Central Re — AGM Information 2015

Jun 3, 2015

Stock Code:2851

CENTRAL REINSURANCE CORPORATION

2015 Annual General Meeting of Shareholders

Agenda Handbook

May 27, 2015

(This translated document is prepared in accordance with the Chinese version and is for reference only. In the event of any inconsistency between the English version and the Chinese version, the Chinese version shall prevail.)

TABLE OF CONTENTS

AGENDA FOR THE MEETING

A、	Report of Shareholders Presented and Call Meeting to Order	…	1
B、	Chairman's Address	…	1
C、	Matters for Report	…	1
D、	Matters for Acknowledgement and Discussion	…	2
E、	Matters for Extraordinary Motion	…	4
F、	Dismiss the Meeting	…	4

APPENDIX

●	Articles of Incorporation	…	36
●	Rules for Procedure of the Shareholders' Meeting	…	43
●	Procedures for Use of the Company's funds in Special Projects, Public Utilities and Social Welfare Enterprises	…	50
●	Ethical Corporate Management Best Practice Principles	…	55
●	Procedures for Transaction of Financial Derivatives	…	62
●	The Proposal from the Board of Directors about the Remuneration to Directors and Supervisors, and Bonus to Employees	…	69
●	The Share-holding Table of Directors	…	70

CENTRAL REINSURANCE CORPORATION 2015 Annual General Meeting of Shareholders

Date & Time:9:00 a.m., May 27, 2015 (Wednesday)

Venue:10F, No.11, Chungshan S.Road, Taipei 10048, Taiwan

Chang Yung-Fa Foundation International Convention Center Room1002 Shareholders present:Shareholders present by themselves or by proxy at the meeting represent _________shares and account for ____% of the total issued shares of the Company which amount to 562,275,000 shares.

Chairman:Mr. Yang, Cheng-Tui

A. Report of Shareholders Presented and Call Meeting to Order.

B. Chairman's Address.

C. Matters for Report:

• I. Business Report of the year 2014. (as the attached Page 5-10)
• II. Audit Committee's Review Report of the year 2014. (as the attached Page 18)
• III.Reporting on the "Procedures for Use of the Company's funds in Special Projects, Public Utilities and Social Welfare Enterprises" amended by the Board of Directors on Aug. 20, 2014 and submitted to the Financial Supervisory Commission (hereinafter referred to as "FSC") for reference according to the article 6 of "Regulations Governing Use of Insurer's funds in Special Projects, Public Utilities and Social Welfare Enterprises". (as the attached Page 50-54)
• IV.Reporting on the "Ethical Corporate Management Best Practice Principles" established by the Board of Directors on Dec. 24, 2014 according to the article 27 of "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies". (as the attached Page 55-61)

D. Matters for Acknowledgement and Discussion:

Submitted by the Board of Directors

• Proposal I: It is proposed to acknowledge the Business Report and Financial Statements of the year 2014. (as the attached Page 5-16)
• Explanation: The Financial Statements of the Company of the year 2014 which had been audited and certified by the CPA firm of PricewaterhouseCoopers, Taiwan and the Business Report of the year 2014 were reviewed by the Audit Committee. The Audit Committee also submitted the Review Report as attached.

Resolution:

Submitted by the Board of Directors

Proposal II: It is proposed to acknowledge the distribution of the earnings of the year 2014 as the Statement of Earnings Appropriation. (as the attached Page 17)

Explanation:

• 1. The retained earnings of the Company for the beginning of the year 2014 is NT\$482,822,998. After adding the net income for the year ended 2014 NT\$870,874,268 and deducting actuarial loss on defined benefit plan, setting aside legal reserve and special reserve, the appropriable earnings for the year ended Dec. 31, 2014 is NT\$944,776,796. According to the Company Law and Articles of Incorporation, the proposal of the distribution of the earnings are as follows:
• (1) Cash dividends: NT\$674,730,000. Each share shall be distributed NT\$1.2.
• (2) Remuneration to Directors and Supervisors: NT\$ 2,878,000.

(3) Bonuses to employees: NT\$ 7,141,169.

The fractional amount less than NT\$1 will be set aside as Company's non-operating revenue in distribution of cash dividends.

1. In the event that the total amount of shares outstanding of the Company is affected by the buyback of the Company's shares, transfer, conversion, cancellation of treasury shares, necessitating adjustments in the cash distribution ratio, it is proposed that the Chairman of the Board be authorized to manage the change in the cash distribution ratio.

2. The Board of Directors will decide the record date and the payment date for distribution of cash dividends.

Resolution:

Submitted by the Board of Directors

• Proposal III: It is proposed to amend the "Procedures for Transaction of Financial Derivatives" referring to the contrast table attached. (as the attached page 19-35)
• Explanation: The amendments are made in accordance with "Regulations Governing Derivatives Transactions Conducted by Insurance Companies" by Order Ref. Jin – Kuan – Bao– Tsai 10302509851 promulgated by FSC on December 24, 2014.

Resolution:

Submitted by the Board of Directors

Proposal IV: It is proposed to lift the restriction of "non-competition" for Mr. Chang, Kuo-Cheng, the Vice Chairman of the Board.

Explanation:

• 1. In accordance with the Article 209 of the Company Law, a director who does business that is within the scope of the Company's business for himself/herself or on behalf of another person, shall explain to the shareholders the essential contents of such act and secure the shareholders' approval.
• 1. It is proposed to approve this proposal because the conduct that Mr. Chang, Kuo-Cheng, the Vice Chairman of the Company, simultaneously acts as the Chairman of Evergreen Insurance Company Limited whose business is within the scope of the

Company's business "Reinsurance Business" will not damage to the Company's benefit.

Resolution:

E. Matters for Extraordinary Motion.

F. Dismiss the Meeting.

CENTRAL REINSURANCE CORPORATION

Business Report of the year 2014

Operating Performance in 2014

Central Reinsurance Corporation (Central Re) is Taiwan's sole domestic and professional reinsurer and our core business is underwriting non-life and life reinsurance in the domestic and overseas insurance markets. We committed to the ethical corporation management, stabilization of insurance market, and fulfillment of corporate social responsibility as our primary goals. In order to ensure sustainable management and adapt with the changing market, we will utilize our domestic advantage to deeply cultivate the Taiwan market, focus on better customer services, prudently expand international business, and enhance the quality of business portfolio.

Operating Results

1. Underwriting operations

The gross premium written in 2014 was NT\$16,349,868 thousand, a 6.92% increase from NT\$15,292,027 thousand in budget estimation. The breakdown by source was shown below table.

		Gross Premium Written
Year	Actual	Budget	Increase(+) / Decrease(-)
Item	Amount	Amount	Amount	%
Domestic Non-Life Business	8,422,688	7,797,144	+625,544	+8.02%
Domestic Life Business	6,472,138	6,096,660	+375,478	+6.16%
Subtotal	14,894,826	13,893,804	+1,001,022	+7.20%
International Non-Life Business	1,385,164	1,352,076	+33,088	+2.45%
International Life Business	69,878	46,147	+23,731	+51.42%
Subtotal	1,455,042	1,398,223	+56,819	+4.06%
Total	16,349,868	15,292,027	+1,057,841	+6.92%

NT\$ '000

2. Financial Situation

By the end of 2014, the company's paid-up capital was NT\$5,622,750 thousand and the total equity before distribution of dividends was NT\$9,456,916 thousand, an increase of 4.69%, over NT\$9,033,548 thousand in 2013. The equity in 2014 was a record high year and it will facilitate to enhance our financial strength, increase our capacity, reinforce the confidence of rating agency, and support development of overseas business.

Total reserves continued to strengthen. By the end of 2014, total reserves reached NT\$22,274,802 thousand, and increased of NT\$246,829 thousand, or 1.12%, over 2013's figure of NT\$22,027,973 thousand.

The company's total net gain from investment at the end of 2014 was up 19.2% to NT\$455,313 thousand compared to budget estimation.

3. Credit Ratings

Based on Central Re's very strong capital and earnings, long-term relationship with domestic clients, strong liquidity structure and satisfactory of underwriting results, Standard & Poor's Ratings Services reaffirmed our A rating and stable outlook in January 2014. Taiwan Ratings Corp. reconfirmed our rating of twAA+.

A.M. Best reaffirmed our A rating and stable outlook in August of 2014. These good credit ratings will be beneficial to managing and expanding Central Re's business plan.

Budget implementation

			NT\$ '000
Item	Actual	Budget	Achievement (%)
Operating Revenues	16,283,563	15,397,684	105.75%
Operating costs	14,907,417	14,213,885	104.88%
Gross operating income	1,376,146	1,183,799	116.25%
Operating expenses	375,134	399,158	93.98%
Net operating income	1,001,012	784,641	127.58%
Non-operating income and expenses	-1	0	-100.00%
Income from continuing operations before tax	1,001,011	784,641	127.58%
Income tax expense	130,137	124,783	104.29%
Income from continuing operations after tax	870,874	659,858	131.98%

The results of budget implementation were shown as follows.

Profitability Analysis

Earnings per share (after tax) increased by NT\$0.25, to NT\$1.55 for 2014. This was mainly due to increases in gross operating income from insurance.

NT\$ '000

Ratio	Year	2014	2013	Average
	Return on Assets (%)	2.60	2.25	2.43
	Return on Equity (%)	9.42	8.60	9.01
	Net operating Income / Paid-up Capital (%)	17.80	16.79	17.30
Profitability	Income from continuing operations before tax/ Paid-up Capital (%)	17.80	16.80	17.30
	Net Profit Margin (%)	5.35	4.76	5.06
	Earnings per share (after tax)(NT\$)	1.55	1.30	1.43

Research and Development

1. Human Resources Development

In order to enhance the work efficiency and the career development of our employees, we have established a variety of personal and professional curricula based on Central Re's training framework, toward every level and with different purpose. Currently, training courses of our employees are related to (re)insurance, finance, risk management, compliance training, interpersonal skills, and so on. Training detail in 2014 is as tabled below.

	Training Program	Attendance Number
	Orientation Training	8
	The Acknowledgement and Training for Legal and Compliance	151
Mandatory	Internal Control, Auditing and Self-inspection Training	49
Training	The Regulatory On-job Training for Money Laundering Prevention	80
	The Acknowledgement and Training for Personal Information Protection	38
	Risk Management Training	121
	Administrative Management Courses (e.g. human resources, shareholder services, occupational safety and health)	11
	Specialized Finance and Investment Courses	72
Professional Training	Specialized (Re)insurance and Actuarial Courses	205
	Risk Management Courses	12
	IT Courses	1
Compliance	External Finance-related Professional Courses, held by a competent authority-designated institution, for Internal auditors	30
Training	External Courses, offered by institutes recognized by the competent authority, for compliance personnel	14

In 2014, the number of our managers (above SVP level) attended the corporate governance, reinsurance, actuarial, and risk management courses held by the external training institutions, amounts to 34 times.

To enhance colleagues' global perspective, we also provided our 12 colleagues with overseas training opportunities, such as insurance seminars or financial conferences in 2014.

At the same time, we constantly inspire our employees to obtain the professional certifications and licenses of the non-life and life insurance and financial related exams held by domestic and international institutions. There are 57 colleagues who have passed the following professional examinations and obtained related certification.

	Item
	The certificate as a qualified insurance underwriter of non-life insurance	16
	The certificate as a qualified claim adjuster of non-life insurance	9
Domestic	The certificate as a qualified insurance underwriter of life insurance	4
Certification	The certificate as a qualified claim adjuster of life insurance	3
	Fellow of Actuarial Institute of the Chinese Taipei (FAICT)	2
	Associate of Actuarial Institute of the Chinese Taipei	1
	Basic Proficiency Test on Bank Internal Controls	2
	Chartered Property Casualty Underwriter (CPCU)	2
	Associateship of the Chartered Insurance Institute (ACII)	1
	Associate of the Society of Actuaries (ASA)	2
International Certification	Associate of the Casualty Actuarial Society (ACAS)	1
	The Academy of Life Underwriting	1
	The Fellow, Life Management Institute (FLMI)	4
	Associate, Customer Service (ACA)	4

Item	Number Passing
Associate, Annuity Products and Administration (AAPA)	2
The Chartered Financial Analyst	1
Financial Risk Manager	1
Associate in Risk Management (ARM)	1

Furthermore, we offer diversified human resource programs in accordance with job requirements and personal interests to our employees to sharpen and exercise their talents. In 2014, we not only hired 8 new employees, but also provided 3 job rotations and 12 job promotions to enhance employees' expertise and career development.

• 1. Business Development and Service
• ‧ In order to improve efficiency and strengthen internal control, we keep developing IT system and construct remote backup mechanism. The management use related statistical analysis to set up future operating strategies.
• ‧ Enhancing customer satisfaction, we assist our clients to design and price innovative products by providing market information and reliable statistics. We also support regulations and risk management advisory and skill training seminars with regard to underwriting as well as claim handling.
• ‧ In-depth understanding of clients' needs and tracking global reinsurance market trends, we always provide clients with appropriate reinsurance solution.
• ‧ Continued prudently expanding facultative business to increase underwriting profit.
• ‧ Set up talent pool to support the development of business and customer service.
• ‧ Keep promoting our company's "Key Risk Indicator".

ASSETS	Notes	December 31, 2014 AMOUNT	℅	December 31, 2013 AMOUNT	$\%$
Cash and cash equivalents	6(1)	\$ 18,430,910	54	\$ 17,673,887	54
Accounts receivable	6(2)	399,901	1	183,877
Current income tax assets		133,340	1	111,284
Financial assets at fair value through profit 6(3)
or loss		949,291	3	963,635	3
Available-for-sale financial assets	6(4)	4,852,161	14	4,966,826	15
Bond investments without active market	6(5)	3,125,047	9	3,176,695	10
Other financial assets	6(6)	524,296	2	247,560	1
Investment property	6(7)	459,027	1	459,570	-1
Reinsurance contract assets	6(8)	3,859,592	11	3,877,374	12
Property and equipment	6(10)	214,772	1	203,973	1
Intangible assets		1,531		2,142
Deferred income tax assets	6(16)	36,423		47,425
Other assets		1,022,876	3	1,022,984	3
TOTAL ASSETS		\$ 34,009,167	100	\$ 32,937,232	100
LIABILITIES AND EQUITY
Accounts payable	6(11)	\$ 577,906	$\overline{2}$	\$ 393,767	2
Current income tax liabilities		115,627		25,040
Financial liabilities at fair value through	6(3)
profit or loss		66,470		11,785
Insurance liabilities	6(8)	23,664,460	70	23,382,630	71
Provisions	6(12)	5,778		772
Deferred income tax liabilities	6(16)	77,799		51,447
Other liabilities		44,211		38, 243
TOTAL LIABILITIES		24, 552, 251	72	23,903,684	73
EQUITY
Capital
Common stock	6(13)	5,622,750	17	5,622,750	17
Capital reserve		300,000	1	300,000	$\mathbf{1}$
Retained earnings
Legal reserve		1,274,236	4	1,127,818	3
Special reserve	6(15)	976,714	3	1,266,462	4
Undistributed earnings	6(16)	1,118,951	3	784,255	$\boldsymbol{2}$
Other equity	6(4)	164,265		67,737)
TOTAL EQUITY		9,456,916	28	9,033,548	27
TOTAL LIABILITIES AND EQUITY		\$ 34,009,167	100	\$ 32,937,232	100

$\frac{2014}{ }$ 2013 Percentage $\%$ AMOUNT AMOUNT Notes $\%$ Items $(\%)$ Operating revenues Gross premiums written \$ 16, 349, 868 100 \$ 15,649,693 102 4 Less: Reinsurance premiums ceded $1,085,426$ ( $7)$ ( 908,808)( 6) 19 Net change in unearned premium 6(8) reserve 242,733 $\overline{2}$ 144,518)( 268) $1)$ ( $\overline{95}$ Retention earned premiums 15,507,175 14,596,367 95 -6 Reinsurance commission revenue 2 2 302, 102 266,945 13 Overriding commission revenue 15,986 16,508 3) $\overline{a}$ -6 Net gain from investment Interest income 315,125 2 2 291,332 8 Gain or loss on valuation of financial 6(3) assets or financial liabilities at fair value through profit or loss 147,280) ( ( $1)$ ( 49,889)( 1) 195 Realized gain or loss on available-for-sale financial assets 83,807 1 1 $143,375$ ) ( $1)$ ( 158) Realized gain or loss on bond investments without active market 271,434 2 100) $\overline{ }$ Foreign exchange gain 186,375 112,911 65 Gain on investment property 6(7) 17,286 18,929 9) € $\blacksquare$ 3 Total net gain from investment 3 455,313 501,342 9) Other operating revenues 2,987 3,332 10) Total operating revenues 16,283,563 100 15,384,494 100 $6\,$ Operating costs Reinsurance claims paid 10,054,640)( $62)$ ( $9,357,147$ ) ( 61) 7 Less: Reinsurance claims recovery 3 11) 420,859 3 1 471,486 59)( Retention reinsurance claims paid 9,633,781)( 58) 8,885,661)( 8 Net changes in other insurance 6(8) liabilities $3)$ ( 489,562)( $268,665$ ) ( 1) 82 Reinsurance commission expenses 4,781,683)( $30)$ ( 4,908,020)( $32)$ ( 3) Other operating costs 2,391) $\frac{2}{2}$ 119450 $\bullet$ $\blacksquare$ Total operating costs $92)$ ( 14,907,417) 14,062,348) ( 91) 6 Operating expenses Selling expenses 258,914)( $1)$ ( 274,036)( $2)$ ( 6) Administration expenses 114,787)( $1)$ ( 103,093)( 1) 11 Training expenses 1,433) 78 803) $\overline{\phantom{a}}$ Total operating expenses 375,134) ( $\overline{2}$ ) 377,932) ( $3)$ ( 1) Net operating income 1,001,012 6 944,214 6 6 Non-operating income and expenses 586 100) D Income from continuing operations before tax 1,001,011 6 944,800 6 6 6(16) Income tax expense $1)$ ( 39) 130, 137) ( $212,710$ ) ( $1)$ ( Income from continuing operations after tax 870,874 $\overline{5}$ 732,090 $rac{5}{5}$ 19 5 Net income 870,874 732,090 19			Year ended December 31		Changes

(Expressed in thousands of New Taiwan dollars, except for earnings per share)
-------------------------------------------------------------------------------	--	--

				Year ended December 31				Changes
			2014			2013		Percentage
Items	Notes		AMOUNT	%		AMOUNT	℅	$(\%)$
Other comprehensive income
Unrealized gain on available-for-sale	6(4)
financial assets		\$	264,419	$2^{\circ}$	$\sqrt{3}$	598,432	4(	56)
Actuarial loss on defined benefit plan	6(12)		5,757	- (		1,575)	-	266
Income tax relating to the components	6(4)(16)
of other comprehensive income			31,438)	- (		13,695)		130
Total other comprehensive income for
the year (after tax)			227,224	2		583,162	4(	61)
Total comprehensive income for the
year		S	1,098,098	7	\$	1,315,252	9(	17)
Earnings per share (after tax)
Basic and Diluted		\$		1.55	S		1.30

ENTRAL REINSURANCE CORPORATI	STATEMENTS OF CHANGES IN EQUIT	FOR THE YEARS ENDED DECEMBER	xpressed in thousands of New Taiwan doll

							Retained Earnings				Other Equity
		Common		Additional Paid-in			Special		Undistributed		Loss on Available-for Unrealized Gain or
	Notes	Stock		$_{\rm Capital}$		Legal Reserve	Reserve		Earnings		sale Financial Assets	Total Equity
2013
Balance at January 1, 2013		\$5,512,500	↔	300,000	↮	991,944	\$1,235,532	⊷	606,151	G	652,206)	\$7,993,921
Distributions of 2012 earnings (Note)
Legal reserve						135,874			135,874
Cash dividends	6(15)								275,625)			275,625)
Stock dividends	6(15)	110,250							110,250)
Reversal of special reserve							195,539)		195,539
Net income for 2013									732,090			732,090
Appropriation for equalization reserve for 2013	6(15)						226,469		226,469
Other comprehensive income for 2013	6(4)								1,307		584,469	583,162
Balance at December 31, 2013		\$5,622,750	∣⊶	300,000		\$1,127,818	\$1,266,462	⊷	784,255	영	67, 737	\$9,033,548
2014
Balance at January 1, 2014		\$5,622,750	⊷	300,000		\$1,127,818	\$1,266,462	⊷	784,255	$\mathfrak{S}$	67,737)	\$9,033,548
Distributions of 2013 earnings (Note)
Legal reserve						146,418			146,418)
Cash dividends	6(15)								674,730)			674,730)
Reversal of special reserve							519,716)		519,716
Net income for 2014									870, 874			870,874
Appropriation for equalization reserve for 2014 6(15)							229,968		229,968)
Other comprehensive income for 2014	$\widetilde{\epsilon}$								4,778		232,002	227,224
Balance at December 31, 2014		\$57777		300 000		\$1 274 226	076 714 ᢦ		$250$ $051$		164.965	ቁ በ ለፍ ሩ በነራ

	Notes		2014		2013
CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax for the year
		\$	1,001,011	\$	944,800
Adjustments to reconcile net income before income tax to net cash provided by operating activities:
Income and expenses having no effect on cash flows
Depreciation
Amortization			8,046		7,036
Net change in reserves	6(17)		1,350		1,296
			246,829		413,183
Net loss (gain) on financial assets and liabilities at fair value through profit or loss
Net loss on available-for-sale financial assets			57,549 216	t	$118,778$ )
Net gain on bond investments without active market					201,674
Interest income					271,434)
Dividend income		€	332,334)	- (	313,718)
Net gain on disposal of property and equipment			$105,481$ ) (		74,432)
Unrealized foreign exchange gain			15)
Changes in assets/liabilities relating to operating activities			$101,928$ ) (		119,445)
Net changes in assets relating to operating activities
Accounts receivable		(	215,876)		167,829
Financial assets at fair value through profit or loss
Reinsurance contract assets			13,470 52,783		541,080
Other assets			5,650)	- (	507,813)
Net changes in liabilities relating to operating activities		€			72,499
Accounts payable			184,139		459,114)
Provisions		(	751)	- (	803)
Other liabilities			5,968		358
Cash generated from operations			809,326		484,218
Interest received			336,729		303,269
Dividend received			104,792		75,754
Cash paid for income tax			$55,690$ )		129,902)
Net cash provided by operating activities			1.195.157		733,339
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value through profit or loss		€	20,506)
Proceeds from disposal of financial assets at fair value through profit or loss			18,516		642,027
Acquisition of available-for-sale financial assets		€	$11,546,277$ ) (		8,523,215)
Proceeds from disposal of available-for-sale financial assets			11,924,846		9,540,085
Acquisition of bond investments without active market		C	$117,118$ ) (		2,302,298)
Proceeds from disposal of bond investments without active market					500,362
Bond investments without active market yield to date			269,553		585,090
Acquisition of property and equipment	6(10)	(	$16,189$ ) (		1,436)
Proceeds from disposal of property and equipment			15
Acquisition of investment property	6(7)	(	$2,113$ ) (		$1,953$ )
Increase in other financial assets			276,736) (		247,560)
Acquisition of intangible assets			739)
Net cash provided by investing activities			233,252		191, 102
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of cash dividends	6(15)		674,730)		275,625)
Net cash used in financing activities			$674,730$ )		275,625)
Effects of exchange rate changes			3,344		16,889
Increase in cash and cash equivalents			757,023		665,705
Cash and cash equivalents at beginning of year			17,673,887		17,008,182
Cash and cash equivalents at end of year		\$	18,430,910	$\pmb{\mathbb{S}}$	17,673,887

		(Unit: NT\$)
Items	Total	Grand Total
Unappropriated retained earnings of previous years		482,822,998
Add $\div$ Net income of 2014	870, 874, 268
Less: Actuarial loss on defined benefit plan(Note 1)	4,777,897
Less : Legal reserve	174, 174, 854
Less: Special reserve(Note 2)	229,967,719	461,953,798
Retained earnings in 2014 available for distribution		944,776,796
Distributable item:
Shareholders' dividends - Cash dividends: NT\$1.2 per share	674,730,000	674,730,000
Unappropriated retained earnings		270,046,796

CENTRAL REINSURANCE CORPORATION

Procedures for Transaction of Financial Derivatives
-----------------------------------------------------	--	--	--

After amendment	Before amendment	Reason for amendment
Article 2 The Types of Derivatives That May be Traded The term "financial derivatives" as used herein shall mean any forward contracts, option contracts, futures contracts, leveraged margin trading contracts, swap contracts, and the combination thereof with a worth derived from traditional financial market tools, including currency, bond, stock and foreign exchange. "Transactions of structured products" mean transactions of portfolios combining fixed-income instruments and derivatives issued or guaranteed by financial institutions. The Company may engage in the above mentioned derivatives transactions for hedging purpose, structured products and	Article 2 The Types of Derivatives That May be Traded The term "financial derivatives" as used herein shall mean any forward contracts, option contracts, futures contracts, leveraged margin trading contracts, swap contracts, and the combination thereof with a worth derived from traditional financial market tools, including currency, bond, stock and foreign exchange. The Company may engage in the above mentioned derivatives transactions for hedging purpose and any other tools approved by the competent authority.	1. To add the definition of structured products in accordance with the Subparagraph 8, Article 2 of "Regulations Governing Derivatives Transactions Conducted by Insurance Companies" (hereinafter referred to as "the Regulation 1"). 2. According to Article 5 of the Regulations 1, a qualified insurer who gets approval from the competent authority may engage in the derivatives transactions for enhancing the investment efficiency. The Company will evaluate the future circumstances and necessity and then submit the application and amend the Procedures and relative regulations accordingly.

After amendment	Before amendment	Reason for amendment
any other tools approved by the competent authority. The Company may not engage in derivatives transactions for anticipated investment positions and enhancing the investment efficiency.
Article 4 Authority Limits and Responsible Management Level 1. Derivatives transactions shall be guided in accordance with the Company's table governing the delegation of authority and responsibility The board of directors 2. authorizes the Chairman to determine the total amount of financial derivatives transactions.	Article 7 Authority Limits and Responsible Management Level 1. Each transaction shall be guided in accordance with the Company's table governing the delegation of authority and responsibility The board of directors 2. authorizes the Chairman to determine the total amount of financial derivatives transactions.	Considering the fluency of the Procedures, we change the order of the Articles. Article 7 is moved to Article 4 and the wording is amended.
Article 5 Segregation of Duties Division functions in regard to the financial derivatives transactions made by the Company shall be as follows: 1. Monitoring Division:	Article 4 Segregation of Duties Division functions in regard to the financial derivatives transactions made by the Company shall be as follows: 1. Monitoring Division:	1. To amend the number of Article. 2. To amend the wording in accordance with the Paragraph 2, Article 20 of "Regulations Governing the Acquisition and Disposal of Assets by Public Companies"

After amendment	Before amendment	Reason for amendment
(1)Board of Directors: Designate senior	(1)Board of Directors: Designate senior	(hereinafter referred to as the "Regulation 2").
management	management
personnel to pay	personnel to pay
continuous attention	continuous attention to
to monitoring and	monitoring and
controlling financial	controlling financial
derivatives trading	derivatives trading
risk. Periodically	risk. Periodically
evaluate whether	evaluate whether
derivatives trading	derivatives trading
performance is	performance is
consistent with	consistent with
established	established
operational strategy	operational strategy
and whether the risk	and whether the risk
undertaken is within	undertaken is within
the Company's	the Company's
permitted scope of tolerance.	permitted scope of tolerance.
(2)Senior management	(2)Senior management
personnel authorized by the board of	personnel authorized by the board of
directors:	directors: Periodically
Periodically evaluate	evaluate the risk
the risk management	management measures
measures currently	currently employed
employed are	are appropriate and
appropriate and are	are faithfully
faithfully conducted	conducted in
in accordance with	accordance with the
the Procedures. When	Procedures. When
irregular	irregular

After amendment	Before amendment	Reason for amendment
circumstances are	circumstances are
found in the course of	found in the course of
supervising trading	supervising trading
and profit-loss	and profit-loss
circumstances,	circumstances,
appropriate measures	appropriate measures
shall be adopted and	shall be adopted and a
a report immediately	report immediately
made to the board of	made to the board of
directors, where an	directors.
independent director	(3)The Audit Division:
shall be present at the	Periodically audit the
meeting and express	compliance of the
an opinion.	Procedures for
(3)The Audit Division:	Derivatives
Periodically audit the	Transactions as well
compliance of the	as of the relevant laws
Procedures for	and regulations.
Derivatives	2. Operating Divisions
Transactions as well	(1)The Investment
as of the relevant	Department: conduct
laws and regulations.	financial derivatives
2. Operating Divisions	transactions.
(1)The Investment	(2) The Finance
Department: conduct	Department: conduct
financial derivatives	settlement and
transactions.	confirmation of
(2) The Finance	financial derivatives
Department: conduct	transactions, and
settlement and	periodical evaluation
confirmation of	as well as risk
financial derivatives transactions, and	assessment, monitoring and

After amendment	Before amendment	Reason for amendment
periodical evaluation as well as risk assessment, monitoring and control. (3) The Accounting Department: conduct accounting and book keeping procedure.	control. (3) The Accounting Department: conduct accounting and book keeping procedure.
Article 6 Gross Contract Amount and The Maximum Loss Limit Where the derivatives are held for hedging purpose, the aggregate nominal value of total and individual contracts thereof shall not exceed the individual and aggregate book value of the hedged items. The maximum evaluation loss limit of derivatives shall not exceed the aggregate nominal value of the individual and total undue hedged items. If the evaluation loss exceeds the preceding limit, the Investment Department shall submit senior management personnel a report with	Article 5 Gross Contract Amount and The Maximum Loss Limit Where the derivatives are held for hedging purpose, the aggregate nominal value of contracts thereof shall not exceed the aggregate book value of the hedged items. The aggregate sum of premium, margin and other similar cost of financial derivatives transactions shall not exceed 10% of each investment. If the financial derivatives transactions are based on hedging purpose, the relevant cost and gain/loss of forward currency transactions, currency swaps, cross currency swaps, interest rate swaps,	1. To amend the number of Article. 2. To amend the wording of Paragraph 1 in accordance with the Subparagraph 1, Paragraph 1, Article 13 of the Regulation 1: Transaction principles and policies, including the types of derivatives transactions, major counterparties, hedging or investment strategies, overall and individual position limits. To amend the wording 3. "loss limit of overall and individual contracts and over limit procedures" of Paragraph 1 and Paragraph 2 in accordance with the Subparagraph 1, Paragraph 1, Article 18 of the Regulation 2. To add relative 4.

After amendment	Before amendment	Reason for amendment
reasonable analysis, suggestion, and improvement measures. Structured products fulfilled with the following conditions are allowed to be invested and the aggregate amount shall not exceed 10% of the	futures, options and other transactions shall not be included in the computation as mentioned in the preceding paragraph.	products of Paragraph 3 moved from "Foreign Investment Operation" in accordance with the Paragraph 1, Article 2 of the Regulation 1.
Company's funds:
1. The final maturity date shall be no longer than 10 years; 2. The principal-guaranteed rate on the maturity date shall be 90% equivalent or above provided that the final
maturity date is no longer than 5 years, or the aforesaid principal-guaranteed rate shall be 100%; The operational risk 3. relating to the underlying derivatives instruments shall be borne by the issuing institutions.
Article 7 Counterparties and Each Transaction Limits	Article 14 Transaction Limits	1. Considering the fluency of the Procedures, we change order of the

After amendment	Before amendment	Reason for amendment
Derivatives transactions counterparties shall meet the following	When conducting derivatives transactions, different transaction limits	Articles. Article 14 is moved to Article 7 and the wording is amended.
requirements: 1. Domestic financial institutions with their risk-based capital ratio, ratio of regulatory capital to risk-weighted assets, regulatory capital adequacy ratio, or the percentage accounted for by adjusted net capital in the total amount of customer	are designated according to counterparty's credit positions as follows: 1. The transaction maximum limit is 200 million US dollars for the counterparty with twAAA credit rating suggested by Taiwan Ratings Corp. or a AA equivalent or higher credit rating suggested by internationally	2. To add domestic and foreign financial institutions standards of Paragraph 1 in accordance with Subparagraph 3, Article 6 and Paragraph 2, Article 11 of the Regulation 1. 3. To amend the wording of Paragraph 2 in accordance with Subparagraph 7, Paragraph 1, Article 13 of the Regulation 1: Counterparty risk,
margins required for the open positions of futures traders meeting regulatory criteria. 2. Foreign financial institutions with BBB+ equivalent or above credit rating suggested by foreign credit rating agencies in the immediately preceding year. When conducting	renowned rating agencies. 2. The transaction maximum limit is 100 million US dollars for the counterparty with twAA- equivalent or higher credit rating suggested by Taiwan Ratings Corp. or a A equivalent or higher credit rating suggested by internationally renowned rating	which requires that when conducting over-the-counter transactions, the insurer shall perform credit risk assessment on the counterparties and assign to individual counterparties different transaction limits according to their credit positions, and the transaction limits shall be subject to constant monitoring. 4. To add Paragraph 3 in
derivatives transactions in the OTC market, different transaction limits are	agencies. The transaction 3. maximum limit is 50	accordance with Paragraph 2, Article 11 of the Regulation 1: The issuing or guarantee institutions of the

After amendment	Before amendment	Reason for amendment
designated according to counterparty's credit positions as follows:	million US dollars for the counterparty with twA- equivalent or	structured products.
1. The transaction maximum limit is 200 million US dollars for the counterparty with twAAA credit rating suggested by Taiwan Ratings Corp. or a AA equivalent or higher credit rating suggested by internationally	higher credit rating suggested by Taiwan Ratings Corp.
renowned rating agencies. 2. The transaction maximum limit is 100 million US dollars for the counterparty with twAA- equivalent or higher credit rating suggested by Taiwan Ratings Corp. or a A equivalent or higher credit rating suggested by internationally renowned rating agencies.
The transaction 3. maximum limit is 50 million US dollars for the counterparty with twA+ equivalent or

After amendment	Before amendment	Reason for amendment
higher credit rating
suggested by Taiwan
Ratings Corp or a
BBB+ equivalent or
higher credit rating
suggested by
internationally
renowned rating
agencies.
The Company shall not 4.
deal with the
counterparties with no
credit rating or credit
rating below twA+
suggested by Taiwan
Ratings Corp or below
BBB+ credit rating
suggested by
internationally
renowned rating
agencies.
The issuing or guarantee
institutions of structure
products shall be the
domestic and foreign
financial institutions
meeting the requirements
in this article paragraph 1
and the trading limits for each counterparty shall
follow the regulations in
this article paragraph 2.
Article 9 Performance	Article 6 Performance	To amend the number of

After amendment	Before amendment	Reason for amendment
Evaluation	Evaluation	Article.
(Omitted.)	(Omitted.)
Article 10 Public Disclosure (Omitted.)	Article 9 Public Disclosure (Omitted.)	To amend the number of Article.
Article 11 Accounting system (Omitted.)	Article 10 Accounting system (Omitted.)	To amend the number of Article.
Article 12 Risk Management System The risk identification, assessment, response, monitoring and reporting of financial derivatives transactions shall be done according to the Company's "Operation Guidelines for Investment Risk Management". These risks as below shall be noted: 1. Credit Risk: Credit risk is controlled by restricting the counterparties principally to those who have banking relationship with the	Article 11 Risk Management System The risk identification, assessment, response, monitoring and analysis of financial derivatives transactions shall be done according to the Company's "Operation Guidelines for Investment Risk Management". These risks as below shall be noted: 1. Credit Risk: Credit risk is controlled by restricting the counterparties principally to those who have banking relationship with the Company or are	1. To amend the number of Article. 2. To amend the wording of Paragraph 1 in according with Subparagraph 6, Paragraph 1, Article 13 of the Regulation 1: Risk management system, which shall include the identification, assessment, monitoring and reporting of transaction risks which shall at least include credit, market, liquidity, operational, legal and system risks.
Company or are internationally	internationally renowned and can provide
renowned and can	professional

	After amendment	Before amendment		Reason for amendment
	provide professional	information.
	information.	2. Market Risk:	Market
2.	Market Risk: Market	risk arising	from the
	risk arising from the	fluctuations of	interest
	fluctuations of interest	rates and	foreign
	rates and foreign	exchange rates or from
	exchange rates or from	other factors	shall be
	other factors shall be	closely monitored	and
	closely monitored and	controlled.
	controlled.	3. Liquidity	Risk:
3.	Liquidity Risk:	Liquidity risk shall be
	Liquidity risk shall be	controlled by restricting
	controlled by restricting	counterparties	to those
	counterparties to those	who have	adequate
	who have adequate	facility,	sufficient
	facility, sufficient	information, and sizable
	information, and	trading capacity	and
	sizable trading capacity	capability to enter into
	and capability to enter into transactions in any	transactions markets around	in any the
	markets around the	world. The	financial
	world. The financial	derivatives	transactions
	derivatives transactions	shall be restricted	to
	shall be restricted to	standardized	products
	standardized products	that are	listed in
	that are listed in	internationally	notable
	internationally notable	exchanges or traded over
	exchanges or traded	the banks' counter.
	over the banks' counter.	4. Operational	Risk:
4.	Operational Risk:	Authority limits	and
	Authority limits and	operating	procedures
	operating procedures	shall be	stipulated
	shall be stipulated	explicitly to	avoid

After amendment		Before amendment	Reason for amendment
explicitly to operational risk. 5. Legal Risk: documents, standard contracts banks, shall reviewed by personnel or counsel and executed after through approval procedures. 6. System Risk: Company shall execute the stop mechanism of financial derivatives transactions.	avoid Any legal except of first be legal legal be going administrative The loss	operational risk. 5. Legal Risk: Any legal documents, except standard contracts of banks, shall first be reviewed by legal personnel or legal counsel and be executed after going through administrative approval procedures. 6. System Risk: The Company shall execute the stop loss mechanism of financial derivatives transactions. Cash Flow Risk: The 7. Company shall maintain
Cash Flow Risk: The 7. Company maintain adequate level of cash to meet the cash settlement in time. Article 13 Risk	shall requirement Control	adequate level of cash to meet the cash settlement requirement in time. Article 12 Risk Control	1. To amend the number
Measures and Control System Risk control measures and internal control taken by the Company for financial transactions shall follows:	Internal system derivatives be as	Measures Risk control measures taken by the Company for financial derivatives transactions shall be as follows: 1. Personnel engaged in	of Article. 2. To amend the wording in accordance with Subparagraph 3 and Subparagraph 6, Paragraph 1, Article 13 of the Regulation 1 regarding internal control system and in

After amendment	Before amendment	Reason for amendment
1. Personnel engaged in derivatives trading may not serve concurrently in other operations such as confirmation and settlement.	derivatives trading may not serve concurrently in other operations such as confirmation and settlement. 2. Finance Department	accordance with Paragraph 2, Article 13 of the Regulation 1 regarding reporting items and frequency to the board of directors and the Risk Management
2. Evaluation method and frequency: Finance Department shall evaluate the financial derivatives positions at least twice per month. The evaluation reports shall be submitted to senior management personnel authorized by the board of directors and the president. The evaluating method shall be in accordance with "Rules for the Preparation of Financial Reports by Insurance Institutions" and the "Generally Accepted Accounting Principles".	shall evaluate the financial derivatives positions at least twice per month. The evaluation reports shall be submitted to senior management personnel authorized by the board of directors and the president. The evaluating method and frequency shall be in accordance with "Rules for the Preparation of Financial Reports by Insurance Institutions" and the "Generally Accepted Accounting Principles". 3. With regard to risk assessment, monitoring	Committee. The reason amending Subparagraph 6 is same as Subparagraph 2, Paragraph 1, Article 5 of the Procedures.
3. With regard to risk identification, assessment, monitoring and control, legality of derivatives transactions, Finance	and control, Finance Department shall periodically submit a performance report to the senior management personnel authorized by

	After amendment		Before amendment	Reason for amendment
	Department shall		the board of directors.
	periodically submit a	4.	Finance Department
	performance report to		shall report to the
	the senior management		soonest meeting of the
	personnel authorized by		board of directors
	the board of directors.		including total and net
4.	Finance Department		amount of contracts with
	shall report to the		the obligations which
	soonest meeting of the		have not become due,
	board of directors		hedging and risk
	including total and net		assessment reports on a
	amount of contracts		regular basis.
	with the obligations	5.	Finance Department
	which have not become		shall establish a log
	due as well as		book in which details of
	unrealized gain or loss		the types and amounts of
	evaluated in accordance		financial derivatives
	with the fair value,		trading engaged in,
	compliance with the		board of directors'
	Procedures, hedging		approval dates, and the
	and risk assessment		matters required to be
	reports; and report to		carefully evaluated and
	the Risk Management		retain it at least for 5
	Committee at least once every six months.		years for reference.
		6.	When irregular
5.	Finance Department		circumstances are found
	shall establish a log book in which details		in the course of
	of the types and		supervising trading and
	amounts of financial		profit-loss
	derivatives trading		circumstances, the senior management
	engaged in, board of		personnel authorized by
	directors' approval		the board of directors

After amendment	Before amendment	Reason for amendment
dates, and the matters required to be carefully evaluated and retain it at least for 5 years for reference.	shall adopt appropriate measures and report to the board of directors.
When irregular 6. circumstances are found in the course of supervising trading and profit-loss circumstances, the senior management personnel authorized by the board of directors shall adopt appropriate measures and report to the board of directors. Independent directors shall be present at the meeting and express an opinion.
Article 14 Internal Audit System The Audit Division shall audit whether all derivatives transactions are in compliance with the Procedures at least once every quarter; and shall perform the following duties and prepare a quarterly audit report which shall be passed by	Article 13 Internal Audit System The Audit Division shall audit whether all derivatives transactions are in compliance with the Procedures monthly; and shall perform the following duties and prepare a quarterly audit report which shall be passed by the board of directors and submitted	1. To amend the audit frequency in accordance with the Q&A 32 of Regulation 2. 2. To amend the number of Article.

After amendment	Before amendment	Reason for amendment
the board of directors and	to the competent authority
submitted to the competent	for reference:
authority for reference:	1. To audit the compliance
1. To audit the compliance	of the processing
of the processing	procedure for
procedure for	Derivatives Transactions
Derivatives	as well as the relevant
Transactions as well as	laws and regulations;
the relevant laws and	2. To audit the internal
regulations;	control measures,
2. To audit the internal	including the functions
control measures,	of internal checks and
including the functions	cross reference;
of internal checks and	3. To assess the
cross reference;	independence of the risk
3. To assess the independence of the	management operations and implementation of
risk management	the risk limitation
operations and	measures;
implementation of the	4. To verify the reliability
risk limitation	of the sources of
measures;	transaction documents
4. To verify the reliability	and information; and
of the sources of	5. To audit the hedging
transaction documents	effectiveness of the
and information; and	hedging derivatives
5. To audit the hedging	transactions.
effectiveness of the	The deficiencies mentioned
hedging derivatives	in the audit report shall be
transactions.	continually followed up
The deficiencies	until improved. If any
mentioned in the audit	severe violation is found, a
report shall be continually	written notice shall be

After amendment	Before amendment	Reason for amendment
followed up until	submitted to the Audit
improved. If any severe	Committee as well as the
violation is found, a	senior management
written notice shall be	personnel authorized by the
submitted to the Audit	board of directors.
Committee as well as the
senior management
personnel authorized by
the board of directors.
Article 17 Effectiveness	Article 17 Effectiveness	To amend the wording.
Any amendment of the	Upon a resolution passed
Procedures shall be	by the board of directors,
approved by the Audit	the Procedures shall be
Committee, the Board of	given to each supervisor
Directors, and the	and shall become effective
Shareholders' Meeting	after ratification by the
thereafter.	shareholders' meeting.
	Any amendment of the
	Procedures shall be
	approved by the Audit
	Committee, the Board of
	Directors, and the
	Shareholders' Meeting
	thereafter.

CENTRAL REINSURANCE CORPORATION ARTICLES OF INCORPORATION

Chapter 1 GENERAL PROVISIONS

Article 1

This Company is incorporated pursuant to the provisions governing a company limited by Shares of the Company Law of Republic of China with the name of 中 央 再 保 險 股 份 有 限 公 司 in Chinese and CENTRAL REINSURANCE CORPORATION in English.

Article 2

The Company may engage in the activity of H501031 Reinsurance Business.

Article 3

The office of the Company is located in Taipei, Taiwan, where necessary, the Company may have branches or offices established within or outside the Republic of China as approved by competent authority.

Article 4

The fund management and investment of the Company, in compliance with Insurance Law and related regulations, shall not be subject to the restriction of not exceeding 40 percent of the paid-up capital of the Company pursuant to Article 13 of the Company Law.

Chapter 2 SHARES

Article 5

The total authorized capital of the Company shall be NT\$6,000,000,000 divided into 600,000,000 shares at NT\$10 each. The Board of Directors is hereby authorized to issue the unissued shares in installments.

Article 6

The shares issued by the Company may be paperless and must be registered in the Securities Central Depositary Business Institution.

Article 7

Registration of share transfer, within sixty (60) days before the date of Annual General Meeting of the Shareholders, thirty (30) days before the date of Extraordinary Meeting of Shareholders, or five (5) days before the date fixed by the Company for distribution of dividends, bonus or other benefits, shall not be conducted.

Chapter 3 SHAREHOLDERS' MEETING

Article 8

The Shareholders' Meeting of the Company consists of two categories; the Annual General and Extraordinary Meetings;

• The Annual General Meeting shall be duly held within six (6) months after the end of each fiscal year of the Company;
• The Extraordinary Meeting of the Company may be duly held if necessary.

Article 9

Notices to convene the Annual General Meeting shall be given to each shareholder thirty (30) days in advance, and the one to convene the Extraordinary Meeting shall be given fifteen (15) days in advance. Notices of the Shareholders' Meeting shall specify the time and place of the meeting and the particulars of the business to be transacted, and shall be given to all the Shareholders.

Article 10

A shareholder who is unable to attend a Shareholders' Meeting may appoint a proxy to attend and vote on his behalf pursuant to a power of attorney printed and distributed by the Company duly issued by the Shareholder stating the ambit of the proxy's authority.

Article 11

Unless otherwise provided under the Company Law and related regulations, the quorum for a Shareholders' Meeting shall be duly adopted by a majority in the meeting attended by Shareholders who represent a majority of the total issued shares.

Article 12

The shareholders of the Company shall have one voting right for each share, unless otherwise regulated under the relevant laws and regulations.

Article 13

When Shareholders' Meeting is convened by the Board of Directors, its chairman shall be processed in accordance with the provisions in Article 208 of the Company Law.

When the meeting is convened by other party with right of summons other than the Board of Directors, the Chairman shall be undertaken by that party with right of summons. When there are two or more parties with right of summons, one party will be elected from these parties.

Article 14

The resolutions adopted by the Shareholders' Meeting shall be reported in the minutes. The content, distribution and other essentials of the minutes shall be made in accordance with the provision of Article 183 of the Company Law.

Chapter 4 DIRECTORS AND MANAGERS

Article 15

The Company shall have seven to nine (7~9) Directors.

The election of the Directors shall adopt the candidate nomination system provided in the Article 192-1 of the Company Law. The shareholders shall elect the Directors from the list of candidates announced by the Company. The related matters shall be processed according to the relevant regulations.

The total number of shares that should be held by all Directors of the first paragraph shall be subject to the provision established by the Securities Management Institution.

Article 16

The Directors shall be elected at the Shareholders' Meeting from competent persons in accordance with law provisions. They shall have a three-year term of office and are eligible for re-election. The Directors may, according to Article 199 of the Company Law, be discharged at any time by a resolution passed at a Shareholders' Meeting.

Article 17

There should be three (3) Independent Directors of the total number of directors as stipulated in Article 15.

Independent and non-independent directors shall be elected at the same time with respective eligible numbers.

The professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, method of nomination and election and any other matters as required with respect to independent directors shall be in compliance with Securities and Exchange Act and the related regulations.

Article 18

The Directors shall constitute the Board. The Chairman shall be elected at a meeting attended by at least two thirds (2/3) or more of the entire Directors and by a simple majority vote of the Directors present at the meeting and may also elect a Vice Chairman in the same manner.

The Chairman of the Board of Directors shall internally preside at the Meetings of Shareholders and Meetings of the Board of Directors, and shall externally represent the Company. When the Chairman is on leave of absence or cannot exercise its job for any cause, agency of his/her job shall be handled in accordance with Article 208 of the Company Law.

Article 19

When the number of vacancies in the Board of Directors equals to one third (1/3) of the total number of Directors, the Board of Directors shall convene an Extraordinary Shareholders' Meeting for election of supplementary Directors within sixty (60) days of such occurrence in accordance with the laws. The term of office of the supplementary Directors shall be limited to make up the original term of office.

When an independent director is discharged for any reason, resulting in a shortage of number of directors required under paragraph 1 of Article 17, a by-election for independent director shall be held at the next following shareholders' meeting. When all independent directors have been discharged, the Board of Directors shall convene a shareholders' meeting for by-election within sixty (60) days of such occurrence.

Article 20

For execution of business of the Company, apart from items that are separately specified in related laws or the Articles of Incorporation to be resolved at the Shareholders' Meeting, all items shall be resolved by the Board of Directors.

Article 21

The Company shall establish an audit committee according to Article 14-4 of the Securities and Exchange Act. The exercise of Audit Committee and its members' duties and authorizations and matters relating thereto, shall be in compliance with Securities and Exchange Act and the related regulations.

Article 22

The meeting of the Board of Directors of the Company shall be informed to each

Director with a notice stating matters to be discussed seven (7) days prior to convening such meeting. Nevertheless, in case of emergency, the said meeting may be convened immediately.

The notice set forth in the preceding paragraph may be served in the form of written document, e-mail or fax.

The meeting of the Board of Directors shall be attended by the Directors personally. Where a Director is unable to attend a meeting, he or she may authorize another Director to attend on his or her behalf by issuing a power of attorney specifying the notified matters and the ambit of the authorization. Each Director shall only accept one proxy.

Unless otherwise provided under the related regulations or this Articles of Incorporation, resolutions of the Board of Directors shall be adopted by the approval of a majority of the Directors in a meeting attended by a majority of all the Directors.

A meeting of the Board of Directors may be conducted through video conference, and the Directors who participate in video shall be deemed to have attended the meeting in person.

Article 23

The remuneration of the Directors is authorized to be resolved by the Board of the Directors according to their level of participation of the Company's operation and their value of contribution as well as the normal standard of the industry.

Article 24

The Company may take out liability insurance for all Directors during their terms of offices to cover their legal liability for damages arising from their performance of duties.

The Company may also indemnify within a certain amount to Director(s), who is (are) liable to pay compensation or legal expense, except for those caused by their intentional or gross negligence acts or by a suit brought in accordance with a resolution of the Shareholders' Meeting.

The so-called "a certain amount" in the preceding paragraph is authorized to be resolved by the Board of Directors according to the actual situations.

Article 25

An Audit Division is to be set up under the Board of Directors to perform internal audits with independent and objective spirit, and to report to the Board of Directors on regular basis.

A Chief Auditor shall be appointed to the Audit Division. The appointment, discharge or transfer of the Chief Auditor shall be concurred by more than two thirds (2/3) of the entire directors.

The Audit Division may have one or more auditors. The appointment of auditors shall be proposed by the Chief Auditor and approved by the Chairman of the Board of Directors.

Article 26

The company may appoint managers. Appointment, discharge and the remuneration of the managers shall be made in accordance with the provisions of Article 29 of the Company Law.

Chapter 5 ACCOUNTING

Article 27

Fiscal year of the Company falls between January 1st and December 31st of each year. Before the commencement of each fiscal year, budget and business plan shall be submitted to the Board of Directors Meeting for approval.

Article 28

After the end of each fiscal year of the Company, the Board of Directors shall prepare the following reports and submit in accordance with legal procedures for approval by the shareholders at the Annual General Meeting:

• Business report.
• Financial statements.
• Proposal for profit distribution or loss restitution.

Article 29

Any profit made by the Company for each fiscal year shall, after deduction of tax, be applied firstly towards making up any losses incurred by the Company in the previous years, secondly retaining twenty (20) percent of the balance thereof as legal reserve, then setting aside or release special reserve in accordance with regulations and adding previous retained earnings for the Board of Directors to make proposal for distribution for resolution by the Shareholders' Meeting. However, from the amount of profit to be distributed, employees' bonus shall be set at point five (0.5) percent to five (5) percent and the remuneration of the Directors shall not exceed one (1) percent thereof.

Shareholders' dividend may be distributed in cash dividend and stock dividend, with the cash dividend not less than fifty (50) percent of the total amount of distribution.

With respect to employees' bonus of paragraph 1, it may be distributed in cash or stock as resolved by the Shareholders' Meeting.

Chapter 6 MISCELLANEOUS

Article 30

The Company may set up executing units in accordance with business needs where their rule and regulation shall be separately stipulated.

The Board of Directors may set up functional committees in accordance with regulations or business needs. Their Charters shall be made by the Board of Directors.

Article 31

Any matter not provided for by this Articles of Incorporation shall be subject to the Company Law and related regulations.

Article 32

Various operation procedures of the Company shall be separately stipulated by the President where substantial rule and regulation shall be reported to the Board of Directors for approval.

Article 33

This Articles of Incorporation entered into force from the date resolved by the Shareholders' Meeting and the same procedure shall apply when it is revised.

History of Amendments of "Central Reinsurance Corporation's Articles of Incorporation"

1. These Articles were originally established on October 26, 1967.

2. 1. The 1st to the 23rd amendments were made between January 18, 1972 and October 26, 2005.
3. 1. The 24th amendment was made on June 15, 2007.
4. 1. The 25th amendment was made on June 13, 2008.
5. 1. The 26th amendment was made on June 18, 2010.
6. 1. The 27th amendment was made on June 15, 2012.
7. 1. The 28th amendment was made on June 13, 2013.
8. 1. The 29th amendment was made on June 11, 2014.

CENTRAL REINSURANCE CORPORATION RULES FOR PROCEDURE OF THE SHAREHOLDERS' MEETING

Article 1

The shareholders' meetings of Central Reinsurance Corporation (hereinafter referred to as "the Company") shall be conducted pursuant to these Rules.

For matters not prescribed in these Rules, except where explicitly prescribed by Company Law, the Company's Articles of Incorporation, and other laws and regulations, the chairman shall decide such matters.

Article 2

The attending shareholders or shareholders attending through proxies (hereinafter referred to as "the Shareholders") shall hand over check-in cards in lieu of signing in.

The number of shares for attending the meeting shall be counted according to the delivered check-in cards.

Where an institutional shareholder is delegated to attend the shareholders' meeting, such institutional shareholder shall only appoint one (1) representative to attend the meeting.

Article 3

Quorum and votes of shareholders' meeting shall be counted on the basis of number of shares.

Article 4

Venue of the shareholders' meeting shall be at the place where the Company is located or at any other place where it is convenient for the Shareholders to attend and is suitable for the meeting to be conducted. The meeting shall commence not earlier than 09:00 A.M. or not later than 03:00 P.M.

Article 5

Except where prescribed by laws and regulations, the Board of Directors shall convene shareholders' meetings.

All Shareholders shall be notified thirty (30) days in advance of an annual general shareholders' meeting. All Shareholders shall be notified fifteen (15) days in advance of an extraordinary shareholders' meeting.

Those Shareholders who hold less than 1,000 shares of stock may be notified by means of posting a public announcement on the Market Observation Post System of Taiwan Stock Exchange Corporation.

The subject matters of the meeting shall be explicitly stated in notices and the public announcement. When permitted by the recipients, notification may be done through electronic means.

Article 6

The Shareholders holding at least one percent (1%) of the total number of issued shares of the Company may submit written proposal for discussion in an annual general shareholders' meeting to the Company.

Before the closure of transferring stocks of an annual general shareholders' meeting, the Company shall publicly announce its readiness for acceptance of Shareholders' proposals, its place of acceptance and period of acceptance. The period of acceptance may not be shorter than ten (10) days.

The Shareholders' proposal shall be included in the agenda and stated in the subject of the notification when none of the following circumstances as reviewed by the Board applies:

• 1. The proposal is not a matter that may be resolved by shareholders' meeting.
• 1. The proposing Shareholder holds less than one percent (1%) of issued shares at the time of closure of transferring stocks prior to the shareholders' meeting.
• 1. The proposal was not submitted during the acceptance period publicly announced in the forgoing paragraph.
• 1. The proposing Shareholder has submitted more than one (1) proposal, or the proposal exceeds three hundred (300) words (including punctuations), or the proposal was not submitted in writing.

The Company shall notify the Shareholders who submitted proposals of the result of processing the proposal prior to the notification of the shareholders' meeting. With regard to the Shareholders' proposals not included in the meeting agenda, the Board shall state in the meeting handbook of the reason why such proposal was not included; No additional agenda will be included and there will not be any reference in the meeting minutes.

If the Shareholders' proposals included in the meeting agenda according to the Paragraph 3 are similar proposals or are similar to the proposal of the Board of Directors, the chairman shall group the proposals and apply Article 25 of these Rules.

Article 7

The Shareholders who cannot attend a shareholders' meeting in person may issue a proxy printed by the Company stating ambit of authorization to a designated person to attend.

The Shareholders attend a shareholders meeting by proxy shall conduct pursuant to the Company Law and relevant regulations.

Article 8

A meeting handbook shall be prepared when a shareholders' meeting is convened. The meeting handbook and other relevant information concerning the meeting shall be publicly announced.

Time and manner of the public announcement of the preceding paragraph, main provisions of the meeting handbook and other compliance requirements should be processed in accordance with the Regulations Governing Content and Compliance Requirements for Shareholders' Meeting Agenda Handbooks of Public Companies.

Article 9

Chairman of the Board shall serve as chairman of a shareholders' meeting convened by the Board. If the Chairman has taken leave or cannot act for any reason, the Vice Chairman shall act in his stead. If the Chairman and Vice Chairman have both taken leave or cannot act for any reason, the Chairman shall designate one director to act on his behalf. If the Chairman has not designated any director to act as chairman, the directors shall elect one from themselves to serve as the meeting chairman.

When a shareholders' meeting has been convened by a person with convening powers other than the Board, the convener shall serve as the chairman. If there are two or more conveners, they shall elect one from themselves to serve as the chairman.

Article 10

The Company may designate commissioned lawyers, certified public accountants, or other relevant personnel to present the shareholders' meeting in a non-voting capacity.

Article 11

The Company shall make an audio or video recording of the entire proceedings of the shareholders' meeting, and shall preserve the recording for at least one (1) year.

The staffs relating to the affairs of the meeting (including security personnel) shall wear identification tags or badges.

Article 12

Chairman of the meeting shall declare the meeting open when it's time for meeting. However, chairman of the meeting may declare postponement of the meeting provided that the Shareholders represent not more than half of total number of issued shares, but such postponements are limited to twice and the total postponement time shall not be more than one (1) hour. If twice postponements cannot still constitute a majority, but the Shareholders represent over one third of the total number of issued shares, a tentative resolution may be passed by a majority of those present pursuant to the Paragraph 1 of the Article 175 of the Company Law.

If the Shareholders have been up to more than half of total number of issued shares before the conclusion of that meeting, the chairman may make the proposition to resolve such tentative resolution by vote pursuant to Article 174 of the Company Law.

Article 13

Where a shareholders' meeting is convened by the Board of Directors, its agenda shall be arranged by the Board of Directors. Moreover, the meeting shall proceed on the basis of arranged agenda and cannot be changed without the resolution at the shareholders' meeting.

Where a shareholders' meeting is called by a convener who is entitled to call such meeting other than the Board of Directors, the preceding Paragraph shall be mutatis mutandis applicable.

Unless it has been duly resolved, chairman of the meeting shall not declare the meeting adjourned at discretion before the agenda as set forth in the preceding two Paragraphs (including motions) have been concluded.

After the meeting is over, the Shareholders shall not elect another chairman to preside to continue the meeting at the same place or any other place. However, if the chairman announces adjournment in violation of the Rules, then based on the consent of more than half of the voting rights of attending Shareholders one person shall be elected as the chairman to continue the meeting.

Article 14

Any Shareholder shall, before speaking at the meeting, present a speaking memo stating summary, shareholder A/C number (or attendance certificate number) and A/C name. Speaking sequence shall be arranged by the chairman of the meeting.

In the event that a Shareholder only presents a speaking memo, but he/she doesn't speak at the meeting, it shall be deemed that he/she speaks nothing at the meeting. If the speaking contents are not same as those indicated on the speaking memo, only the former shall be considered.

When a Shareholder is speaking, other Shareholders may not interfere by speaking unless being authorized by chairman or the Shareholder who is speaking. Chairman shall stop such violation.

Article 15

An attending Shareholder may question about report items on the agenda only after the chairman or person designated by the chairman has read or reported all report items. Each Shareholder may speak once concerning all report items and each instance may not exceed five (5) minutes.

When an attending Shareholder speaks with regard to the matters for recognition and discussion listed on the agenda, and to the motions made in the extraordinary motion session, each Shareholder shall speak no more than twice concerning each motion and each proposition and not exceeding five (5) minutes each time without obtaining the consent of the chairman.

Where a Shareholder speaks over the prescribed time limit or exceeds the bounds of the issue at hand, the chairman is entitled to stop such speaking. The chairman may direct disciplinary personnel (or security personnel) to take necessary measures to maintain order in the meeting place or ensure the smooth progress of the meeting if a speaker still refuses to stop talking or other interfering circumstances occur.

Article 16

When government or an institutional shareholder sends two or more representatives to attend a shareholders' meeting, only one person may speak on each proposition.

Article 17

After an attending Shareholder has spoken, the chairman may personally respond, or designate another relevant person to do so.

Article 18

The chairman may announce an intermission at an appropriate time during a shareholders' meeting.

Article 19

The chairman may announce an end of discussion and put the proposition to a vote when the chairman considers it has reached the extent for making a resolution.

Article 20

Except where prescribed by laws and regulations or the Articles of Incorporation of the Company, a Shareholder shall have one voting right for each share.

Article 21

Except where prescribed by laws and regulations or the Articles of Incorporation of the Company, a resolution shall be adopted by a majority vote by attending Shareholders.

When a proposition is to be resolved, it may be passed by applause after the chairman finds that there is no objection; its effectiveness shall be same as resolved by voting. When any Shareholder expresses objection, the resolution shall be decided by voting.

Article 22

When a proposition is put to a vote, the chairman shall direct two (2) ballot supervising personnel and several ballot counting personnel to perform duties. However, such ballot supervising personnel must be a Shareholder of the Company.

The result of voting shall be reported on the spot and recorded. Ballot supervising personnel shall seal the ballots, and shall turn them over to the Company for preservation after signing or affixing their seals on them.

Article 23

A ballot shall be deemed invalid when all ballot supervising personnel concur that one of the following situations applies:

• 1. The ballot used was not prepared by the Board.
• 1. A blank ballot has been placed in the ballot box.
• 1. The ballot is illegible due to damage or indistinct writing.
• 1. The ballot has been altered or bears extraneous written text or symbols.
• 1. Both consent and oppose have been marked.

Article 24

If a Shareholder disputes any matters such as the voting process, the ballot counting

method or the validity of ballots, the ballot supervising personnel shall state the Shareholder's account number, the number of voting rights, and the subject of the dispute, then sign or seal for preservation.

Article 25

If there shall be an amendment or alternative to one proposition, the chairman may combine the amendment or alternative into the original proposition and determine their orders for resolution. If one of the above shall be resolved, the others shall be considered as rejected, upon which no further resolution shall be required.

Article 26

The deliberation conducted at a shareholders' meeting shall be recorded in the meeting minutes. The contents and distribution of minutes shall be in accordance with Article 183 of the Company Law and the minutes of shareholders' meetings must be preserved as long as the Company is in existence.

Article 27

The chairman may ask disciplinary or security personnel to help maintain order at a meeting.

Article 28

The Rules shall take effect after been passed by the shareholders' meeting and the same procedure shall apply when they are revised.

Article 29

The Rules were duly established on February 20, 1998;

The 1st amendment was made on September 29, 1998;

The 2nd amendment was made on October 24, 2000;

The 3rd amendment was made on June 25, 2002;

The 4th amendment was made on June 9, 2006;

The 5th amendment was made on June 13, 2008;

The 6th amendment was made on June 15, 2011;

The 7th amendment was made on June 15, 2012.

CENTRAL REINSURANCE CORPORATION

Procedures for Use of the Company's funds in Special Projects, Public Utilities and Social Welfare Enterprises

Article 1 Purpose

The Procedures are formulated to set up the procedures for use of the Company's fund in special projects, public utilities and social welfare enterprises, as well as to enhance the risk management and to ascertain public disclosure.

Article 2 Accordance

The Procedures are set forth in accordance with the "Regulations Governing Use of Insurer's Fund in Special Projects, Public Utilities and Social Welfare Enterprises" (the Regulations) published by the Financial Supervisory Commission (FSC).

Article 3 The Scope of Investment in Special Projects

Use of the Company's funds for special projects shall be restricted to investments in or extension of loans for the following projects:

• 1. Emerging and key strategic projects or venture investment projects approved by the government.
• 1. Industrial zone or regional development projects approved by the government.
• 1. Purchase of houses by the houseless.
• 1. Cultural and educational conservation and construction.
• 1. Funeral facilities not distributed as public utilities listed in Article 4.
• 1. Other use in line with the government policies.

Article 4 The Scope of Investment in Public Utilities

Use of the Company's funds for public utilities shall be restricted to the following utilities:

• 1. Transportation facilities of highways, railroads, harbors, parking lots and airports.
• 1. Facilities of public utilities, such as water, electricity, telecommunications, etc.
• 1. Public housing construction, social housing and elderly residence projects.
• 1. Environmental protection facilities, including river, sewerage, garbage and waste disposal, and funeral facilities.
• 1. Construction of public-welfare facilities for public recreation.

• Other public utilities as promoted by the government or in line with the government's construction projects.

Article 5 The Scope of Investment in Social Welfare Enterprises

Use of the Company's funds for social welfare business is limited to the business for social welfare operation that is established in accordance with the authorization of the competent authorities and the necessary facilities, including social assistance, welfare services, employment, social insurance, and healthcare.

Article 6 The Restrictions of Investment Targets in Special Projects, Public Utilities and Social Welfare Enterprises

The investment targets of the Company's fund in special projects, public utilities and social welfare enterprises, shall be profitable and restricted to such companies limited by shares that are incorporated and registered in accordance with the Company Act, with the exception of such development, construction projects, loans and investments as are in line with the government policies.

Investments in funeral facilities in accordance with the Procedures shall be restricted in the facilities which their managers shall be evaluated by municipal or county (city) competent authority and receive a grade of above "B".

Article 7 The Limitation of Investment Amount

For risk control purpose, with the exception of decrees otherwise provided by the competent authority or government, the investment amount of special projects, public utilities and social welfare enterprises shall not exceed the following limits:

• 1. The total amount shall not exceed 10% of the Company's total funds.
• 1. The total amount invested in one and the same entity shall not exceed 5% of the Company's total funds.
• 1. The total amount invested in one and the same investee shall not exceed 10% of the paid-in capital or the total issued shares of the invested entity; where the invested entity is a venture investment enterprise, such amount shall not exceed 25% of the paid-in capital of the invested entity; where the investment is made onto an enterprise with the items enumerated under Article 4 and 5, such amount shall not exceed 45% of the paid-in capital of the invested entity.
• 1. In case of securitization products issued aiming at the contents set forth in Article 4 and 5 as the target, the Company may invest within the limit of 10% of the total amount of the securitization products, free of the restriction of the investment ratio

set forth in the preceding paragraph.

1. Where the said entity is qualified to accept investments under Subparagraph 3 or 4 of Paragraph 1 of Article 146-1 of the Insurance Act, the investments in such entity shall be governed by the provisions of the said Subparagraph instead, provided that if the said investment exceeds such limits as are prescribed in Subparagraph 3 or 4 of Paragraph 1 of Article 146-1 of the Insurance Act instead, provided that if the said investment exceeds the ratio as prescribed in Subparagraph 3 or 4 of Paragraph 1 or Paragraph 2 of Article 146-1 of the Insurance Act, no additional funds shall be invested in the entity unless the additional investment is made to maintain the original equity share in the entity.

Article 8 Evaluation and Operating Procedures

The evaluation procedures of investing in special projects, public utilities and social welfare enterprises shall include the following documents:

• 1. Investment plan and objectives (including objectives, method, market analysis, cost analysis, analysis of long-term and short-term return on investment, composition of shareholders and management team).
• 1. Details of the funds used for the special project or public utilities or social welfare enterprises, and analysis of return (including analysis of return on investment in each phase with explanatory notes)
• 1. Financial statements of the invested entity.

Article 9 Risk-Based Capital Ratio

The Company engaging in the investment set forth in preceding Paragraph, the risk-based capital ratio thereof should comply with the provisions of Paragraph 1 of Article 143-4 of the Insurance Act.

Article 10 Circumstances that the Company May Invest in Special Projects or Public Utilities or Social Welfare Enterprises Directly without Getting the Approval of the Competent Authority

In any of the following circumstances, the board of directors delegates the Chairman to decide the investments in special projects or public utilities or social welfare enterprises without going through the application procedure, and have the decisions subsequently submitted to and ratified by the board of directors meeting. Then the Company shall submit the documents set forth in Article 8 to the competent authority for subsequent review; otherwise the investment shall be submitted to the board of directors for resolution and the competent authority for approval:

• 1. The Company increases its monetary investment in an entity for such project as has been approved by the competent authority, without increasing its original share in the total investment in the project
• 1. The invested entity is a venture investment enterprise qualified to receive guidance and/or assistance from the central competent authority according to the Regulations for the Guidelines for Venture Capital Businesses, and the total amount that the Company invests in one and the same entity is less than NT\$100 million and less than 5% of the paid-in capital of the Company.
• 1. The invested entity is not such an enterprises as is specified in the preceding Subparagraph and the total amount that the Company invests in one and the same entity is less than NT\$50 million and less than 2% of the paid-in capital of the Company.

Article 11 Segregation of Duties

The division of duties in regard to an investment in special project or public utilities or social welfare enterprises is as follows, and each unit's personnel may not serve concurrently in other units:

• 1. The Investment Department: To execute and control transactions, and to evaluate the counterparty and the performance of transactions.
• 1. The Accounting Department: To be responsible for the relative accounting treatment.
• 1. The Finance Department: To control the risk, and be responsible for the settlement and custody operation.

Article 12 The Determination Procedures of Trading Terms

With the exception of such development and construction projects, loans and investments which are in line with the government policies, the Investment Department shall conduct market assessment and analysis to elaborate the trading terms (decision and reference of price) with counterparties for investments in special project, public utilities and social welfare enterprises. Transactions shall be approved in accordance with the table governing the delegation of authority and responsibility and shall follow the provisions of the operating procedures of acquisition and disposal of assets.

Article 13 Internal Control System

When the Company invests in special project, public utilities and social welfare enterprises, the Investment Department shall submit investment or after loan management report every year to track the operation of invested entity and to analyze the return of investment based on duration, as a basis for performance evaluation.

Article 14 Designated Senior Management Personnel Shall Report the Performance to the Board of Directors Periodically

Designated senior management personnel shall report the performance of special project, public utilities and social welfare enterprises to the board of directors every year.

Article 15 Effectiveness

The Procedures, as well as the amendment thereof, shall be submitted to the Audit Committee for approval, the Board of Directors for resolution to become effective, and to the competent authority for reference and to shareholders' meeting.

The History of "Procedures for Use of the Company's funds in Special Projects, Public Utilities and Social Welfare Enterprises"

• 1. The Procedures was made on April 23, 2008.
• 1. The 1st amendment was made on June 13, 2008.
• 1. The 2nd amendment was made on March 23, 2011.
• 1. The 3rd amendment was made on March 25, 2013.
• 1. The 4th amendment was made on August 20, 2014.

CENTRAL REINSURANCE CORPORATION

Ethical Corporate Management Best Practice Principles

Article 1

Central Reinsurance Corporation (the "Company") has established these principles in order to foster a corporate culture of ethical management and sound development according to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies.

Article 2

When engaging in commercial activities, directors, managers, employees, mandataries of the Company or persons having substantial control over the Company ("the personnel of the Company; persons having substantial control hereinafter referred to as substantial controllers") shall not directly or indirectly offer, promise to offer, request or accept any improper benefits, nor commit unethical acts including breach of ethics, illegal acts, or breach of fiduciary duty ("unethical conduct") for purposes of acquiring or maintaining benefits.

Parties referred to in the preceding paragraph include civil servants, political candidates, political parties or members of political parties, state-run or private-owned businesses or institutions, and their directors, supervisors, managers, employees or substantial controllers or other stakeholders.

Article 3

"Benefits" in these Principles means any valuable things, including money, endowments, commissions, positions, services, preferential treatment or rebates of any type or in any name. Benefits received or given occasionally in accordance with accepted social customs and that do not adversely affect specific rights and obligations shall be excluded.

Article 4

The Company shall comply with the Company Act, Securities and Exchange Act, Business Entity Accounting Act, Political Donations Act, Anti-Corruption Act, Government Procurement Act, Act on Recusal of Public Servants Due to Conflicts of Interest, TWSE/GTSM listing rules, or other laws or regulations regarding commercial activities, as the underlying basic premise to facilitate ethical corporate management.

Article 5

The Company shall abide by the operational philosophies of honesty, transparency and responsibility, base policies on the principle of good faith and establish good corporate governance and risk control and management mechanism so as to create an operational environment for sustainable development.

Article 6

The Company shall in their own ethical management policy clearly and thoroughly prescribe the specific ethical management practices and the programs to forestall unethical conduct ("prevention programs"), including operational procedures, guidelines, and training in accordance with the local relevant laws and regulations of the territories where the company operates.

Article 7

When establishing the prevention programs, the Company shall analyze which business activities within their business scope which are possibly at a higher risk of being involved in an unethical conduct, and strengthen the preventive measures.

The prevention programs adopted by the company shall at least include preventive measures against the following:

• 1. Offering and acceptance of bribes.
• 1. Illegal political donations.
• 1. Improper charitable donations or sponsorship.
• 1. Offering or acceptance of unreasonable presents or hospitality, or other improper benefits.
• 1. Misappropriation of trade secrets and infringement of trademark rights, patent rights, copyrights, and other intellectual property rights.
• 1. Engaging in unfair competitive practices.
• 1. Direct or indirect damage to the interests of consumers or other interested parties when the service is provided.

Article 8

The Company shall clearly specify in the rules and external documents the ethical corporate management policies and the commitment by the board of directors and the management on rigorous and thorough implementation of such policies, and shall carry out the policies in internal management and in commercial activities.

Article 9

The Company shall engage in commercial activities in a fair and transparent manner based on the principle of ethical management.

Prior to any commercial transactions, the Company shall take into consideration the legality of their agents, suppliers, clients, or other trading counterparties and whether any of them are involved in unethical conduct, and shall avoid any dealings with persons so involved.

When entering into contracts with their agents, suppliers, clients, or other trading counterparties, the Company shall include in such contracts terms requiring compliance with ethical corporate management policy and that in the event the trading counterparties are involved in unethical conduct, the Company may at any time terminate or rescind the contracts.

Article 10

When conducting business, the Company and the personnel of the Company may not directly or indirectly offer, promise to offer, request, or accept any improper benefits in whatever form to or from clients, agents, contractors, suppliers, public servants, or other stakeholders.

Article 11

When directly or indirectly offering a donation to political parties or organizations or individuals participating in political activities, the Company and the personnel of the Company shall comply with the Political Donations Act and their own relevant internal operational procedures, and shall not make such donations in exchange for commercial gains or business advantages.

Article 12

When making or offering donations and sponsorship, the Company and the personnel of the Company shall comply with relevant laws and regulations and internal operational procedures, and shall not surreptitiously engage in bribery.

Article 13

The Company and the personnel of the Company shall not directly or indirectly offer or accept any unreasonable presents, hospitality or other improper benefits to establish business relationship or influence commercial transactions.

Article 14

The Company and the personnel of the Company shall observe applicable laws and regulations, the Company's internal operational procedures, and contractual provisions concerning intellectual property, and may not use, disclose, dispose, or damage intellectual property or otherwise infringe intellectual property rights without the prior consent of the intellectual property rights holder.

Article 15

The Company shall engage in business activities in accordance with applicable competition laws and regulations and shall not engage in unfair competition.

Article 16

In the course of services, the Company and the personnel of the Company shall

observe applicable laws and regulations and international standards to ensure the transparency of information about, and safety of their services. They shall also adopt and publish a policy on the protection of the rights and interests of consumers or other stakeholders, and carry out the policy in their operations, with a view to preventing their services from directly or indirectly damaging the rights and interests of consumers or other stakeholders.

Article 17

The personnel of the Company shall exercise the due care of good administrators to urge the Company to prevent unethical conduct, always review the results of the preventive measures and continually make adjustments so as to ensure thorough implementation of its ethical corporate management policies.

To achieve sound ethical corporate management, the Auditing Division is responsible for establishing and supervising the implementation of the ethical corporate management policies and prevention programs. They shall be in charge of the following matters, and the Auditing Division shall report to the board of directors on a regular basis:

• 1. Assisting in incorporating ethics and moral values into the Company's business strategy and adopting appropriate prevention measures against corruption and malfeasance to ensure ethical management in compliance with the requirements of laws and regulations.
• 1. Adopting programs to prevent unethical conduct and setting out in each program the standard operating procedures and conduct guidelines with respect to the Company's operations and business.
• 1. Planning the internal organization, structure, and allocation of responsibilities and setting up check-and-balance mechanisms for mutual supervision of the business activities within the business scope which are possibly at a higher risk for unethical conduct.
• 1. Promoting and coordinating awareness and educational activities with respect to ethics policy.
• 1. Developing a whistle-blowing system and ensuring its operating effectiveness.
• 1. Assisting the board of directors and management in auditing and assessing whether the prevention measures taken for the purpose of implementing ethical management are effectively operating, and preparing reports on the regular assessment of compliance with ethical management in operating procedures.

Article 18

The personnel of the Company shall comply with laws and regulations and the prevention programs when conducting business.

Article 19

The Company shall adopt policies for preventing conflicts of interest to identify, monitor, and manage risks possibly resulting from unethical conduct, and shall also offer appropriate means for directors, managers, and other stakeholders attending or present at board meetings to voluntarily explain whether their interests would potentially conflict with those of the Company.

When a proposal at a given board of directors meeting concerns the personal interest of, or the interest of the juristic person represented by, any of the directors, managers, and other stakeholders attending or present at board meetings of the Company, the concerned person shall state the important aspects of the relationship of interest at the given board meeting. If his or her participation is likely to prejudice the interest of the Company, the concerned person may not participate in discussion of or voting on the proposal and shall recuse himself or herself from the discussion or the voting, and may not exercise voting rights as proxy for another director. The directors shall practice self-discipline and must not support one another in improper dealings.

The personnel of the Company shall not take advantage of their positions or influence in the companies to obtain improper benefits for themselves, their spouses, parents, children or any other person.

Article 20

The Company shall establish effective accounting systems and internal control systems for business activities possibly at a higher risk of being involved in an unethical conduct, not have under-the-table accounts or keep secret accounts, and conduct reviews regularly so as to ensure that the design and enforcement of the systems are showing results.

The Auditing Division of the Company shall periodically examine the Company's compliance with the foregoing systems and prepare audit reports and submit the same to the board of directors. The auditing office may engage a certified public accountant to carry out the audit, and may engage professionals to assist if necessary.

Article 21

The Company shall establish operational procedures and guidelines to guide the personnel of the Company on how to conduct business. The procedures and guidelines should at least contain the following matters:

• 1. Standards for determining whether improper benefits have been offered or accepted.
• 1. Procedures for offering legitimate political donations.
• 1. Procedures and the standard rates for offering charitable donations or sponsorship.
• 1. Rules for avoiding work-related conflicts of interests and how they should be reported and handled.
• 1. Rules for keeping confidential trade secrets and sensitive business information obtained in the ordinary course of business.
• 1. Regulations and procedures for dealing with suppliers, clients and business transaction counterparties suspected of unethical conduct.
• 1. Handling procedures for violations of these Principles.
• 1. Disciplinary measures on offenders.

Article 22

The chairman, president, or senior management of the Company shall communicate the importance of corporate ethics to the directors, employees, and mandataries on a regular basis.

The Company shall periodically organize training and awareness programs for the personnel of the company and invite the Companies' commercial transaction counterparties so they understand the Companies' resolve to implement ethical corporate management, the related policies, prevention programs and the consequences of committing unethical conduct.

The Company shall apply the policies of ethical corporate management when creating their employee performance appraisal system and human resource policies to establish a clear and effective reward and discipline system.

Article 23

The Company shall adopt a concrete whistle-blowing system and scrupulously operate the system. The whistle-blowing system shall include at least the following:

• 1. An independent mailbox or hotline, either internally established and publicly announced or provided by an independent external institution, to allow internal and external personnel of the Company to submit reports.
• 1. Dedicated personnel or unit appointed to handle whistle-blowing system. Any tip involving a director or senior manager shall be reported to the independent directors. Categories of reported misconduct shall be delineated and standard operating procedures for the investigation of each shall be adopted.
• 1. Documentation of case acceptance, investigation processes, investigation results, and relevant documents.
• 1. Confidentiality of the identity of whistle-blowers and the content of reported cases.
• 1. Measures for protecting whistle-blowers from inappropriate disciplinary actions due to their whistle-blowing.
• 1. Whistle-blowing incentive measures.

When material misconduct or likelihood of material impairment to the Company comes to their awareness upon investigation, the dedicated personnel or unit handling the whistle-blowing system shall immediately prepare a report and notify the independent directors in written form.

Article 24

The Company shall adopt and publish a well-defined disciplinary and appeal system for handling violations of the ethical corporate management rules, and shall make immediate disclosure on the Company's internal website of the title and name of the violator, the date and details of the violation, and the actions taken in response.

Article 25

The Company shall collect quantitative data about the promotion of ethical management and continuously analyze and assess the effectiveness of the promotion of ethical management policy. The Company shall also disclose the measures taken for implementing ethical corporate management, the status of implementation, the foregoing quantitative data, and the effectiveness of promotion on the Company's website, annual reports, and prospectuses, and shall disclose these principles on the Market Observation Post System.

Article 26

The Company shall at all times monitor the development of relevant local and international regulations concerning ethical corporate management and encourage their directors, managers, and employees to make suggestions, based on which the adopted ethical corporate management policies and measures taken will be reviewed and improved with a view to achieving better implementation of ethical management.

Article 27

These principles shall be implemented after the audit committee and the board of directors grants the approval, and shall be reported at a shareholders' meeting. The same procedure shall be followed when the principles have been amended.

When these principles are submitted for discussion by the board of directors pursuant to the preceding paragraph, the board of directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. An independent director that cannot attend the board meeting in person to express objection or reservations shall provide a written opinion before the board meeting, unless there is some legitimate reason to do otherwise, and the opinion shall be specified in the minutes of the board of directors meeting.

History of "Ethical Corporate Management Best Practice Principles"

1. These Principles were originally established on December 24, 2014.

CENTRAL REINSURANCE CORPORATION

Procedures for Transaction of Financial Derivatives

Article 1 Accordance

The Procedures are set forth in accordance with the provisions of Article 11 of the "Regulations Governing Derivatives Transactions Conducted by Insurance Companies" and Paragraph 3 of Article 7 of the "Regulations Governing the Acquisition and Disposal of Assets by Public Companies".

Article 2 The Types of Derivatives That May be Traded

The term "financial derivatives" as used herein shall mean any forward contracts, option contracts, futures contracts, leveraged margin trading contracts, swap contracts, and the combination thereof with a worth derived from traditional financial market tools, including currency, bond, stock and foreign exchange.

The Company may engage in the above mentioned derivatives transactions for hedging purpose and any other tools approved by the competent authority.

Article 3 Operating and Hedging Strategies

The operating and hedging strategies for financial derivatives transactions are as follows:

• 1. To set the total amount of derivatives contracts that may be traded.
• 1. To conduct performance evaluation of financial derivatives periodically.
• 1. To strictly evaluate the credit situation and professional competence of counterparties.
• 1. All the transactions and relevant operation shall be in accordance with the "Insurance Act" and the relevant regulations.

Article 4 Segregation of Duties

Division functions in regard to the financial derivatives transactions made by the Company shall be as follows:

1. Monitoring Division:

2. (1)Board of Directors: Designate senior management personnel to pay continuous attention to monitoring and controlling financial derivatives trading risk. Periodically evaluate whether derivatives trading performance is consistent with established operational strategy and whether the risk undertaken is within the Company's permitted scope of tolerance.

3. (2)Senior management personnel authorized by the board of directors: Periodically evaluate the risk management measures currently employed are appropriate and are faithfully conducted in accordance with the Procedures. When irregular circumstances are found in the course of supervising trading and profit-loss circumstances, appropriate measures shall be adopted and a report immediately made to the board of directors.
4. (3)The Audit Division: Periodically audit the compliance of the Procedures for Derivatives Transactions as well as of the relevant laws and regulations.
5. 1. Operating Divisions
6. (1)The Investment Department: conduct financial derivatives transactions.
7. (2)The Finance Department: conduct settlement and confirmation of financial derivatives transactions, and periodical evaluation as well as risk assessment, monitoring and control.
8. (3)The Accounting Department: conduct accounting and book keeping procedure.

Article 5 Gross Contract Amount and The Maximum Loss Limit

Where the derivatives are held for hedging purpose, the aggregate nominal value of contracts thereof shall not exceed the aggregate book value of the hedged items.

The aggregate sum of premium, margin and other similar cost of financial derivatives transactions shall not exceed 10% of each investment.

If the financial derivatives transactions are based on hedging purpose, the relevant cost and gain/loss of forward currency transactions, currency swaps, cross currency swaps, interest rate swaps, futures, options and other transactions shall not be included in the computation as mentioned in the preceding paragraph.

Article 6 Performance Evaluation

The performance of derivatives transactions shall be evaluated based on the Company's hedging strategies.

Article 7 Authority Limits and Responsible Management Level

• 1. Each transaction shall be guided in accordance with the Company's table governing the delegation of authority and responsibility.
• 1. The board of directors authorizes the Chairman to determine the total amount of financial derivatives transactions.

Article 8 Transaction Procedure and Department in Charge

The operation procedures of Investment Department shall be as follows:

• 1. To confirm the transaction position.
• 1. To analyze and determine the relevant trend.
• 1. To determine the hedge method based on the specific investment target, counterparties, targeted price range and trading strategies.
• 1. To obtain the approval of transactions.
• 1. To execute transactions:
• (1) Counterparty: Discreetly evaluate the counterparty's management performance, financial status and professional competence and obtain the Chairman's approval in advance.
• (2) Dealers: Dealers executing financial derivatives transactions shall get the Chairman's approval in advance. Counterparties shall be informed that the persons who are not in the Company's Letter of Authorization are prohibited from trading.

The operation procedures of Finance Department shall be as follows:

• 1. Confirmation: The confirmation personnel shall confirm with the counterparty whether the transaction terms are in accordance with deal notice and obtain relevant supervisory ratification.
• 1. Settlement: Once the trade is confirmed correctly, the settlement personnel shall perform the delivery on settlement date.
• 1. Risk management: the personnel responsible for the risk management is in charge of identification, assessment, monitoring and reporting of transaction risks.

Article 9 Public Disclosure

The Accounting Department shall compile monthly reports on the status of

derivatives trading engaged in up to the end of the preceding month and enter the information in the prescribed format into the information reporting website designated by the Financial Supervisory Commission(hereinafter referred to as the "FSC") by the 10th day of each month.

When losses from derivatives trading reaching the limits set out in the Procedures, the Finance Department shall publicly announce and report the relevant information on the FSC's designated website within 2 days commencing immediately from the date of occurrence of the event.

Article 10 Accounting system

The Accounting system of financial derivatives transactions shall be set forth in accordance with "Rules for the Preparation of Financial Reports by Insurance Institutions" and the "Generally Accepted Accounting Principles".

Article 11 Risk Management System

The risk identification, assessment, response, monitoring and analysis of financial derivatives transactions shall be done according to the Company's "Operation Guidelines for Investment Risk Management". These risks as below shall be noted:

• 1. Credit Risk: Credit risk is controlled by restricting the counterparties principally to those who have banking relationship with the Company or are internationally renowned and can provide professional information.
• 1. Market Risk: Market risk arising from the fluctuations of interest rates and foreign exchange rates or from other factors shall be closely monitored and controlled.
• 1. Liquidity Risk: Liquidity risk shall be controlled by restricting counterparties to those who have adequate facility, sufficient information, and sizable trading capacity and capability to enter into transactions in any markets around the world. The financial derivatives transactions shall be restricted to standardized products that are listed in internationally notable exchanges or traded over the banks' counter.
• 1. Operational Risk: Authority limits and operating procedures shall be stipulated explicitly to avoid operational risk.
• 1. Legal Risk: Any legal documents, except standard contracts of banks, shall first be reviewed by legal personnel or legal counsel and be executed after going through administrative approval procedures.
• 1. System Risk: The Company shall execute the stop loss mechanism of financial derivatives transactions.
• 1. Cash Flow Risk: The Company shall maintain adequate level of cash to meet the cash settlement requirement in time.

Article 12 Risk Control Measures

Risk control measures taken by the Company for financial derivatives transactions shall be as follows:

• 1. Personnel engaged in derivatives trading may not serve concurrently in other operations such as confirmation and settlement.
• 1. Finance Department shall evaluate the financial derivatives positions at least twice per month. The evaluation reports shall be submitted to senior management personnel authorized by the board of directors and the president. The evaluating method and frequency shall be in accordance with "Rules for the Preparation of Financial Reports by Insurance Institutions" and the "Generally Accepted Accounting Principles".
• 1. With regard to risk assessment, monitoring and control, Finance Department shall periodically submit a performance report to the senior management personnel authorized by the board of directors.
• 1. Finance Department shall report to the soonest meeting of the board of directors including total and net amount of contracts with the obligations which have not become due, hedging and risk assessment reports on a regular basis.
• 1. Finance Department shall establish a log book in which details of the types and amounts of financial derivatives trading engaged in, board of directors' approval dates, and the matters required to be carefully evaluated and retain it at least for 5 years for reference.
• 1. When irregular circumstances are found in the course of supervising trading and profit-loss circumstances, the senior management personnel authorized by the board of directors shall adopt appropriate measures and report to the board of directors.

Article 13 Internal Audit System

The Audit Division shall audit whether all derivatives transactions are in compliance

with the Procedures monthly; and shall perform the following duties and prepare a quarterly audit report which shall be passed by the board of directors and submitted to the competent authority for reference:

• 1. To audit the compliance of the processing procedure for Derivatives Transactions as well as the relevant laws and regulations;
• 1. To audit the internal control measures, including the functions of internal checks and cross reference;
• 1. To assess the independence of the risk management operations and implementation of the risk limitation measures;
• 1. To verify the reliability of the sources of transaction documents and information; and
• 1. To audit the hedging effectiveness of the hedging derivatives transactions.

The deficiencies mentioned in the audit report shall be continually followed up until improved. If any severe violation is found, a written notice shall be submitted to the Audit Committee as well as the senior management personnel authorized by the board of directors.

Article 14 Transaction Limits

When conducting derivatives transactions, different transaction limits are designated according to counterparty's credit positions as follows:

• 1. The transaction maximum limit is 200 million US dollars for the counterparty with twAAA credit rating suggested by Taiwan Ratings Corp. or a AA- equivalent or higher credit rating suggested by internationally renowned rating agencies.
• 1. The transaction maximum limit is 100 million US dollars for the counterparty with twAA- equivalent or higher credit rating suggested by Taiwan Ratings Corp. or a A- equivalent or higher credit rating suggested by internationally renowned rating agencies.
• 1. The transaction maximum limit is 50 million US dollars for the counterparty with twA- equivalent or higher credit rating suggested by Taiwan Ratings Corp.

Article 15 Supplementary Provisions

Any amendment of the Procedures and any transaction involving major derivatives shall be approved by more than half of all Audit Committee members and submitted to the board of directors for a resolution

If approval of more than half of all Audit Committee members as required in the preceding paragraph is not obtained, the Procedures may be implemented if approved by more than two thirds of all directors, and the resolution of the Audit Committee shall be recorded in the minutes of the board of directors meeting.

The terms "all Audit Committee members" in paragraph 1 and "all directors" in paragraph 2 shall be counted as the actual number of persons currently holding those positions.

When the Procedures and a financial derivatives transaction are submitted for discussion by the board of directors, the board of directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting.

Article 16 Outstanding Issues

Any matter or event not mentioned in the context of the Procedures shall be in accordance with "Regulations Governing Derivatives Transactions Conducted by Insurance Companies" and the "Regulations Governing the Acquisition and Disposal of Assets by Public Companies".

Article 17 Effectiveness

Upon a resolution passed by the board of directors, the Procedures shall be given to each supervisor and shall become effective after ratification by the shareholders' meeting.

Any amendment of the Procedures shall be approved by the Audit Committee, the Board of Directors, and the Shareholders' Meeting thereafter.

The History of "Procedures for Transaction of Financial Derivatives"

• 1. The Procedures was made on October 15, 2002.
• 1. The 1st amendment was made on June 15, 2007.
• 1. The 2nd amendment was made on June 15, 2011.
• 1. The 3rd amendment was made on June 13, 2013.
• 1. The 4th amendment was made on June 11, 2014.

The Proposal from the Board of Directors about the Remuneration to Directors and Supervisors, and Bonus to Employees

1. Bonus to Employees in Cash: NT\$7,141,169.

Bonus to Employees in Stock: Nil.

Remuneration to Directors and Supervisors: NT\$2,878,000.

• 1. As the amount of employee bonus and remuneration of directors and supervisors proposed by the Board of Directors is different from the estimated number, the difference, reasons and measures should be disclosed as follows: none.
• 1. The amount of proposed distribution of employee stock bonus, and the size of such an amount as a percentage of the sum of the current after-tax net income and total employee bonus:Because it is not proposed distribution of employee stock bonus, this item is not applicable.
• 1. Recalculated EPS after distribution of employee bonus and directors & supervisors remuneration: Recalculated EPS after distribution of employee bonus and directors & supervisors remuneration is NT\$1.55, which is the same as the number on the Company's 2014 Financial Statements because the amount of employee bonus and remuneration of directors and supervisors proposed by the Board of Directors has already been estimated under aforementioned Statements.

CENTRAL REINSURANCE CORPORATION The Shares-holding Table of Directors

March 29, 2015

Title	Name	Shares
	Evergreen International Corp.
Chairman	Representative : Yang, Cheng-Tui	197,541,037
Vice Chairman	Evergreen International Corp.
	Representative : Chang, Kuo-Cheng
Director	Evergreen International Corp.
	Representative : Tai, Jiin-Chyuan
Director	Evergreen International Corp.
	Representative : Ku Lai, Mei-Hsueh
	Ministry of Finance, R.O.C.	126,502,689
Director	Representative : Lee, Yi-Fen
	Ministry of Finance, R.O.C.
Director	Representative : Chen, Kuan-Pao
Independent	Yau, Sea-Wain	0
Director
Independent	Tsen, Ron-Syou
Director
Independent	Chou, Yu-Cheng
Director
Total		324,043,726
	the minimum of shares held by Directors according to law	17,992,800