Fulfillment Ratio

To provide you an overview of HSBC Life (International) Limited (the "Company")'s dividend declaration history, the following shows the fulfillment ratio for each of the Company’s participating products which have new policies issued since 2010 and still have in-force policies in the reporting year. These results are intended for reference purpose only and should not be taken as indicator of future dividend declaration and special bonus of the participating products. The actual fulfillment ratios in future may be lower or higher than the historical fulfillment ratios as illustrated. If you have an HSBC Life policy, you can review the policy value and other policy details through HSBC Online Banking or HSBC Mobile Banking app.

The fulfillment ratio for annual dividends shows the extent to which the actual accumulated annual dividends and interest (excluding special bonus, if applicable) meets, underperforms or outperforms the illustrated amount at the point of sale for all relevant in-force participating policies at the relevant policy year. In respect of each product and currency, fulfillment ratio for annual dividends for a policy year is calculated as the ratio of aggregate amount of any actual accumulated non-guaranteed annual dividends, any monthly income/annuity (non-guaranteed portion) and non-guaranteed interests (if any) earned on any accumulated dividends and/or its interest (if any) as well as accumulated guaranteed bonus and/or annuities (if applicable), against the illustrated amount at point of sale across all relevant in-force policies in the reporting year.

The fulfillment ratio for special bonuses shows the extent to which the actual payout of special bonus meets, outperforms or underperforms the illustrated amount at the point of sale for all the relevant participating policies which were actually terminated in the reporting year. In respect of each product and currency, fulfillment ratio for special bonuses for a policy year is calculated as the ratio of aggregate amount of actual payout of special bonus against the illustrated amount at point of sale across all relevant policies which were actually terminated in the reporting year.

The fulfillment ratio will be 100% when the non-guaranteed benefits (i.e. accumulated dividends and interest or special bonus) declared matches with the illustrated non-guaranteed benefits amount at the point of sale. If it is above 100%, it means larger amount of non-guaranteed benefits was declared as compared with the illustrated amount and if it is below 100%, it means the opposite.

However, it should be noted that the fulfillment ratio can only reflect the non-guaranteed benefits declaration result for a certain past period of the policies issued and it cannot represent any future declaration plan and strategy over a longer term for the remaining policy years.

For example, lower ratios can be observed for policies issued in 2010 & 2011 because they experienced through the decreasing interest rate environment and difficult market conditions in 2011 & 2012 caused by incident such as Eurozone debt crisis. As such, it is not suggested taking the fulfillment ratio result as an indicator of future non-guaranteed benefits declaration of the participating products.