Central Re — AGM Information 2016

Jul 28, 2016

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Stock Code ： 2851

CENTRAL REINSURANCE CORPORATION

Minutes of the 2016 Annual General Meeting of Shareholders

May 27, 2016

(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.)

CENTRAL REINSURANCE CORPORATION Minutes of the 2016 Annual General Meeting of Shareholders

Date & Time ： 9:00 a.m., May 27, 2016 (Friday)

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

Chang Yung-Fa Foundation International Convention Center Room1002

Shareholders present ： Shareholders present by themselves (including electronic voting) or by proxy at the meeting represent 476,123,984 shares and account for 84.67% of the total issued shares of the Company which amount to 562,275,000 shares.

• Chairman ： Mr. Yang, Cheng-Tui

Secretary ： Ms. Chien, Wei-Tsen

• Attendants as guest ： Mr. Yau, Sea-Wain, Independent Director / Mr. Tsen, Ron-Syou, Independent Director / Mr. Chou, Yu-Cheng, Independent Director / Ms. Lee, Yi-Fen, Director / Mr. Chen, Kuan-Pao, Director / Mr. Tai, Jiin-Chyuan, Director/ Ms. Ku Lai, Mei-Hsueh, Director

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

B. Chairman’s Address ： Omitted.

C. Matters for Discussion ：

Submitted by the Board of Directors

Proposal: It is proposed to amend the “Articles of Incorporation” referring to the contrast table attached. (as the attached Page 4-6)

Explanation:

1. According to the amended Article 235 and 240 and new added Article 235-1 of the Company Law publicized by the Presidential Order No. Hua-Zong-I-Yi-10400058161 on May 20, 2015 and Ref. No. Ching-Shang-Tze-10402413890 promulgated by Ministry of Economic Affairs, it is proposed to amend the “Articles of Incorporation” of the Company.

2. The major amendments are as follows-

3. (1) It is proposed to provide in Article 29 that minimum 0.5% of profit of the current year distributable as employees’ compensation and not exceed 1% of profit of the current year distributable as the remuneration of Directors shall be distributed when the Company have profit, and the amount of payment of the employees’ compensation and the remuneration of Directors along with the distribution manner of the employees’ compensation shall be adopted by a majority vote at a meeting of the Board of Directors attended by two-third of the total number of directors and then to be reported to the shareholders meeting.

4. (2) It is proposed to shift original Article 29 to Article 29-1, and amend paragraph 1 of the Article 29-1 to delete the provision of employee’s bonus and remuneration of Directors.

Resolution: Approved after voting.

Total votes at the time of voting were 476,147,815 votes (including 339,622,220 electronic votes).

Voting Results	% of the total votes at the time of voting
Approval votes were 468,174,892 votes (including 332,224,553 electronic votes)	98.32%
Disapproval votes were 26,274 votes (including 26,274 electronic votes)	0%
Invalid votes were 0 vote	0%
Abstention votes/no votes were 7,946,649 votes (including 7,371,393 electronic votes)	1.66%

D. Matters for Report ：

• I. Business Report of the year 2015. (as the attached Page 7-12)

• II. Audit Committee’s Review Report of the year 2015. (as the attached Page 20)

• III. The state of Employees’ compensation and Remuneration of Directors of the year 2015: The profit of 2015 is NT$ 991,256,783. According to the amended “Articles of Incorporation”, the Board of Directors resolved that the Employees’ compensation in cash is NT$ 6,740,546. (0.68% of the profit of 2015.) and the Remuneration of Directors is NT$ 2,700,000. (0.27% of the profit of 2015.)

• IV.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 May 27, 2015 and submitted to the Financial Supervisory Commission 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 35-42)

• V. Reporting on the “Ethical Corporate Management Best Practice Principles” amended by the Board of Directors on Dec. 24, 2015 according to the article 27 of “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”. (as the attached Page 43-49)

E. Matters for Acknowledgement ：

Submitted by the Board of Directors

• Proposal I: It is proposed to acknowledge the Business Report and Financial Statements of the year 2015. (as the attached Page 7-18)

• Explanation: The Financial Statements of the Company of the year 2015 which had been audited and certified by the CPA firm of PricewaterhouseCoopers, Taiwan and the Business Report of the year 2015 were reviewed by the Audit Committee. The Audit Committee also submitted the Review Report as attached.

• Resolution: Approved after voting.

• Total votes at the time of voting were 476,147,815 votes (including 339,622,220 electronic votes).

Voting Results	% of the total votes at the time of voting
Approval votes were 468,206,606 votes (including 332,256,267 electronic votes)	98.33%
Disapproval votes were 11,172 votes (including 11,172 electronic votes)	0%
Invalid votes were 0 vote	0%
Abstention votes/no votes were 7,930,037 votes (including 7,354,781 electronic votes)	1.66%

• Submitted by the Board of Directors

• Proposal II: It is proposed to acknowledge the profit allocation proposal of the year 2015 as the Statement of Earnings Appropriation. (as the attached Page 19)

Explanation:

1. The proposed profit allocation is as follows:

   • The Cash dividends amounts to NT$393,592,500, each share shall be distributed NT$0.7. The fractional amount less than NT$1 will be set aside as Company’s non-operating revenue in distribution of cash dividends.

2. 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.

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

4. Resolution: Approved after voting.

   • Total votes at the time of voting were 476,147,815 votes (including 339,622,220 electronic votes).

Voting Results	% of the total votes at the time of voting
Approval votes were 468,170,366 votes (including 332,220,027 electronic votes)	98.32%
Disapproval votes were 47,412 votes (including 47,412 electronic votes)	0%
Invalid votes were 0 vote	0%
Abstention votes/no votes were 7,930,037 votes (including 7,354,781 electronic votes)	1.66%

F. Matters for Extraordinary Motion ： None.

G. Dismiss the Meeting.

• Notes 1: The meeting minutes was recorded in accordance with the provision of paragraph 4 of Article 183 of the Company Law. The meeting audio recording still prevails regarding the meeting content, proceedings and shareholders’ statements.

• Notes 2: Because the percentage of approval votes, disapproval votes, invalid votes, abstention votes and no votes held by total votes is calculated rounded down to the second decimal place, the total percentage will not be exactly equal to 100.00%.

CENTRAL REINSURANCE CORPORATION THE CONTRAST TABLE OF THE AMENDED ARTICLES OF INCORPORATION

	Afteramendment		Before amendment	Reason foramendment
	29. Minimum 0.5% of profit of the current year distributable as employees’compensation and not exceed 1% of profit of the current year distributable as remuneration of Directors shall be distributed when the Company have profit. However, the Company’s accumulated losses shall have been covered before distributing employees’ compensation and remuneration of Directors by the aforementioned principles. Employees’compensation may be distributed in the form of shares or in cash; Remuneration of Directors shall be distributed in the form of cash only. The profit set out in the first Paragraph is meaning thereto income before income tax of the current year including the profit of employees’ compensation and remuneration of Directors. The amount of payment of the employees’compensation and the remuneration of Directors and the distribution manner of the employees’compensation shall be adopted by a majority vote at a meeting of the Board of Directors attended by two-third of the total number of directors and then to be reported to the shareholders meeting.		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	In accordance with the Article 235-1 of Company Law and Ref. No. Ching-Shang-Tzu- 10402413890 promulgated by the Ministry of Economic Affairs, it is proposed to amend Article 29 as follows: 1.In the first Paragraph, It is proposed to express the ratio of profit of the current year distributable as employees’ compensation and remuneration of Directors. 2.In the second paragraph, it is proposed to express the distribution manner of employees’ compensation and remuneration of Directors. 3.In accordance with the legislative cause of Article 235-1 of Company Law, it is to define the profit meaning in the third paragraph. 4.In the fourth paragraph, it is proposed to express the distribution amount of employees’ compensation and remuneration of Directors and the distribution manner of employees’ compensation shall be adopted by a majority vote at a meeting of the Board of Directors attended by two-third of the total number of directors and then to be reported to the shareholders meeting.

	Afteramendment		Before amendment	Reason foramendment
			be distributed in cash or stock as resolved by the Shareholders'Meeting.
	29-1. 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 makesurplus profitproposal for distribution for resolution by the Shareholders' Meeting. 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.			1.It is proposed to shift original Article 29 to Article 29-1. 2.Because Article 235 of Company Law is amended to delete the provision of employee bonus, this article is amended to delete the provision as below: “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. 3.Because the right of distribution of surplus profit belong to shareholders, not belong to employees and Directors, it is to define the proposal made by the Board of Directors is allocated surplus profit in paragraph 1. 4.Delete the third paragraph.
	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.The history is as follow: (1) These Articles were originally established on October 26, 1967.		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.	To add revision history .

	Afteramendment	Before amendment	Reason foramendment
	(2) The 1st to the 23rd amendments were made between January 18, 1972 and October 26, 2005. (3) The 24th amendment was made on June 15, 2007. (4) The 25th amendment was made on June 13, 2008. (5) The 26th amendment was made on June 18, 2010. (6) The 27th amendment was made on June 15, 2012. (7) The 28th amendment was made on June 13, 2013. (8) The 29th amendment was made on June 11, 2014. (9) The 30th amendment is made on May 27, 2016.

CENTRAL REINSURANCE CORPORATION

BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

ASSETS	December 31, 2015 Notes AMOUNT % 6(1) $ 16,461,567 50 6(2) 248,065 1 69,977 - 6(3) 537,573 2 6(4) 3,802,122 11 6(5) 5,478,882 17 6(6) 1,422,932 4 6(8) 456,730 1 6(9) 3,455,783 10 6(12) 213,444 1 3,786 - 6(18) 28,124 - 1,086,086 3 $ 33,265,071 100 6(13) $ 425,192 2 68,011 - 6(3) 31,549 - 6(9) 23,279,625 70 6(14) 8,015 - 6(18) 76,186 - 27,012 - 23,915,590 72 6(15) 5,622,750 17 300,000 1 1,448,411 4 6(17) 1,194,523 4 6(18) 816,086 2 6(4) ( 32,289) - 9,349,481 28 $ 33,265,071 100	December 31, 2014	December 31, 2014
		AMOUNT $ 18,430,910 399,901 133,340 949,291 4,852,161 3,125,047 524,296 459,027 3,859,592 214,772 1,531 36,423 1,022,876 $ 34,009,167 $ 577,906 115,627 66,470 23,664,460 5,778 77,799 44,211 24,552,251 5,622,750 300,000 1,274,236 976,714 1,118,951 164,265 9,456,916 $ 34,009,167	%
11000 Cash and cash equivalents 12000 Accounts receivable 12600 Current income tax assets 14110 Financial assets at fair value through profit or loss 14120 Available-for-sale financial assets 14160 Investments in debt instrument without active market 14180 Other financial assets 14200 Investment property 15000 Reinsurance contract assets 16000 Property and equipment 17000 Intangible assets 17800 Deferred income tax assets 18000 Other assets TOTAL ASSETS LIABILITIES AND EQUITY			54 1 1 3 14 9 2 1 11 1 - - 3
			100
			2 - - 70 - - -
21000 Accounts payable 21700 Current income tax liabilities 23200 Financial liabilities at fair value through profit or loss 24000 Insurance liabilities 27000 Provisions 28000 Deferred income tax liabilities 25000 Other liabilities TOTAL LIABILITIES 30000 EQUITY 31000 Capital 31100 Common stock 32000 Capital reserve 33000 Retained earnings 33100 Legal reserve 33200 Special reserve 33300 Undistributed earnings 34000 Other equity TOTAL EQUITY TOTAL LIABILITIES AND EQUITY
			72
			17 1 4 3 3 -
			28
			100

The accompanying notes are an integral part of these financial statements.

CENTRAL REINSURANCE CORPORATION STATEMENTS OF COMPREHENSIVE INCOME

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

Items

Years endedDecember31 Changes 2015 2014 Percentage Notes AMOUNT % AMOUNT % (%) $ 14,194,290 101 $ 16,349,868 100 ( 13) ( 914,406) ( 6) ( 1,085,426) ( 7) ( 16) 6(9) 60,933 - 242,733 2 ( 75) 13,340,817 95 15,507,175 95 ( 14) 286,205 2 302,102 2 ( 5) 13,831 - 15,986 - ( 13) 357,752 3 315,125 2 14 6(3) ( 311,821) ( 2) ( 147,280) ( 1) 112 189,118 1 83,807 1 126 19,323 - - - - 142,070 1 186,375 1 ( 24) 6(8) 19,719 - 17,286 - 14 416,161 3 455,313 3 ( 9) 10,996 - 2,987 - 268 14,068,010 100 16,283,563 100 ( 14) ( 9,179,765) ( 65) ( 10,054,640) ( 62) ( 9) 429,175 3 420,859 3 2 ( 8,750,590) ( 62) ( 9,633,781) ( 59) ( 9) 6(9) 324,113 2 ( 489,562) ( 3) ( 166) ( 4,321,737) ( 31) ( 4,781,683) ( 30) ( 10) ( 762) - ( 2,391) - ( 68) ( 12,748,976) ( 91) ( 14,907,417) ( 92) ( 14) ( 215,630) ( 1) ( 258,914) ( 1) ( 17) ( 118,299) ( 1) ( 114,787) ( 1) 3 ( 1,499) - ( 1,433) - 5 ( 335,428) ( 2) ( 375,134) ( 2) ( 11) 983,606 7 1,001,012 6 ( 2) ( 1,790) - ( 1) - 178900 981,816 7 1,001,011 6 ( 2) 6(18) ( 215,951) ( 2) ( 130,137) ( 1) 66 765,865 5 870,874 5 ( 12) 765,865 5 870,874 5 ( 12)

41000 Operating revenues 41100 Gross premiums written 51100 Less: Reinsurance premiums ceded 51310 Net change in unearned premium reserve 41130 Retention earned premiums 41300 Reinsurance commission revenue 41400 Overriding commission revenue 41500 Net gain from investment 41510 Interest income 41521 Gain or loss on valuation of financial assets or financial liabilities at fair value through profit or loss 41522 Realized gain or loss on available-for-sale financial assets 41524 Realized gain or loss on investments in debt instrument without active market 41550 Foreign exchange gain 41570 Gain on investment property Total net gain from investment 41800 Other operating revenues Total operating revenues 51000 Operating costs 51200 Reinsurance claims paid 41200 Less: Reinsurance claims recovery 51260 Retention reinsurance claims paid 51300 Net changes in other insurance liabilities 51500 Reinsurance commission expenses 51800 Other operating costs Total operating costs 58000 Operating expenses 58100 Selling expenses 58200 Administration expenses 58300 Training expenses Total operating expenses Net operating income 59000 Non-operating income and expenses 62000 Income from continuing operations before tax 63000 Income tax expense 64000 Income from continuing operations after tax 66000 Net income

(Continued)

CENTRAL REINSURANCE CORPORATION STATEMENTS OF COMPREHENSIVE INCOME

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

Items	Years ended December 31 2015 2014 Notes AMOUNT % AMOUNT 6(12) ($ 2,429) - ( $ 5,757) 6(12)(18) 413 - 979 6(4) ( 217,755) ( 1) 264,419 6(4)(18) 21,201 - ( 32,417) ( 198,570) ( 1) 227,224 $ 567,295 4 $ 1,098,098 $ 1.36 $	Years ended December 31	Years ended December 31	Changes Percentage % (%) - ( 58) - ( 58) 2 ( 182) - ( 165) 2 ( 187) 7 ( 48) 1.55
		2015	2014
83000 Other comprehensive income 83100 Items may not be reclassified to profit or loss subsequently 83110 The remeasurements of defined benefit plans 83180 Income tax relating to the items may not be reclassified to profit or loss subsequently 83200 Items may be reclassified to profit or loss subsequently 83220 Unrealized gain or loss on available-for-sale financial assets 83280 Income tax relating to the items may be reclassified to profit or loss subsequently Total other comprehensive (loss) income for the year (after tax) 85000 Total comprehensive income for the year Earnings per share 97500 Basic and Diluted (in NT dollars)

The accompanying notes are an integral part of these financial statements.

CENTRAL REINSURANCE CORPORATION STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

2014 Balance at January 1, 2014 Distributions of 2013 earnings (Note) Legal reserve Cash dividends Reversal of special reserve Net income for the year Appropriation for equalization reserve for the year Other comprehensive income for the year Balance at December 31, 2014 2015 Balance at January 1, 2015 Distributions of 2014 earnings (Note) Legal reserve Cash dividends Net income for the year Appropriation for equalization reserve for the year Other comprehensive income for the year Balance at December 31, 2015	Notes		Common Stock		Capital Reserve			RetainedEarnings	RetainedEarnings	Other Equity	Total Equity
							Legal Reserve	Special Reserve	Undistributed Earnings	Unrealized Gain or Loss on Available-for saleFinancial Assets
	6(15) 6(15) 6(4) 6(15) 6(15) 6(4)		$ 5,622,750 - - - - - - $ 5,622,750 $ 5,622,750 - - - - - $ 5,622,750		$ 300,000 - - - - - - $ 300,000 $ 300,000 - - - - - $ 300,000		$ 1,127,818 146,418 - - - - - $ 1,274,236 $ 1,274,236 174,175 - - - - $ 1,448,411	$ 1,266,462 - - ( 519,716) - 229,968 - $ 976,714 $ 976,714 - - - 217,809 - $ 1,194,523	$ 784,255 ( 146,418) ( 674,730) 519,716 870,874 ( 229,968) ( 4,778) $ 1,118,951 $ 1,118,951 ( 174,175) ( 674,730) 765,865 ( 217,809) ( 2,016) $ 816,086	($ 67,737 ) - - - - - 232,002 $ 164,265 $ 164,265 - - - - ( 196,554 ) ($ 32,289 )	$ 9,033,548 - ( 674,730) - 870,874 - 227,224 $ 9,456,916 $ 9,456,916 - ( 674,730) 765,865 - ( 198,570) $ 9,349,481

Note: Employees' bonus of $7,141 and $5,996, and directors' remuneration of $2,878 and $3,100 for 2014 and 2013, respectively, have been deducted from the statement of cpmprehensive income.

The accompanying notes are an integral part of these financial statements.

CENTRAL REINSURANCE CORPORATION

STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

			Years ended December 31	Years ended December 31
			2015	2014
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the year		$	981,816 $	1,001,011
Adjusting items:
Profit and expense items
Depreciation			8,998	8,046
Amortization			1,572	1,350
Net change in reserves	(		367,562 )	246,829
Net gain on financial assets and liabilities at fair value through profit or loss			73,026	57,549
Net gain or loss on available-for-sale financial assets	(		118,922 )	216
Net gain on investments in debt instruments without active market	(		19,323 )	-
Interest income	(		374,593 ) (	332,334 )
Dividend income	(		70,570 ) (	105,481 )
Net gain on disposal of property and equipment			- (	15 )
Unrealized foreign exchange loss	(		44,958 ) (	101,928 )
Changes in assets/liabilities relating to operating activities
Net changes in assets relating to operating activities
Accounts receivable			168,609 (	215,876 )
Financial assets at fair value through profit or loss			304,641	13,470
Reinsurance contract assets			386,536	52,783
Other assets	(		40,389 ) (	5,650 )
Net changes in liabilities relating to operating activities
Accounts payable	(		152,714 )	184,139
Provisions	(		192 ) (	751 )
Other liabilities	(		17,199 )	5,968
Cash generated from operations			718,776	809,326
Interest received			368,714	336,729
Dividend received			71,259	104,792
Cash paid for income tax	(		171,904 ) (	55,690 )
Net cash provided by operating activities			986,845	1,195,157
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value through profit or loss	(		18,050 ) (	20,506 )
Proceeds from disposal of financial assets at fair value through profit or loss			17,180	18,516
Acquisition of available-for-sale financial assets	(		18,165,232 ) (	11,546,277 )
Proceeds from disposal of available-for-sale financial assets			19,086,734	11,924,846
Acquisition of investments in debt instruments without active market	(		2,838,055 ) (	117,118 )
Proceeds from repayments of investments in debt instruments without active market			540,933	269,553
Acquisition of property and equipment	(		5,084 ) (	16,189 )
Proceeds from disposal of property and equipment			-	15
Acquisition of investment property	(		289 ) (	2,113 )
Increase in other financial assets	(		898,636 ) (	276,736 )
Acquisition of intangible assets	(		3,827 ) (	739 )
Net cash (used in) provided by investing activities	(		2,284,326 )	233,252
CASH FLOWS FROM FINANCING ACTIVITY
Payment of cash dividends	(		674,730 ) (	674,730 )
Net cash used in financing activity	(		674,730 ) (	674,730 )
Effects of exchange rate changes			2,868	3,344
(Decrease) increase in cash and cash equivalents	(		1,969,343 )	757,023
Cash and cash equivalents at beginning of year			18,430,910	17,673,887
Cash and cash equivalents at end of year		$	16,461,567 $	18,430,910

CENTRAL REINSURANCE CORPORATION

Earnings Distribution Plan

For the Year of 2015

For the Year of 2015
		(Unit: NT$)
Items	Total	Grand Total
Unappropriated retained earnings of previous years		270,046,796
Add：Net income of 2015	765,864,765
Less：The remeasurements of defined benefit plans(Note 1)	2,016,152
Less：Legal reserve	153,172,953
Less：Special reserve(Note 2)	217,809,825	392,865,835
Retained earnings in 2015 available for distribution		662,912,631
Distributable item：
Shareholders' dividends－Cash dividends: NT$0.7 per share	393,592,500	393,592,500
Unappropriated retained earnings		269,320,131

Note 1: Pursuant to Article 11 of the Rules for the Preparation of Financial Reports by Insurance Institutions, the Company defined the remeasurements of defined benefit plans transferred to retained earnings.

Note 2: According to the Insurance regulations, the provision for equalization reserve NT$217,809,825 of the year 2015 had been recognized as special reserve.

Note 3: The surplus of year 2015 is allocated by priority .