Far Eastern University; Chairman, WWF International; Vice Chairman, Philippine Business for Education; Director, BPI/MS Insurance Corporation; Trustee, Makati Business Club; and Member, Management Association of the Philippines.

He graduated with BS Management Engineering from Ateneo de Manila University in 1973. He received his MBA from Harvard Business School in 1977.

His past affiliations include being President of Bank of the Philippine Islands for 8 years, President of the Bankers Association of the Philippines for 4 years, President of the Alliance Francaise de Manille for 7 years, and Trustee of the International School of Manila for 4 years.

AURELIO LUIS R. MONTINOLA III 65 years oldNon-Executive Director Chairman of the Board

BOARD OF DIRECTORS

Darren is currently the Group’s Director of Partner Development for AIA. Prior to this new role, he was the Regional CEO for Partnership Distribution in the Group office since January 2014. In that role, Darren was responsible for the Group Partnership Distribution function as a strategic business unit, providing best-in-class capabilities required to become the preferred partner in Asia for leading banks, IFA’s and HNW and affinity groups.

As Regional CEO he led and worked with the local CEOs, along with a regional team, in building out their partner distribution strategy to provide a clear value proposition and execution roadmap to deliver a consistently high quality value-added services to AIA’s bank partners and customers across all of Asia-Pacific. He is also responsible for leading the team to unlock and develop new opportunities in Bancassurance, Direct Marketing, High Net Worth, IFA/Brokers, and Institutional Businesses.

Prior to joining the Group, Mr. Thomson was Regional Head, Strategic Channel Development; President and CEO, Manulife Singapore and; Chairman, Manulife Asset Management Singapore. He also worked for Prudential plc in Asia and in the UK for 20 years.

DARREN THOMSON54 years oldNon-Executive Director Vice-Chairman

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BOARD OF DIRECTORS

SURENDRA MENON58 years oldExecutive Director Chief Executive Officer

Surendra Menon is the Chief Executive Officer of BPI-Philam. Prior to his appointment, Mr. Menon held the role of Regional Director for Bancassurance of the AIA Group. As a catalyst in the Bancassurance industry, he has built and developed various profitable businesses in Asia including Indonesia, Singapore, and the Philippines.

Mr. Menon joined AIA in 2003 and was responsible for the acquisition of 10 partnerships in Indonesia including BCA, CIMB, ANZ, and was the Deputy CEO and CDO. He then became the subject matter expert for the AIA Group in Bancassurance from 2013 to 2015, helping many countries in Asia with 2014 and 2015 final on BPI-Philam in the Philippines. He is currently the CEO of BPI-Philam Life Assurance Corporation and steers the management of the company to transform it into one of the leading life insurance companies in the Philippines.

Mr. Menon has actuarial, financial planning, and investment management qualifications from UK, Singapore, and Indonesia, respectively. Prior to joining AIA, Mr. Menon worked in DBS Bank in Singapore, BDNI Life in Indonesia, and the Insurance Corporation of Singapore (now known as Aviva in Singapore). He was also a director of GT Asset Management in forming the first mutual fund in Indonesia and, was a police inspector in the Singapore Police Force and Captain in the 1st Rescue Battalion Singapore Civil Defence as part of his national community duty.

Mr. Ariel “Aibee” Cantos is the Chief Executive Officer of Philam Life. Prior to his appointment, Mr. Cantos held the role of CEO of BPI-Philam, the bancassurance joint venture of Philam Life and the Bank of the Philippine Islands (BPI), the leading bancassurance operation in the Philippines. He is also a member of the Board of Directors of various Philam companies and sits as a Trustee of the Philam Foundation.

His most recent position at Philam Life was Senior Vice President and Chief Agency Officer, before spearheading the growth of BPI-Philam in 2013. He joined Philam Life right after completing his Bachelor’s Degree in Economics, Honors Program, from the Ateneo de Manila University and had an enriching and successful career in Philam Life’s Agency Distribution Channel, where he served for close to 30 years. He held various positions within the channel such as Profit Center Head of Accident & Health Products, Director of Manila Agencies, and Director of Provincial Agencies.

He is currently the president of the Philippine Life Insurance Association Inc. (PLIA), and a corporate member of Management Association of the Philippines (MAP) and Makati Business Club (MBC).

ARIEL G. CANTOS56 years oldNon-Executive Director

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BOARD OF DIRECTORS

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CEZAR P. CONSING57 years oldNon-Executive Director

Cezar “Bong” Consing is the President and CEO of Bank of the Philippine Islands (“BPI”).

From 2004 to 2013, Mr. Consing was a Partner with The Rohatyn Group, a New York-based investment management company that manages about $5.5 billion in investments in the emerging global markets. He was responsible for the firm’s private equity business in Asia, managing its Hong Kong-based operations, and was a member of the board of partners of the firm’s management company.

Mr. Consing was an investment banker with J.P. Morgan & Co. from 1985 to 2004, where he was based in Hong Kong and Singapore. From 1999 to 2004, he was President of J.P. Morgan Securities (Asia Pacific) and, as a senior Managing Director, headed the firm’s investment banking group in the Asia Pacific region. As an investment banker, Mr. Consing was directly involved in some of the most significant corporate transactions in Asia, including several mergers, privatizations, and debt and equity fund raisings. Mr. Consing worked for BPI in Manila in corporate planning and corporate banking from 1980 to 1985.

Mr. Consing served as an independent director of the boards of CIMB Group Holdings Berhad and CIMB Group Sdn. Berhad from 2004-2012, and First Gen Corporation, a major Philippine power generation company, from 2005-2013. He has been an independent director of the board of Jollibee Foods Corporation since 2010. He served as a board director of BPl from 1995-2000, 2004-2007, and most recently since 2010.

He received an M.A. in Applied Economics from the University of Michigan, Ann Arbor, in 1980.

Natividad N. Alejo is the President of BPI Family Savings Bank; she joined BPI in 1979. She has been an Executive Vice President and Group Head of Retail Banking from 2012 to Feb. 28, 2015. She has served as Senior Vice President and Consumer Banking Group Head from 2007 to 2011. She has also served as the President and Director of BPI Capital Corporation and BPI Securities Corporation from 2001 to 2006. She was a President of the Investment House Association of the Philippines in 2004 to 2006. She also holds the following positions: Director of BPI Family Savings Bank, Inc., BPI Direct Banko, Inc., BPI Operations Management Corporation, BPI-Philam Life Assurance Corporation, Beacon Property Ventures, Inc., Santiago Land Development Corp., FEB Speed International, Inc., International Finance Ltd.

She graduated with an AB Economics degree (summa cum laude and Gansewinkle Scholastic Trophy Awardee) from the Divine Word University, Tacloban City in 1976. She took up MA Economics at the University of the Philippines in 1978, and completed the Advanced Management Program at Harvard Business School in fall of 2005. Ms. Alejo is also with the An Waray Party List.

NATIVIDAD N. ALEJO58 years oldNon-Executive Director

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BOARD OF DIRECTORS

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ROMEO L. BERNARDO62 years oldIndependent Director

RYAN ROBERT QUINN45 years oldNon-Executive Director

Mr. Bernardo, 62, Filipino, is Managing Director of Lazaro Bernardo Tiu and Associates (LBT), a financial advisory firm based in Manila. He is also a GlobalSource economist in the Philippines. He is Chairman of ALFM Family of Funds and Philippine Stock Index Fund.

He is a director of several companies and organizations including Aboitiz Power, BPI, Globe Telecom Inc., RFM Corporation, Philippine Investment Management (PHINMA), Inc., National Reinsurance Corporation of the Philippines 35 (NRCP), and Institute for Development and Econometric Analysis. He is a member of the Philippine World Bank Advisory Group and a member of the Panel of Conciliators of the International Centre for Settlement of Investment Disputes. He previously served as Undersecretary of Finance and as Alternate Executive Director of the Asian Development Bank. He was an Advisor of the World Bank and the IMF (Washington D.C.).

Mr. Bernardo holds a degree in Bachelor of Science in Business Economics from the University of the Philippines (magna cum laude) and a Master’s Degree in Development Economics at Williams College from Williams College in Williamstown, Massachusetts.

Ryan Quinn is Regional Head of Partnership Distribution for Australia, New Zealand, Vietnam and Philippines. He is responsible for working with local heads of partnership distribution and workingwiththemtoexecutetheirbusinessstrategies. HealsohasresponsibilityforHNW, IFA/Brokerage across the AIA group.

From 2012-2015 he was Chief Distribution officer of the Korean AIA business. As CDO, he was responsible to drive the face to face distribution strategy focusing on building the distribution platform to become the pre-eminent multi national life insurance provider in Korea. Ryan moved to Hong Kong in 2003 joining AIA and has held several roles during his tenure including Regional Head of AIA’s Retirement Services Division SEA, IFA Brokerage, HNW and also Head of Bancassurance. He was also Regional Chief Agency Officer, covering Korea, Philippines, Hong Kong, New Zealand and Australia

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BOARD OF DIRECTORS

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SIMON R. PATERNO58 years oldNon-Executive Director

Simon R. Paterno is an Executive Vice President, and heads the Financial Products Group of Bank of the Philippine Islands. He is responsible for managing the product businesses of the Bank, including Investment Banking, Corporate Loans, Transaction Banking, Retail Lending, Cards and Payments, Asset Management and Trust, Electronic Channels, and Deposits. He also oversees subsidiaries and affiliates in insurance, leasing, and merchant acquisition. He is also a member of the Management Committee of BPI.

Mr. Paterno is the former President and CEO of the Development Bank of the Philippines, serving from 2002-2004. He worked for 18 years at the New York, Hong Kong, and Manila offices of J.P. Morgan, serving finally as Managing Director in charge of sovereign clients during the Asian Financial Crisis of 1997-98, and as Country Manager for the Philippine office until 2002. He also worked for 8 years at Credit Suisse as Managing Director and Country Manager for the Philippines.

Mr. Paterno obtained his MBA from Stanford University in 1984. He was awarded his A.B., cum laude, Honors Program in Economics from Ateneo de Manila University in 1980. In 2005, he was elected President of the Management Association of the Philippines. He serves the boards of the Foundation for Economic Freedom and Ateneo Scholarship Foundation. He was named a TOYM awardee for Investment Banking in 1999.

ANDREAS ROSENTHAL46 years oldExecutive Director

Dr. Andreas Rosenthal, a German national, joined Philam Life in February 2012 as Chief Financial Officer. During those times, he was responsible for the supervision of Philam Life’s Finance Operations which consist of Actuarial, Investment, Financial Reporting and Controllership, Risk Management, Treasury and Procurement. He was a primary contributor to the company’s success during his leadership.

Coming from his one year stint from AIA Korea, he re-joined Philam Life last August 2015 and assumed a bigger role as CFO and Head of Transformation.

He brings with him 18 years of experience in the insurance industry across multiple functions such as finance, actuarial, product development and risk management. He held CFO positions in various countries in Asia and was the Regional CFO for Allianz SE covering the entire Asia- Pacific region for life insurance, and property and casualty businesses among 15 markets.

He holds a PhD in Mathematics from the University of Bielefeld in Germany, and a Master’s Degree (Diplom-Mathematiker) from the FU University of Berlin.

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BOARD OF DIRECTORS

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JESUS P. TAMBUNTING79 years old

Independent Director

Ambassador Tambunting held key positions in private institutions, including Chairman of Hambrecht and Quist Asia Pacific, and Director on the Board of Globe Telecom, Inc. The Ambassador also had stints as President of organizations such as the Philippine Ambassadors Foundation Inc., Management Association of the Philippines, Chamber of Thrift Banks, the Development Bankers Association of the Philippines, and the Manila Polo Club.

Ambassador Tambunting was conferred Master Entrepreneur and Entrepreneur of the Year 2009 by Ernst & Young and the SGV Foundation, and was inducted into the World Entrepreneur Academy in Monaco in June 2010. He also received several awards such as the International Alumnus Award from the University of Maryland in April 2011, the first Ramon V. del Rosario Sr. Award in Nation Building in 2010, the Distinguished Person of the Year 2009 from the ADFIAP, the Management Man of the Year 2003 from the Management Association of the Philippines, the Lifetime Achievement Award for 2005 from the Asian Bankers Association, the Distinguished Service Award from the Department of Foreign Affairs, and Knight Commander with Star from the Equestrian Order of the Holy Sepulchre of Jerusalem in 2008. In 2016, the Order promoted him to Knight Grand Cross and bestowed upon him the title Lieutenant of Honor.

The Ambassador earned his Bachelor of Science degree in Economics from the University of Maryland. He obtained his secondary education from the Culver Military Academy in Indiana and his elementary education from the Ateneo de Manila University.

Ambassador Jesus P. Tambunting is the Chairman of Capital Shares Investment Corporation, a holding company with investments in real estate, property development and insurance. He was chairman of Planters Development Bank (Plantersbank), the country’s leading bank for Small and Medium Enterprises (SMEs), which he founded in 1971. Ambassador Tambunting also served as Chairman of the Board of Small Business Corporation (SBCorp), a government corporation tasked with promoting the growth of the SME sector.

Ambassador Tambunting is the Co-Chairman of the Philippine-British Business Council, a member of the Philippine-US Business Council, and a member of the Board of Trustees several organizations, namely the Carlos P. Romulo Foundation, PinoyMe Foundation, ABS- CBN Bayan Foundation, Philippine Business for Education (PBED), and the Makati Medical Center Foundation. From 2004 until May 2008, he served as Chairman of the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP), a regional organization of 127 development banks and institutions in 44 countries. He was elected to the Board of Directors of BPI-Philam Life Assurance Inc. in 2009. He is also a member of the Makati Business Club National Issues Committee.

Ambassador Tambunting served as the Philippines’ Ambassador Extraordinary and Plenipotentiary to the United Kingdom of Great Britain, and Northern Ireland from 1993 to 1998. During that same time, he served as Ambassador to the Republic of Ireland and as Permanent Philippine Representative to the International Maritime Organization.

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Board Support

Atty. Domingo is currently the General Counsel & Corporate Secretary of The Philippine American Life and General Insurance Corporation (Philam Life). She also serves as the Corporate Secretary of BPI-Philam Life Assurance Corporation (formerly Ayala Life).

She was the Deputy Company Secretary of AIA Group Limited from February 9, 2014 to February 6, 2015. She was also Corporate Secretary of various Philam companies from 2008 to January 2014, to wit: Philam Equitable Life Assurance Company; Philam Properties Group of Companies; Philam Asset Management Inc.; Philam Call Center Services, Inc.; the Tower Club, Inc. and Philam Foundation, Inc.

Atty. Domingo is a member of the Integrated Bar of the Philippines, and a Fellow of the Institute of Corporate Directors. Atty. Domingo is a graduate of the University of the East, with a Bachelor of Arts degree major in Political Science, where she graduated Magna Cum Laude. She took her Bachelor of Laws degree in San Beda, College of Law.

CARLA J. DOMINGOCorporate Secretary

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C O R P O R AT E GOVERNANCEBPI-Philam confirms its full compliance with the Code of Corporate Governance. Its commitment to the highest standards of corporate governance is rooted in the belief that a culture of integrity and transparency is essential to the consistent achievement of its common goals. Creating a sustainable culture, where trust and accountability are vital as skill and wisdom, steers us towards achieving long-term value for shareholders and clients, and strengthens our confidence in the institution.

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CORPORATE GOVERNANCE

Role and Responsibilities of the Board

The Board of Directors exercises all the powers of the corporation; all business conducted and all properties of the corporation are controlled and held by them. The Board is completely independent from management and major stockholders.

The Board is accountable to the shareholders and as such it shall ensure the highest standard of governance in running the Company’s business and setting the strategic directions. The detailed role and responsibilities are set forth in the By Laws and the Manual of Corporate Governance.

For 2016, The Board of Directors, through its Board Risk and Audit Committees, has conducted a regular review of the Company’s material controls (including operational, financial and compliance controls) and risk management systems. The Board Risk Committee, the Audit Committee and the Board of Directors have declared their satisfaction and confidence on the Company’s internal controls and risk management systems.

Board Independence

Each of the independent directors meets the guidelines set in the Manual of Corporate Governance. None of the independent directors has any business or significant financial interest in the Company or any of its subsidiaries. They, therefore, continue to be considered independent.

Board Process

The Board meetings are on a quarterly basis unless a special meeting is necessary to consider urgent matters. Minutes of meetings of the Board and all Committees are kept by the Corporate Secretary. Likewise, they have separate meetings with Internal and External Auditors, without the management.

Said minutes are open for inspection by the Board and Stockholders upon request. Board materials are sent to the members at least five (5) business days in advance of the scheduled board meetings.

In addition to the regular meetings, the directors also engage in informal meetings on a quarterly basis to further discuss issues and strategies. Non-executive directors also find time to meet separately to discuss the business affairs of the Corporation.

Election of Directors

The Company uses a transparent procedure for the election of directors. The Nomination and Governance Committee looks into the qualifications of directors and thereafter the Board deliberates on the recommendation of the Committee. At the stockholders’ meeting, the shareholders are duly informed by the Corporate Secretary of the qualified nominees and of the voting method and vote counting system. Each stockholder with voting privilege shall be entitled to cumulate his/her vote in the manner provided by law. After the election process, the Corporate Secretary shall count the votes and thereafter declare the duly elected members of the Board.

Orientation Program and Training

The Corporate Secretary provides the orientation for new directors to explain the organizational profile, charters, by laws, policies and procedures in the company. A corporate governance seminar is also arranged for each director to ensure adherence to best practices on corporate governance.

The Board members are encouraged to attend further training and inform the Corporation on such trainings attended.

Performance Evaluation

The Company has established its own performance evaluation, the criteria of which are based on the Insurance Commission’s Circular on Corporate Governance. Every April of each year, the Board, as well as the Committees, conducts annual self-assessment of its performance, the results of which are submitted to the Nomination and Governance Committee and to the Board of Directors.

In the Annual Board Performance Evaluation Survey, the Board members are required to rate the performance of the Chairman, the CEO, the Board, and the Board Committees based on the standards and criteria provided therein. Among the criteria set include but not limited to the following: the appropriateness of the Board’s composition; the director’s skills, expertise, and their participation and contribution in the Board and Committee discussions; the working relationship among the Board, the Chairman, and the senior management;

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the overall performance of the Chairman, the CEO, the Board and the various Board Committees. In the Survey, the Board members are required to give the subject either an ‘excellent’; consistentlygood’; ‘adequate’; or ‘needs major improvement’ rating. The directors are also required to provide other ideas and suggestions on how they could further improve the performance of the Board. After accomplishing the survey, the directors will submit the same to the Corporate Secretary, who will then consolidate and evaluate the answers and submit the results to the Nomination and Governance Committee for its approval. The results will then be reported to the Board for its notation.

For 2016, the Annual Board Performance Evaluation Survey was participated by the members of the Board, where the Board registered an overall rating of “excellent”. The result clearly exemplifies the effectiveness and competence of the Company’s Board of Directors. It also shows that it clearly understands the Company’s objectives, as well as the major roles it plays to the Company, its shareholders and stakeholders.

Retirement Benefits

The company has a defined benefit plan. The amount of retirement benefit that an employee will receive upon retirement usually depends on one or more factors such as age, years of service and compensation. Retirement cost is actuarially determined using projected unit credit method.

Dividend Policy It is the policy of BPI-Philam to adopt and comply with the provision of the Insurance Code (RA 10607) that states that no domestic insurance corporation shall declare or distribute any dividend on its outstanding stocks unless it has met the minimum paid-up capital and net worth requirements under the Code and except from profits attested in a sworn statement to the Commissioner by the President or Treasurer of the Company to be remaining on hand after retaining unimpaired the entire paid-up capital stock, the solvency requirements, the legal reserve fund required by the Code, the sum sufficient to pay all net losses reported, or in the course of settlement, and all liabilities for expenses and taxes. Any dividend declared or distributed by our Company shall be reported to the Commissioner within thirty (30) days after such declaration or distribution. As provided in our Company’s By-Laws, Article VIII, Section 1, of the net profits resulting from the annual balance, there shall be first segregated the sum set aside for dividends for participating policies; and, from the remainder, the amount that may be allotted by the Board of Directors for payment of dividends on common shares, carrying the balance to surplus.

The Board of Directors may determine the distribution of the surplus or a part thereof as dividends either to our participating policyholders or as dividends to our stockholders.

The Board of Directors may declare cash dividends to our stockholders at any time when in its judgment the condition of the Corporation allows it, or stocks and bonds dividends subject to the approval of our stockholders in accordance with law.

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BOARD COMMITTEES

AUDIT COMMITTEERomeo L. Bernardo

Independent Director

Chairman

Andreas RosenthalExecutive Director

Jesus P. TambuntingIndependent Director

COMPENSANTION/REMUNERATION COMMITTEE

Surendra MenonExecutive Director

Chairman

Cezar P. ConsingNon-Executive Director

Jesus P. TambuntingIndependent Director

NOMINATION & GOVERNANCE COMMITTEE

Surendra MenonExecutive Director

Chairman

Jesus P. TambuntingIndependent Director

Aurelio Luis R.Montinola IIINon-Executive Director

BOARD RISK COMMITTEE

Cezar P. ConsingNon-Executive Director

chairman

Simon R. PaternoNon-Executive Director

Jesus P. TambuntingIndependent Director

Surendra MenonExecutive Director

Ryan Robert QuinnNon-Executive Director

CORPORATE GOVERNANCE

EXECUTIVE COMMITTEE

Darren ThomsonNon-Executive Director

Chairman

Cezar P. ConsingNon-Executive Director

Vice Chairman

Surendra MenonExecutive Director

Andreas RosenthalExecutive Director

Natividad N. AlejoNon-Executive Director

Aurelio Luis R. Montinola III *Non-Executive Director

*as alternate of Mr. Consing and Ms. Alejo

INVESTMENT COMMITTEE

Arleen May S. GuevaraSenior Officer

Chairperson

Surendra MenonExecutive Director

Natividad N. AlejoNon-Executive Director

Jesus P. TambuntingIndependent Director

Simon R. PaternoNon-Executive Director

Tisha T. DarvinSenior Officer

Spencer T. YapSenior Officer

AUDIT COMMITTEE

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The Board held a total of seven (7) meetings in 2016. The directors received the meeting pack five (5) days in advance. The meeting pack includes, among others, the Board and Committee Meeting Minutes for approval of the Board, the business and financial highlights of the Company and other items that need Board action and approval.

The presence of at least six (6) out of eleven (11) directors is necessary to have a quorum and the affirmative votes of the majority of the directors present are required to decide a matter except where the law or the by-laws require a higher number.

The Board exercises discretionary powers and oversees the management of the company.

The number of meetings held in 2016 and the overall attendance rate are as follows:

MEMBER

BOARDAUDIT

COMMITTEENOMINATION & GOVERNANCE COMMITTEE

COMPENSATION COMMITTEE

NO. OF MEETINGS HELD & ATTENDED FOR THE YEAR 2016

7

MEETINGS 95.23%

4

MEETINGS 83.33%

6 MEETINGS

83.33%

1 MEETING

66.66%

AURELIO LUIS R. MONTINOLA III 7 MEETINGS N/A 6 MEETINGS N/A

DARREN THOMSON 7 MEETINGS N/A N/A N/A

J. AXEL BROMLEY* 1 MEETING 2 MEETINGS 1 MEETING N/A

TERRENCE CUMMINGS** 3 MEETINGS N/A N/A N/A

ARIEL G. CANTOS 7 MEETINGS N/A N/A N/A

SURENDRA MENON 7 MEETINGS N/A 5 MEETINGS 1 MEETING

JESUS P. TAMBUNTING 7 MEETINGS 4 MEETINGS 6 MEETINGS 0

ROMEO L. BERNADO 7 MEETINGS 4 MEETINGS N/A N/A

NATIVIDAD N. ALEJO 6 MEETINGS N/A N/A N/A

CEZAR P. CONSING 7 MEETINGS N/A N/A 1 MEETING

RYAN ROBERT QUINN*** 4 MEETINGS N/A N/A N/A

ANDREAS ROSENTHAL**** 1 MEETING 2 MEETINGS N/A N/A

SIMON R. PATERNO 5 MEETINGS N/A N/A N/A

*until 18 July 2016**until 18 April 2016 ***effective 18 April 2016 ****effective 18 July 2016

Board Meetings

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OPERATING PHILOSOPHY

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The AIA Code of Conduct

Honesty and integrity are the cornerstones of the AIA business. AIA serves millions of customers across the most dynamic growth region in the world – and is known and admired for its unwavering commitment to these values.

This reputation and the trust it inspires is critical to the success of the organization. Dedication and commitment to high standards have helped build the organization in the past and continue to do so. It can only maintain such reputation to the future when each employee strives harder to do what is right and by being prepared to take their personal responsibilities in observing the highest standards of integrity and conduct at all times and in every dealing.

This is what the AIA Code of Conduct is about. It sets out AIA’s and its member companies’ commitment to the Operating Philosophy of “Doing the Right Thing, in the Right Way, with the Right people... and the results will come.” This establishes the unique culture of AIA across all 17 markets within the Asia Pacific region that includes BPI-Philam.

The AIA Code of Conduct sets out the ethical guidelines for conducting business which is the same code that BPI-Philam observes. This serves as a guide in managing the company’s compliance, ethics, and risk issues.

The standards set forth in the Code also apply to business partners including agents, contractors, subcontractors, suppliers, distribution partners, and those who act on behalf of AIA and BPI-Philam. Thus, the corporation, its directors, senior management and employees are mandated to comply with the policies. The Compliance Department is tasked to implement these policies and monitor compliance therewith.

Like AIA, BPI-Philam has always believed in the power of diverse, talented people to create value and deliver on customer and shareholder expectations. Thus, it competes vigorously to create new opportunities for its customers and for itself. However, competitive advantages are sought only through legal and ethical business practices. With the products, services and responsible business practices, BPI-Philam strives to improve the quality of life of every Filipino. Promoting compliance with local laws and local regulatory requirements that apply to the business is at the foundation of BPI-Philam’s good corporate citizenship.

Code of Conduct - Annual Certification Program

To ensure that all BPI-Philam employees are aware of the provisions of the Code, an annual certification program is conducted whereby all employees confirm their knowledge and understanding about the rules and guidelines written in the Code.

Business Conduct Orientation Program

At the same time, it is company policy that all new hires attend the Business Conduct Orientation Program (BCOP) whereby this Code and all other relevant compliance policies are discussed. This program is offered on a monthly basis and is conducted either by Compliance or Training Dept.

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BPI-PHILAM IS A SAFE, HEALTHY AND SECURE WORKPLACE

BPI-Philam conducts its business in a manner that protects the health, safety and security of its employees and customers. Situations that may pose health, safety, security and environmental hazards must be reported promptly to management or to the appropriate Corporate Security Personnel.

Avoiding security breaches, threats, losses and theft requires that all employees remain vigilant in the workplace and while carrying out business. Employees are encouraged to notify management or Corporate Security of any issue that may impact the company’s security, fire and life safety or emergency readiness.

Using, selling, possessing or working under the influence of illegal drugs at BPI-Philam is strictly prohibited. At the same time, excessive or inappropriate use of alcohol while conducting business for BPI-Philam is also prohibited.

Physical security systems reduce the risk of exposure. Entry controls are implemented to ensure company’s safety security and protection. Wearing of IDs and uniforms are strictly observed.

BPI-Philam respects the personal information and property of employees. Employees expect

the company to carefully maintain the personal information they provide. Employee trust must not be compromised by disclosing this information other than to those with a legitimate need to know.

Access to personal information or employee property is only authorised for appropriate personnel with a legitimate reason to access such information or property. From time to time, BPI-Philam may access and monitor employee internet usage and communications to assess compliance with laws and regulations, policies and behavioural standards. Subject to local laws, employees shall have no expectation of privacy with regard to workplace communication or use of AIA and BPI-Philam’s information technology resources.

BPI-PHILAM SHAPES ETHICAL PRACTICES

Treating Customers Fairly

The Treating Customers Fairly policy demands that customers should be treated fairly at all times and that products, services, and advice must be appropriate to meet customer needs. Marketing, advertising and sales-related materials and services must always be truthful and accurate, and misrepresenting or attempting to mislead or deceive customers by

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use of unsupported or fictitious claims about BPI-Philam products or those of its competitors is not acceptable.

BPI-Philam should provide high standards of service and should respond promptly and fairly to customer feedback.

BPI-Philam adopts a structured framework in handling complaints related to market misconduct. The Customer Complaints Handling Process ensures that all customer complaints and grievances are immediately addressed. The process defines the step-by-step approach in addressing and handling complaints as a result of any of its sales personnel’s misconduct.

There is a Compliance Disciplinary Committee that evaluates all complaints and determines whether a sales personnel has committed any wrongdoing. Any sales personnel found guilty of any market conduct-related offense is subjected to appropriate sanctions.Misconduct includes, but is not limited to: misrepresentation of product features, misselling, policy replacement, misappropriation of client monies, and any other infringement of the Market Conduct Guidelines.

Data Privacy

Customers expect BPI-Philam to carefully handle and safeguard the business and personal information that they share in the conduct of the business. BPI-Philam must never compromise a customer’s trust by disclosing private information other than to those with a legitimate business need to know.

Employees who handle customer information are responsible for knowing and complying with applicable information privacy and information security laws. In all cases, appropriate physical, administrative and technical safeguards for personal information and business data must be maintained.

Conflict of Interest

An employee’s position in BPI-Philam must not be used for inappropriate personal gain or advantage. Any situation that creates, or even appears to create a conflict of interest between personal interests and the interests of the company must be appropriately managed.

Conflicts of interest (whether potential or actual conflicts) must be reported. There is a system being used for the reporting. Managers are expected to take appropriate steps to prevent, identify and appropriately manage conflicts of interests of those they supervise.

All AIA and BPI-Philam employees are prohibited from taking for themselves, or directing to a third party, a business opportunity that is discovered through the use of company’s corporate property information. BPI-Philam employees are prohibited from using corporate property, information or position for personal gain.

Employees are asked to declare if they have any personal relationships within the group. Immediate family members, members of the household and individuals with whom an employee has a close personal relationship within the group must never improperly influence business decisions. When determining whether a personal relationship might lead to a conflict of interest, the following questions can serve as guide:

• Does one of us have influence over the other at work?• Does one of us supervise or report to the other?• Could an outsider view the situation as a conflict of interest?

Fair Dealing

Following AIA’s model, BPI-Philam seeks competitive advantages only through legal and ethical business practices. Every employee

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must conduct business in a fair manner with customers, service providers, suppliers and competitors. Disparaging competitors or their products and services are discouraged. Improperly taking advantage of anyone through manipulation, concealment, abuse of privileged information, intentional misrepresentation of facts or any other unfair practice is not and will not be tolerated at BPI-Philam much more in the AIA Group.

Fair Dealing Policy & Creditor’s Rights

BPI-Philam adheres to its Fair Dealing Policy, which ensures that businesses with the customers, service providers, supplier and competitors are conducted in a fair manner. Following AIA’s model, BPI-Philam seeks competitive advantages only through legal and ethical business practices. Every employee must conduct business in a fair manner with customers, service providers, suppliers and competitors. Disparaging competitors or their products and services are discouraged. Improperly taking advantage of anyone through manipulation, concealment, abuse of privileged information, intentional misrepresentation of facts or any other unfair practice is not and will not be tolerated at BPI-Philam much more inthe AIA Group. It is also the policy of BPI-Philam to uphold creditor’s rights by honouring its contractual obligations with all its creditors and counterparties, in accordance with the provisions of their contracts and the law. In the conduct of its business dealings with third parties, BPI-Philam undertakes to honour all its commitments, stipulations and conditions set forth in their binding agreements.

Supplier Selection

BPI-Philam also complies with the AIA Code of Conduct, which provides that the Company select suppliers and vendors on the basis of performance and merit in accordance with a fair and transparent process. Appropriate due diligence is performed regarding potential agents, consultants and independent contractors prior to engaging their services.

Like AIA, BPI-Philam seeks supplier partnerships with diverse businesses and values suppliers that share the Company’s dedication and commitment to diversity and social responsibility.

Sourcing Policy

Business partners serve as extensions of BPI-Philam to the extent that they operate within contractual relationships. Business partners are expected to adhere to the spirit of the AIA Code of Conduct and to any applicable contractual provisions.

Business partners must not act in a way that is prohibited or considered improper for a BPI- Philam employee. Employees must ensure that customers, agents, and suppliers do not exploit their relationship with BPI-Philam or use BPI-Philam’s name connection with any fraudulent, unethical or dishonest transaction.

Suppliers and vendors are selected on the basis of performance and merit in accordance with a fair and transparent process. Requirements for suppliers and vendors to follow the standards in the Code must be included in the vendor management programme.

The total expenditure on goods and services from third party suppliers form a significant part of BPI-Philam’s operating cost. Any activity by a line of business to acquire goods/services must be undertaken in a professional manner to ensure BPI-Philam is able to maximize the value and manage risks associated with use of external suppliers.

The local Sourcing Policy, which took effect in November 2013, sets out the framework within which BPI-Philam must engage external suppliers for goods/services and is supplemented by BPI-Philam’s Sourcing Practice Guide. This provides BPI-Philam the standard processes and document templates in engaging suppliers that should be read in conjunction with the policy document.

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The BPI-Philam Sourcing Policy, with the AIA Group Sourcing Policy as a model, was defined with the primary objective to establish standardized sourcing procedures.

As set out in the AIA Group Sourcing Policy, a Local Sourcing Lead (LSL) or a designate is appointed and will be responsible for ensuring implementation, execution, update and compliance of the local policy. This person should closely work with the AIA Group Sourcing (GS) team.

CORPORATE CITIZENSHIP

Communicating with Regulators & Other Governmental Officials

Inquiries from regulators outside the normal course of BPI-Philam’s regulatory relationships must be reported immediately to the Compliance Officer or a designated Legal Counsel before a response is made.

Financial reporting-related inquiries may be responded to by authorised comptrollers. Responses to regulators must contain complete, factual and accurate information. During a regulatory inspection or examination, documents must never be concealed, destroyed or altered, nor must lies or misleading statements be made to regulators. Requests from auditors are subject to the same standards.

Anti-Money Laundering and Counter Terrorist Financing

Pursuant to Section 18 of Republic Act (RA) No. 9160, also known as the “Anti-Money Laundering Act of 2001”, as amended by RA No. 9194, RA No. 10167, RA No. 10168 and RA No. 10365 all covered institutions which include insurance companies supervised or regulated by the Insurance Commission are mandated to formulate their respective money laundering prevention program in accordance with the

said law.

As a matter of policy, BPI-Philam shall foil any attempt by anyone to use the Company or its affiliates for money laundering purposes. This Anti-Money Laundering Program, together with the Company’s Guidelines, establishes the governing principles and business standards to protect BPI-Philam and its business operations from becoming an unwitting tool of money launderers. The company’s management, officers and staff must remain vigilant in the fight against money laundering and financing of terrorism and shall collectively oppose any effort to violate or flaunt the “Anti-Money Laundering Act of 2001”, as well as its implementing rules and regulations.

In order to promote an effective AML compliance program, the following actions were taken:

1. Institutionalized the AML Committee to ensure effective implementation of the company’s AML program. The Chairman of the AML Committee is the Head of Operations with the Head of Legal and Head of Compliance as members.

2. Adopted a Risk-Based Approach, and strictly implements Enhanced Due Diligence for defined High Risk Customers.

3. Continuous eLearning for employees and face-to-face AML training for agents.

4. Adopted the Actimize system with 3 modules – Watch List Filtering or screening against PEPs and sanctioned persons; Customer Due Diligence that provides risk scoring for all clients; and Suspicious Activity Monitoring that provide red flag/alerts for transactions, particularly, cash transactions.

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Anti-Corruption & Bribery & Gifts and Entertainment

The Policy is applied alongside the AIA Code of Conduct. It provides guidance on giving and accepting gifts and entertainment. The Anti-Corruption Guidelines specifies the roles, responsibilities and procedural controls for transactions involving government officials. All relevant laws countering bribery and corruption must be upheld. If local laws and regulations require higher compliance standards vis-a-vis the guidelines of the AIA Code of Conduct, then BPI-Philam must meet the higher standards.

The Anti-Corruption & Bribery Policy prohibits all employees, agents, or independent contractors in providing bribes or other benefits to another person in order to obtain or retain business or unfair advantage in any business interaction involving AIA and BPI-Philam Life, its customers and employees.

The company is not allowed to use improper means to influence another person’s business judgement. All employees and officers are required to report to the Compliance Officer any gift/entertainment provided to Government organizations and/or any of its officials.

Prevention of Insider Trading & Price Sensitive Information

The AIA Group takes its obligations as a listed entity seriously and is committed to ensuring the highest standards of market conduct and fair dealing. The Hong Kong Securities andFutures Ordinance (SFO) prohibits market misconduct, including insider trading. Breaches of market misconduct laws are serious offences that attract heavy civil and criminal penalties.

Since BPI-Philam is a member of the AIA Group, it adopts the same policy and follows the same guidelines. The Prevention of Insider Trading and Market Misconduct Policy aims to build a robust system to prevent market misconduct,

including insider trading. It sets out standards and controls to ensure compliance with the regulatory requirements. Lastly, the existence of this policy should prevent employees and directors from engaging in speculative trading in AIA Group Securities.

The policy applies to all employees and directors of AIA Group Limited and each of its subsidiaries (“AIA Group”), including BPI-Philam.

This policy defines the duty of each employee to safeguard material information from improper use. Under the policy, it is illegal to trade securities while in possession of a material non- public information and pass a material non-public information to anyone who may trade securities based on it or give others recommendations to buy or sell securities.

In connection with this, dealings in AIA securities by certain employees, officers, directors, and their related interests, require pre-approval from the Group Company Secretary. Other securities about which AIA may have received or may expect to receive material, non-public information, or are otherwise subject to restrictions in trading, are placed on watch lists or restricted lists. Trading activities in securities included in these lists are restricted and/ or actively monitored.

Investment Code of Ethics

AIA believes that individual investment activities by its officers and employees should not be prohibited or discouraged. Nonetheless, the nature of AIA’s fiduciary obligations necessarily requires some restrictions on the investment activities of certain employees, officers, directors, and their related interests, who may be deemed Investment Access Persons.

In managing assets for AIA entities, Investment Access Persons have a fiduciary responsibility to treat stakeholders fairly. This duty requires

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a course of conduct, consistent with other statutory obligations, that seeks to be prudent in AIA’s and its stakeholders’ best interest.

The AIA Investment Code of Ethics is intended to address three fundamental principles that must guide the personal investment activities of Investment Access Persons in light of their fiduciary duties:

(1) Place the interests of AIA and its Stakeholders first. As fiduciaries, Investment Access Persons must avoid serving personal interests ahead of the interests of AIA or those of its stakeholders.(2) Avoid taking inappropriate advantage of one’s position as an Investment Access Person.(3) Conduct personal investing activities in such a way as to avoid even the appearance of a conflict of interest with investment activities undertaken for the AIA Portfolios.

As a member of the AIA Group, BPI-Philam adopts the same policy and follows the same guidelines. Generally, all Investment Access Persons are required to obtain pre-clearance prior to purchasing or selling a security. In addition, Investment Access Persons must provide and certify on a regular basis their accounts and beneficial holdings as well as all transactions in securities in which they had beneficial ownership and/or control. Certain outside business activities of Investment Access Persons also need prior approvals.

BPI-PHILAM’S COMPLIANCE DISCIPLINARY FRAMEWORK & GUIDELINES

Under this section, Framework & Guidelines (the “Framework”), Heads of Departments have the power to impose disciplinary sanctions to any employee who has been found, after due process, to have breached or violated any of the company’s compliance policies.

The Framework seeks to ensure that all decisions regarding employee misconduct or violation shall undergo a due diligence

review, fair hearing, with representation if they so choose and with penalties that are proportionate.

In the event of a serious or material breach, criminal misconduct or where it is reasonably believed that the safety or welfare of employees or the Company is put at risk by the continuing presence of an employee or employees against whom allegations have been brought, such employee or employees will be suspended immediately without prejudice.

Heads of Departments shall closely coordinate with Compliance, Legal and/or Human Resources whenever necessary. For breaches identified by Compliance, Compliance shall escalate the matter to the Heads of Departments for further action.

Market Conduct Guidelines

BPI-Philam envisions itself as having one of the highest sales standards in the life insurance industry in Philippines. All sales personnel are expected to conduct their business with the highest level of professionalism and personal integrity. BPI-Philam will not tolerate any less.

The Market Conduct Guidelines is used as a guide by all sales personnel in the conduct of their business and aid in the determination of what would be deemed proper conduct and behaviour. It shall apply equally and consistently to the conduct of Life business practices and all financial products. Any breach of the Market Conduct Guidelines may result in the imposition of a penalty upon the offender in question. Compliance with these guidelines does not ensure a continued contractual relationship with BPI-Philam. BPI-Philam reserves the right at all times to terminate the employment contract of any sales personnel in accordance with the terms of the contract entered into between BPI-Philam and that of the sales personnel.

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A Market Conduct Committee was also created with the main purpose of administering the rules of the Market Conduct Guidelines, Company policies or other guidelines, and to provide assistance to the Board of Directors and Company’s management to enable BPI-Philam to continue operating according to the highest ethical business standards and the applicable laws and regulations.

Anti-Fraud Policy

BPI-Philam adopts a zero-tolerance approach to fraud and expects all employees, agents, and third parties to act with honesty and integrity. The policy is intended to reinforce management procedures designed to aid in the prevention, detection, and investigation of fraud, thereby safeguarding the Company’s assets and providing protection from the legal and reputational consequences of fraudulent activity. All suspected cases of fraud are investigated and disciplinary procedures enforced, including prosecution and termination.

Aside from BPI-Philam’s existing Anti-Fraud Policy and Guidelines, the Company is now required by the Insurance Commission through IC Circular Letter No. 2016 -50 to submit by September 2017 an Anti-Fraud Plan to ensure that all Companies are prepared and ready to combat insurance fraud for its own protection and for the welfare of its stakeholders or insuring public.

Sales Code of Discipline

In pursuit of building and promoting professionalism and having one of the highest sales ethical standards in the life insurance industry, it is the policy of the Company to set up measures of conduct and standards of behavior to instil a strong sense of discipline among its sales force. Disciplinary actions are corrective rather than punitive in nature.

In promoting professionalism among sales and moving towards self-regulation, the Office of the Insurance Commission and the Philippine Life Insurance Association support the need and use of penalties or sanctions or a combination thereof as the Company deems fit.

The BPI-Philam Sales Code of Discipline contains penalties associated with the breach of Company policy, the Market Conduct Guidelines, Employment Contract, laws, and regulations. The objective is to establish uniform disciplinary sanctions amongst all sales personnel and adopt a systematic and equitable procedure in administering corrective measures.

The sanctions, which may range from Written Reprimand to Termination of Employment, are applied accordingly depending on the gravity of the offense and as deemed appropriate by the Company. The offenses listed in this Code of Discipline are given as guidelines and are not exclusive of all types of offenses. Unique and complex cases are handled by the BPI- Philam Compliance Disciplinary Committee (BCDC) or by highest levels of Management.

The Whistleblow Program

BPI-Philam does business with integrity and follow the highest ethical principles. Any employee (or anyone else) may raise concerns of misconduct or wrongdoing within AIA and BPI-Philam that can allow investigation to fix any problems. This Policy guides all employees on how to raise ethical concerns and managers on how they should respond when this happens.The Whistleblow Policy applies to all employees of the AIA Group including BPI-Philam.

‘Whistleblower’ refers to someone (an AIA employee, business partner, agent, consultant, vendor, customer, or other party) who informs AIA or BPI-Philam of suspected illegal or improper ways of doing business involving violation of laws, regulations, AIA or BPI-

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Philam policies, and other unethical actions that might negatively impact AIA’s and BPI-Philam’s reputation.

Employees who are aware of possible wrongdoing within AIA and BPI-Philam have a responsibility to disclose that information to management. Reports are taken seriously and investigated confidentially. Employees or other individuals will not suffer retaliation for reporting suspected wrongdoing in good faith.

An AIA Ethics line was developed to support the program. It is an independently managed website and hotline (telephone) service, receiving reports in local language, 24 hours a day, and 7 days a week. AIA and BPI-Philam can communicate with anonymous whistleblowers using this website via a secure platform.

The following misconduct including unethical or unlawful acts can be reported through this AIA Ethics line:

• Fraud, misappropriation, theft, bribery or corruption, giving or receiving inappropriate gifts or kickbacks;

• Harassment, bullying or assault, discrimination, conflicts of interest, or abuse of authority;

• Fake or falsification of signatures, customer accounts, information or business performance reports;

• Creating inappropriate funds or cash floats (slush funds) with travel agents, fake vendor bids etc.;

• Signs of retaliation against a whistleblower or suspected whistleblower including subtle acts such as exclusion from meetings or events which may impact long term career or advancement;

• Anyone trying to interfere with the confidentiality of a whistleblower report,

identifying or giving away the identity of a whistleblower, or encouraging or tolerating such actions.

Reporting of concerns or suspicions may be done by multiple means as provided in the Code. The report may also be made by using the AIA Group Ethics and Compliance Hotline (PLDT) 1010-5511-00-00-245-4179 or 105-11-800-245-4179.

SOCIAL AND ENVIRONMENTAL RESPONSIBILITIES

Social Media

BPI-Philam recognises the value of social media to engage with stakeholders in innovative and interactive ways. When using social media, every employee must conduct themselves professionally. Social media includes blogs, forums, chat rooms, professional and social networking sites, photo and video sharing sites, and other interactive online media such as Twitter.

ENTERPRISE RISK MANAGEMENT

Enhancing Value by Ensuring Stability

We recognize that effective risk management maximizes the value of our business to our shareholders and assures policyholders that we will always be there for them. For the regulators, sound risk management is vital to the stability of the financial system, and for our investors, it is a means of protecting and enhancing the long-term value of their investment.

We follow a Risk Management Framework (RMF) which identifies, quantifies, and mitigates risk within the company. An effective RMF is the key to avoiding significant financial and reputational damages that arise from inadequate or ineffective control of the risks in the business.

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At the heart of our RMF is a system for risk governance that oversees various aspects. The RMF is built around the Risk Management Committee (RMC), which oversees and reviews both financial and operational risks, and ensures that appropriate risk policies are in place.

The RMC is responsible for the establishment of priorities and coordination across risk management activities, exposure monitoring, and development of guidelines for risk reporting. It coordinates and oversees status of action plans in addressing risk deficiencies, and monitors risks that may impact BPI-Philam’s financial position.

The RMC reports to BPI-Philam Board Risk Committee (BRC) which is responsible for oversight of the company’s risk management activities. The BRC determines the Risk Appetite, the Risk Management Statement, and the Risk Management Framework of BPI- Philam, and advises and assists the Board of Directors in the review and approval of these matters. In 2016, the Board Risk Committee met four times and validated that risk management processes are in place to ensure that the amount of risk taken is consistent with the company’s Risk Appetite.

Managing Financial Risks

We believe that sound risk management hinges on effective quantification of risks. To this end, risk metrics are used to identify our exposure to financial risks.

We manage our exposure to financial risk within tolerances agreed by the RMC. As an internal control procedure, risk metrics, risk tolerances, and limits were set to monitor risk exposure and to ensure that we are operating within our Risk Appetite. We also manage financial risk by periodically running specific scenario-modelling exercises.

Financial risk is subdivided into credit risk, market risk, and liquidity risk.The primary source of credit risk is the investment portfolio, but such risk could also arise through reinsurance, procurement, and treasury activities. Credit risk management starts with the assignment of internal ratings to all counterparties.

BRC approves a matrix of risk tolerances that ensures that credit risk in the investment portfolio is contained within our Risk Appetite. These limits cover individual counterparty, segmental concentration, and cross-border exposures. The Investments Team has discretion to shape the portfolio within these credit limits, seeking further approvals through the risk governance framework. If certain investments are technically within credit limits but there is a specific concern, these are brought to the attention of the RMC or the Investments Committee, as appropriate.

Market risk is the risk of financial loss from adverse movements in the value of assets owing to market factors, including changes in interest and foreign exchange rates, as well as movements in the spread of credit instruments to corresponding bonds, “Credit Spread Risk” and in equity and property prices.

The BRC approves policies and metrics used in evaluating market risk exposures. We manage the different Market Risks, thusly:

• Interest Rate Risk: by ensuring appropriate insurance design and underlying assumptions as part of the product approval process and by matching, to the extent possible and appropriate, the duration of investment assets with the duration of insurance liabilities. Interest Rate Risk arises from any difference between the duration of the company’s liabilities and assets, in particular in relation to the reinvestment of maturing assets to meet commitments, predominantly in insurance liabilities. This exposure can be heightened

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in products with inherent options or guarantees.

• Credit Spread Risk: by focusing on the overall

quality and diversification of our investment portfolios and avoid excessive volatility in their mark-to-market value. Credit Spread Risk arises from changes in the market value of non-government securities as a result of a change in perception as to their likelihood of repayment.

• Equity Price Risk: by managing concentrations and volatility in our equity exposures, which are included in the aggregate exposure reports on individual counterparties to ensure concentrations are avoided. Equity Price Risk arises from changes in the market value of equity securities and equity funds. Investment in equity assets on a long-term basis is expected to provide diversification benefits and improve returns.

• Foreign Exchange Rate Risk: by matching assets and liabilities by currency. Foreign Exchange Risks arise from the translation of dollar-denominated assets and liabilities to local currency for financial reporting purposes.

Liquidity Risk occurs in two ways: Financial Liquidity Risk and Investment Liquidity Risk. We managed Financial Liquidity Risk by determining limits for our activities to ensure that sufficient cash is available to meet payment options to counterparties when they fall due. Investment Liquidity Risk is managed through continuous assessment of the relative liquidity of the company’s assets and managing the size of individual holdings through limits.

Handling Operational Risk

Operational Risk is managed by first breaking these down into thirteen (13) defined risk areas or Key Operational Risks (KORs):

1. Business Interruption risk2. Distribution risk3. Finance and Actuarial Process risk4. Financial Crimes and Fraud risk5. Information Security risk6. Information Technology risk7. Investment Process risk8. Legal and Regulatory risk9. Operations risk10. People risk11. Product risk12. Project risk13. Third Party risk

Each KOR is measured using KRIs, with a first line owner for respective KORs. The RMC reviews these risks regularly, including emerging risks.

Every year, our Risk and Control Assessment process identifies and assesses the impact of Operational risks. Here, management considers possible or actual risk events, ascribes likelihood of occurrence and potential severity, and then agrees on mitigation strategies to reduce these risks. These strategies are then monitored and the exercise being repeated, with the results stored in an operational risk database.

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AUDIT COMMITTEE

The Audit Committee is an independent committee formed by the Board of Directors to assist the Board in the performance of its duties and responsibilities specifically in ensuring that governance, internal controls and risk management systems of the organisation are in place.

For 2016, the Audit Committee members were Mr. Romeo L. Bernardo as the Chairman and Ambassador Jesus P. Tambunting and Mr. Andreas Rosenthal as the members, two of whom, except Mr. Rosenthal are independent directors. Each Audit Committee member met the necessary requirements of the Securities and Exchange Commission, the Revised Code of Corporate Governance and other applicable laws and regulations in the Philippines. See page 30 for the profile of the Audit Committee members.

The Audit Committee has adopted a formal terms of reference, the Audit Committee Charter, to detail its responsibility for oversight of the organisation’s corporate governance process. The Committee, while exercising its oversight role,

relies on the expertise of Management and works with the Internal and External Auditors to ensure the integrity of the financial statements and the on-going review of the organisation’s governance process, risk management and internal controls.

The Audit Committee in accordance with its responsibilities outlined in the Audit Committee Charter developed an annual calendar and meeting agenda for 2016. From 1 January to 31 December 2016, the Audit Committee met four (4) times. In these meetings, the Audit Committee met with Senior Management, Group Internal Audit, the Compliance Office and the organisation’s External Auditors, Isla Lipana & Co./PricewaterhouseCoopers. In 2016, the Audit Committee also met individually with Group Internal Audit and the External Auditors without management being present. Among the agenda items discussed included the approval of the Annual Audit plan, Group Internal Audit updates, results of Compliance reviews and updates from the External Auditors. Group Internal Audit Updates include the results of completed audit projects, the status of the audit plan and tracking of open issues.

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AUTHENTICITYBPI-Philam exudes genuine concern for its customers in order to provide real results.

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FINANCIAL STATEMENTS

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FINANCIAL STATEMENTS

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STATEMENTS OF TOTAL FINANCIAL POSITIONFor the years ended December 31, 2016 and 2015

(All amounts in thousands of Philippine Peso)

2016 2015 Growth vs LY

Cash and cash equivalents

Insurance receivables, net

Financial assets at fair value through profit or loss

Available-for-sale financial assets

Loans and receivables, net

Accrued income

Investments in subsidiary and associate, net

Investment properties

Property and equipment, net

Other assets, net

2,721,039

593,369

64,212,732

18,069,766

1,388,259

403,132

67,644

809,994

359,601

152,640

2,613,914

312,270

52,490,002

18,141,029

1,206,511

353,361

67,644

905,297

153,449

184,174

4%

90%

22%

0%

15%

14%

0%

-11%

134%

-17%

BPI-PHILAM LIFE ASSURANCE CORPORATION (BPLAC)

ASSETS

LIABILITIES AND EQUITY

88,778,176 76,427,651 16%Total assets

Insurance contract liabilities, net

Reserve for policyholders’ dividends and

experience refund

Policyholders’ dividends

Premium deposit fund

Insurance payables

Accounts payable and accrued expenses deferred

Tax liabilities

Other liabilities

74,325,511

280,051

468,740

1,979,624

277,573

1,923,424

92,014

468,688

63,316,004

254,670

454,394

2,031,089

96,134

1,242,642

60,269

556,566

17%

10%

3%

-3%

189%

55%

53%

-16%

79,815,625 68,011,768 17%Total liabilities

Share capital

Treasury shares

Reserves for:

Fluctuation on available-for sale financial assets

Revaluation of property and equipment, net

750,000

(6)

2,585,766

4,669

750,000

(6)

2,809,312

1,049

0%

0%

-8%

345%

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BPI-PHILAM LIFE ASSURANCE CORPORATION (BPLAC)

STATEMENTS OF TOTAL COMPREHENSIVE INCOME For the years ended December 31, 2016 and 2015

(All amounts in thousands of Philippine Peso)

2016 2015 Growth vs LY

REVENUES AND OTHER INCOME

Gross premiums on insurance contracts

Reinsurers’ share of gross premiums on

insurance contracts

19,519,833

(263,180)

20,920,750

(121,846)

-7%

116%

Net insurance premiums

Fee income

Investment income

Realized gain on sale of available-for-sale

financial assets, net

Foreign exchange gains, net

Fair value losses, net

Others

19,256,653

1,741,270

1,427,353

39,749

47,821

(960,032)

1,616

20,798,904

1,378,822

1,097,576

252,210

17,437

(1,430,823)

13,999

-7%

26%

30%

-84%

174%

-33%

-88%

21,554,430 22,128,125 -3% Total revenues and other income

EXPENSES

Change in insurance contract liabilities, net

Benefits and claims on insurance contracts, net

Commissions and other acquisition expenses

General and administrative expenses

Investment expenses

Interest expense

Insurance taxes, licenses and fees

8,127,451

7,821,366

1,717,521

1,297,612

207,337

156,675

126,399

12,269,746

4,969,152

1,972,908

1,110,500

92,239

215,265

116,538

-34%

57%

-13%

17%

125%

-27%

8%

19,454,361 20,746,348 -6%Total expenses

FINANCIAL STATEMENTS

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Remeasurements of retirement benefit scheme

Share-based payments

Retained earnings

(3,813)

1,921

5,624,014

(19,187)

510

4,874,205

-80%

277%

15%

8,962,551 8,415,883 6%Total equity

88,778,176 76,427,651 16%TOTAL LIABILITIES AND EQUITY

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BPI-PHILAM LIFE ASSURANCE CORPORATION (BPLAC)

STATEMENTS OF TOTAL COMPREHENSIVE INCOME For the years ended December 31, 2016 and 2015

(All amounts in thousands of Philippine Peso)

2016 2015 Growth vs LY

INCOME BEFORE INCOME TAX

INCOME TAX EXPENSE

2,100,069

352,768

1,381,777

193,574

52%

82%

NET INCOME FOR THE YEAR 1,747,301 1,188,203 47%

OTHER COMPREHENSIVE (LOSS) INCOME

Item that will be subsequently reclassified

to profit or loss

Net fair value changes on available-for-

sale financial assets Items that will not be

subsequently reclassified to profit or loss

Net fair value gains on property and equipment

Remeasurement gain (loss) on retirement

benefit scheme

(223,546)

3,620

15,374

(842,748)

1,049

(7,182)

-73%

245%

-314%

(204,552) (848,881) -76%Total other comprehensive loss

1,542,749 339,322 355%TOTAL COMPREHENSIVE INCOME FOR THE YEAR

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FINANCIAL STATEMENTS

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BPI-PHILAM LIFE ASSURANCE CORPORATION (BPLAC)

STATEMENTS OF CHANGES IN EQUITYFor the years ended December 31, 2016 and 2015

(All amounts in thousands of Philippine Peso)

BALANCES AT JANUARY 1, 2015

COMPREHENSIVE INCOME FOR THE YEAR

750,000 (6)3 ,652,060 -( 12,005) 257 3,686,002 8,076,308

Net income for the yearOther comprehensive income

Total comprehensive income for the year

--

--

-(842,748)

-1,049

-(7,182)

--

1,188,203-

1,188,203(848,881)

COMPREHENSIVE INCOME FOR THE YEARNet income for the yearOther comprehensive income

--

--

-(223,546)

-3,620

-15,374

--

1,747,301-

1,747,301 (204,552)

TRANSACTION WITH OWNERS

BALANCES AT DECEMBER 31, 2015

Cost of share-based payments -- - - - 253 - 253

750,000 (6) 2,809,312 1,049 (19,187) 510 4,874,205 8,415,883

-- (842,748) 1,049 (7,182) -1 ,188,203 339,322

Share capitalTreasuryshares

Reserve forfluctuation on

available-for salefinancial assets

Reserve forrevaluation

property and equipment, net

Reserve forremeasurements

of retirementbenefit scheme

Reserve forshare-based

paymentsRetained earnings Total

Total comprehensive income for the year -- (223,546) 3,620 15,374 -1 ,747,301 1,542,749

TRANSACTIONS WITH OWNERSCash dividendsCost of share-based payments

--

--

--

--

--

-1,411

(997,492)-

(997,492)1,411

BALANCES AT DECEMBER 31, 2016 750,000 (6) 2,585,766 4,669 (3,813) 1,921 5,624,014 8,962,551

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FINANCIAL STATEMENTS

AIAGL

AIA

Philam Life

BPI

AHCI

Philam Asset Management Inc. (“PAMI”)

Philam Properties Corp. (“PPC”)

Philam Call Center Services, Inc. (“PCCSI”)

BPI-AMTC

Ayala Plans (“AP”)

BPI M/S Insurance Corporation (“BPI M/S”)

Ultimate Parent Company

Intermediate Parent Company

Parent Company

Significant investor

Subsidiary

Fellow subsidiaries under common

control of Philam Life

Subsidiaries of BPI

RELATED PARTY TRANSACTIONS

In the normal course of conducting its business, the Company transacts with the following related parties:

FINANCIAL STATEMENTS

Related party Relationship

SUMMARY OF TRANSACTIONS WITH RELATED PARTIES

The significant related party balances and transactions as at and for the years ended December 31 are summarized as follows:

(a) Outsourcing services and other transactions

The Company has entered into a service agreement with the Parent Company, BPI, PCCSI and PPC for various support services, effective January 1, 2010. For the outsourcing services rendered, the above parties allocate expenses based on percentage of time spent in the following areas: finance, operations, marketing, corporate services, corporate compliance, information technology, actuarial, underwriting, legal, internal audit, risk management, process management, property management, distribution services, corporate secretary and other related functions.

The summary of transactions and balances arising from the Company’s outsourcing agreements is as follows:

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Philam Life

BPI

PCCSI

PPC

AIA

Philam Life

639,361

10,878

69,614

-

719,853

-

(480,298)

Amount of transaction for

the year

Amount of transaction for

the year

Outstanding payable balance at

December 31

Outstanding receivable

(payable) balance at December 31

Amount of transaction for

the year

Amount of transaction for

the year

Outstanding payable balance at

December 31

Outstanding receivable

(payable) balance at December 31

(347,029)

(950)

(18,083)

(225)

(366,287)

(12,437)

(2,120)

521,453

8,529

65,016

228

595,226

(150,844)

(779)

(48,848)

(916)

(26,241)

(225)

(76,230)

(8,850)

(259)

2016

2016

2015

2015

Other transactions with related parties for the years ended December 31 are summarized below:

Allocated group expenses and charges for use of systems

Service fees for the management of AFS financial assets and financial assets at FVTPL paid to BPI-AMTC (35,997)

(1,013,247)

(33,185)

(42,526)

(36,838)

(905,603)

(13,202)

(32,555)Bank service fees to BPI

GR

IT

INN

OVATIVE

UP

LIFTING

AU

THEN

TIC

55

Amount of transaction for

the year

Outstanding receivable

(payable) balance at December 31

Amount of transaction for

the year

Outstanding receivable

(payable) balance at December 31

2016 2015

Expense recoveries

PAMI

PCSSI

PPC

AHCI

BPI MS

BPI M/S

BPI

PAMI

Philam Life

Ayala Plans

Provision for legal

obligations of AHCI

Manpower Cost Billing

and Other Transactions

with Philam Life

79,147

627

-

-

-

21,116

5,743

-

-

1,017

27,876

115,677

1,309

-

750

139

-

907

-

-

-

907

25,492

-

570

-

-

19,953

2,409

1,233

500

-

24,095

28,615

1,309

-

750

139

1,920

384

-

-

-

2,304

-

17,433

(69,961)

8,311

-

17,686

(69,961)

1,185

Dividend declared

(b) Lease transactions (Company as lessor)

Philam Life

BPI

508,721

475,504

-

-

-

-

-

-

Amount of transaction for

the year

Outstanding receivable balance

at December 31

Amount of transaction for

the year

Outstanding receivable balance

at December 31

2016 2015

GR

IT

INN

OVATIVE

UP

LIFTING

AU

THEN

TIC

56

The balances presented are unguaranteed and unsecured, non-interest bearing and collectible/payable on demand. The amounts will be settled in cash.

Security deposit received from related parties from the above lease transactions amounts to P13,728 (2015 - P5,845) and is under Account payable and accrued expenses.

Reconciliation of outstanding related party balances at December 31

The outstanding balances presented are unguaranteed and unsecured, non-interest bearing and collectible/payable on demand. The amounts will be settled in cash. There are no guarantees provided or collaterals held arising from transactions with related parties. No provision for impairment has been made for amounts owed by related parties since collection is deemed to be reasonably certain.

(a) Receivable balances

From the detailed schedule above:

Philam Life, its subsidiaries and other related parties

BPI, its subsidiaries and other related parties

ACHI

Loans and receivables, net

Accrued income

125,297

1,046

750

127,093

125,297

1,796

127,093

2016

2016

31,109

2,443

750

34,302

31,997

2,305

34,302

2015

2015

Due from related party balances are booked under the following accounts in the statement of financial position at December 31:

GR

IT

INN

OVATIVE

UP

LIFTING

AU

THEN

TIC

57

(b) Payable balances

From the detailed schedule above:

No provision for impairment has been made for amounts owed by related parties since collection is deemed to be reasonably certain.

Philam Life, its subsidiaries and other related parties

ACHI

BPI, its subsidiaries and other related parties

AIA

367,457

69,961

76,661

12,437

526,516

2016

75,573

69,961

46,673

8,850

201,057

2015

The above due to related party balances reconcile to the following amounts presented in the statement of financial position:

Accounts payable and accrued expenses 526,516

526,516

2016

201,057

201,057

2015

GR

IT

INN

OVATIVE

UP

LIFTING

AU

THEN

TIC

58