Central Re - Annual Report 2014 | FinancialReports.eu

==> picture [434 x 65] intentionally omitted <==

==> picture [357 x 39] intentionally omitted <==

==> picture [596 x 54] intentionally omitted <==

==> picture [308 x 38] intentionally omitted <==

==> picture [184 x 54] intentionally omitted <==

==> picture [186 x 53] intentionally omitted <==

==> picture [311 x 40] intentionally omitted <==

==> picture [285 x 67] intentionally omitted <==

I.	LETTER TO SHAREHOLDERS	1
	OperatingPerformancein 2014	3
	Business Plan in 2015	9
	DevelopmentStrategy	9
	ExternalCompetitive,Regulatoryand Macroeconomic Environment	10
II.	COMPANY PROFILE	15
	Date of Incorporation	15
	CompanyHistory	15
III.	CORPORATE GOVERNANCE REPORT	16
	Organization	16
	Directors and Management Team	17
	Implementation ofCorporateGovernance	28
	Corporate Social Responsibility	40
	EthicalCorporate Management	44
	Material Resolutions ofShareholdersMeetingandBoard of DirectorsMeeting	48
	Changes in Shareholdings and Shares Pledged by Directors, Supervisors,
	Managers and Major Shareholders	52
IV.	CAPITAL OVERVIEW	54
	Source of Capital Stock	54
	Shareholders Structure	55
	Diffusion of Ownershipand List of Principal Shareholders	56
	Disclosure of the Share Prices and Related Information for the Past Two Fiscal
	Years	57
	Dividend Policyand Earnings Distribution ImplementationStatus	57
V.	BUSINESS OPERATIONS OVERVIEW	59
	Business Activities	59
	MarketOverview	63
	Human Resources	65
	Labor Relations	65
	ImportantContracts	68
VI.	FINANCIAL INFORMATION	69
	FinancialStatement for Recent Five Years	69
	Financial Analyses for Recent Five Years	73
	AuditCommittee'sReviewReport	75
	Financial Statements and Report of Independent Accountants	76

LETTER TO SHAREHOLDERS

I. LETTER TO SHAREHOLDERS

Dear Shareholders,

Established for almost half of a century, Central Reinsurance Corporation (Central Re) is Taiwan’s sole domestic and professional reinsurer. Its core business encompasses the underwriting of non-life and life reinsurance in the domestic and overseas insurance markets�

Following the continuous recovery of Taiwan's economy, the domestic insurance premium maintains stable growth in 2014. The overall written premium of the domestic direct market increased by about 7.2%. The non-life sector has seen 5 years of consecutive growth, with a growth rate 5.9% in 2014; whereas the life sector has seen 3 years of consecutive growth with a 7.3% growth rate in 2014. Central Re continues to adopt a steady business strategy through the optimization of business quality, as well as prudent and appropriate capital and assets management. The company achieved a satisfactory business performance, with operating revenue and after-tax profit surpassing its targets in 2014. This creation of shareholder value reflects the collectively untiring efforts of our staff’s teamwork�

Central Re’s performance in 2014 saw its operating revenue reaching NT$16.284 billion, representing an increase of 6% year on year. After-tax profit was NT$871 million and EPS reached NT$1.55. The performance reached a record-breaking high in the past 5 years. Reserves of retained business amounted to NT$22.275 billion, an increase of approximately 1% compared to 2013; while equity before distribution of dividends was NT$9.457 billion, an increase of approximately 5% over the previous year. These results demonstrated the continued and steady strengthening in Central Re’s solvency, financial position and capital structure�

1 Central Reinsurance Corporation Annual Report 2014

LETTER TO SHAREHOLDERS

Based on Central Re’s very strong capital and earnings, long-term relationship with domestic clients, excellent liquidity structure and satisfactory underwriting results, rating agency Standard & Poor's reaffirmed our A rating and stable outlook in January 2014. Taiwan Ratings Corp. reconfirmed our rating of twAA+. In addition, A.M. Best reaffirmed our A rating and stable outlook in August 2014. These good credit ratings will be beneficial for managing and expanding Central Re's business operations.

Looking into the future, Central Re’s management team will remain committed to its corporate philosophy of “Challenge, Innovation and Teamwork”. In the face of competition and challenging business environment, it is our strategy to utilize our domestic advantage to further cultivate the Taiwan market, to focus on better customer services, to prudently expand our international business, to enhance the quality of business portfolio, plus to adopt a sound investment strategy to achieve our goals on steady revenue and earnings growth.

Chairman

==> picture [148 x 54] intentionally omitted <==

Central Reinsurance Corporation Annual Report 2014 2

LETTER TO SHAREHOLDERS

A. Operating Performance in 2014

Central Re is Taiwan’s sole domestic and professional reinsurer. Core business of Central Re is underwriting non-life and life reinsurance in the domestic and overseas insurance markets. We are committed to achieve ethical corporate management, stabilization of insurance market, and the fulfillment of corporate social responsibility. In order to ensure sustainable management and adaption to the changing market, it is our strategy to utilize our domestic advantage to further cultivate the Taiwan market, to focus on better customer services, to prudently expand our international business, and to enhance the quality of business portfolio.

a. 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.

NT$ thousands

Gross Premium Written	Gross Premium Written	Gross Premium Written	Gross Premium Written	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%

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

3 Central Reinsurance Corporation Annual Report 2014

LETTER TO SHAREHOLDERS

the confidence of rating agency, and support development of overseas business.

Total reserves of Central Re 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, excellent liquidity structure and satisfactory of underwriting results, rating agency Standard & Poor's 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 for managing and expanding Central Re's business operations.

Financial Strength Ratings

Rating Agency	Rating	Outlook
A.M. Best A Stable
Standard & Poor’s A Stable
Taiwan Ratings twAA+ Stable

Central Reinsurance Corporation Annual Report 2014 4

LETTER TO SHAREHOLDERS

b. Budget implementation

The results of budget implementation were shown as follows.

			NT$thousands
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%

c. Profitability Analysis

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

			NT$thousands	NT$thousands
	Year
		2014	2013	Average
Ratio

Profitability	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
	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

5 Central Reinsurance Corporation Annual Report 2014

LETTER TO SHAREHOLDERS

d. Research and Development

Human Resources Development

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

		Attendance Number
	Training Program

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

In 2014, the number of our managers (above SVP level) attended the

Central Reinsurance Corporation Annual Report 2014 6

LETTER TO SHAREHOLDERS

corporate governance, reinsurance, actuarial, and risk management courses held by the external training institutions amounted to 34 times.

To enhance colleagues’ global perspective, we also provided 12 of our 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 professional certifications and licenses in respect of the non-life and life insurance sectors 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.

		Number Passing
	Item

Domestic Certification	The certificate as a qualified insurance underwriter of non-life insurance	16
	The certificate as a qualified claim adjuster of non-life insurance	9
	The certificate as a qualified insurance underwriter of life insurance	4
	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
International Certification	Chartered Property Casualty Underwriter (CPCU)	2
	Associateship of the Chartered Insurance Institute (ACII)	1
	Associate of the Society of Actuaries (ASA)	2
	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
	Associate, Annuity Products and Administration (AAPA)	2
	The Chartered Financial Analyst	1
	Financial Risk Manager	1
	Associate in Risk Management (ARM)	1

7 Central Reinsurance Corporation Annual Report 2014

LETTER TO SHAREHOLDERS

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.

Business Development and Service
(1) In order to improve efficiency and strengthen internal control, we continue to develop our IT system and construct remote backup mechanism. The management uses related statistical analysis to establish future operating strategies.
(2) 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.
(3) In-depth understanding of clients’ needs and tracking global reinsurance market trends. We always provide clients with appropriate reinsurance solution.
(4) Continued to prudently expand facultative business to increase underwriting profit.
(5) Set up talent pool to support the development of business and customer service.
(6) Keep promoting our company's “Key Risk Indicator”.

Central Reinsurance Corporation Annual Report 2014 8

LETTER TO SHAREHOLDERS

B. Business Plan in 2015

Central Re established the business plan in 2015 as below.

a. Operating Strategies

Implement corporate governance activities, ethical corporation management and fulfillment of corporate social responsibility
Strengthen capital structure to enhance company's solvency
Integrate risk management and operation decisions by means of practicing risk management as a mechanism to enhance the ability of risk governance.
Satisfy clients by tailor-made solutions based on their requirements to gain the profitable traditional proportional reinsurance.
Prudently expand international business to diversify our business portfolio
Maintain client relationships by providing actuarial services, support of new products development, professional seminar, discussion of regulation, etc.
Adopt a sound investment strategy to achieve our goals of steady revenue and earnings growth

b. Operating Objective

Under low interest rate environment, the investors are attracted to inject their funds to reinsurance market to gain favorable return. The intensive market competition and sluggish demand resulted in a softening global reinsurance market. Consequently, the rating agencies assigned a negative outlook to the reinsurance sector. In the face of competition and the challenging business environment, we will prudently assume our business and adopt a sound investment strategy to create business portfolio with risk control and profit stability.

C. Development Strategy

Based on the changing operational environment, market trend and our visions, we build up our development strategy as below.

a. Implement legal compliance, risk management, internal control and corporate governance activities

9 Central Reinsurance Corporation Annual Report 2014

LETTER TO SHAREHOLDERS

b. Uphold sound business ethics, contribute to the insurance market, and fulfillment of corporate social responsibility
c. Promote our professional image, strengthen employee's training and career development
d. Focus on providing tailor-made reinsurance solutions to increase customer satisfactions and values
e. Cultivate Taiwan market to pursue long term and steady underwriting profit
f. Prudently expand international business and increase overseas business from direct market
g. Strengthen capital structure and enhance utilization efficiency of capital

D. External Competitive, Regulatory and Macroeconomic

Environment

a. External Competitive Environment

By the end of 2014, there are 3 professional reinsurers in Taiwan. Our company is the only domestic reinsurer and the other two foreign reinsurers are General Reinsurance AG. Taiwan Branch and RGA Global Reinsurance Company Limited Taiwan Branch. We are in the presence of a challenge in 2015 due to the domestic insurers' continuously increase of their retentions, sluggish growth of local reinsurance's requirement, as well as abundance capacity from global reinsurance market.

b. Regulatory Environment

1. Insurance Act

The Insurance Act has been amended twice in 2014 as follows:

(1) The competent authority added new provision Paragraph 2 of Article 22 on January 8, 2014, which is specified that where a trust enterprise is obligated under a trust agreement to pay the insurance premiums, the insured amount which the insurer is obligated to pay in accordance with the insurance contract shall be deemed to be a trust

Central Reinsurance Corporation Annual Report 2014 10

LETTER TO SHAREHOLDERS

property of the preceding trust agreement.

(2) In order to prompt the insurance enterprises to exercise more appropriately their shareholders’ rights to the invested companies and their rights to the securitized products, the competent authority amended the Insurance Act on June 4, 2014, with key points as follows:
- i. Added new provisions for prohibiting the insurance enterprises from voting in the election of directors or supervisors at the company being invested, or serving as trust supervisor for securitization products being invested, and amended the basis for calculating the cap on how much the insurance enterprises are allowed to invest in the shares of a single invested company. (Amendments of Articles 146-1, 146-9)
- ii. The following investments value may not be included as part of the overseas investment ceiling of the insurance enterprises:
  - The value for foreign currency denominated listed or over-the-counter certificates of domestic stocks or bonds that are invested in by insurance enterprises in accordance with provisions of the Insurance Act.
  - The value of insurance-related enterprise established by or invested in by insurance enterprises and not to be included as part of the foreign investment ceiling with prior approval from the competent authority.(Amendment of Article 146-4)
Directions Governing Anti-Money Laundering and Countering Terrorism Financing of Insurance Sector

In order to strengthen the regime of anti-money laundering and countering terrorism financing of R.O.C, and to enhance internal control and audit systems of insurance enterprises, the competent authority has issued the preceding Directions on January 6, 2014. The Directions require that the insurance enterprises shall comply with the Directions as well as other relevant anti-money laundering provisions when conducting customer due diligence (hereinafter referred to as “CDD”) and keeping records on all business relations and transactions. The key points of the Directions are as follows:

11 Central Reinsurance Corporation Annual Report 2014

LETTER TO SHAREHOLDERS 2014 Annual Report 01

(1) The provisions include the conditions that should undertake CDD, the measures that should be taken and the ongoing monitoring regime on transactions.
(2) The risk management and internal control systems shall contain the mechanism of identification, assessment, management of risks associated with money laundering and financing of terrorism, as well as the standard operation procedure of anti-money laundering.

The Company has established internal rules to comply with in accordance with the preceding Directions.

Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises

For the purpose of enhancing legal compliance, anti-money laundering and countering terrorism financing regime, internal control and audit system, increasing capability of audit personnel and strengthening professional training, the role and the function of the legal compliance officer, the preceding Regulations were amended on August 8, 2014, with key points as follows:

(1) The risk management mechanisms of the insurance enterprises shall include strengthening anti-money laundering and countering terrorism financing regime. (Amendment of Article 8)
(2) The chief compliance officer for the head office may not serve concurrently in other duties other than the officer of legal division, and his position should be at executive-vice-president level equivalent or above. In consideration of the different scales and businesses among the foreign insurance branch offices in ROC, the professional reinsurance company, the insurance co-operative society and general insurance companies, the entities other than the general insurance companies may appoint a senior manager as the chief compliance officer for the head office. (Amendment of Article 30)
(3) In consideration of the possible risk of legal compliance, when using the insurer’s fund in specific or major investments, the chief compliance officer for the head office shall submit a legal opinion with his signature on it. In addition, the duties of the legal compliance division have been added. (Amendment of Articles 31, 32)

Central Reinsurance Corporation Annual Report 2014 12

LETTER TO SHAREHOLDERS

(4) All divisions other than the legal compliance division shall designate respectively a staff to act as the legal compliance officer for their own divisions. And all divisions shall designate respectively a staff to conduct self-check of compliance operation every half year and the outcomes of their checks shall be submitted to the legal compliance division for reference. (Amendment of Articles 33, 34)

The Company has established internal rules to comply with in accordance with the preceding Regulations.

Regulations Governing Permission of Insurance Business Transactions and Investment between the Taiwan and Mainland China Areas

In order to continuously support the insurance enterprises in Taiwan to enlarge businesses in Mainland Area and to enhance insurance business transactions between them, the competent authority amended the preceding Regulations on November 5, 2014 with key points as follows:

(1) The operation for reinsurance business transactions has been revised from special approval to business approval by the competent authority. (Amendment of Article 12)
(2) A local insurance enterprise may apply to establish a branch or subsidiary in Mainland China, and Articles 22 to 26 and Article 34 of the preceding Regulations shall apply mutatis mutandis with respect to required documents and business management. (Amendment of Article 20-1)
(3) A local insurance enterprise may apply to make equity investments to a foreign-invested insurance enterprise as defined in Mainland China, and the qualifications and requirements for the application were amended. (Amendment of Article 27)

The Company has been approved by the competent authority to conduct reinsurance businesses with insurance enterprises in Mainland China.

c. Macroeconomic Environment

According to Taiwan's Directorate-General of Budget, Accounting and

13 Central Reinsurance Corporation Annual Report 2014

LETTER TO SHAREHOLDERS

Statistics report, the steady growth of US and UK's economy and low oil prices contribute to the recovery of global economy. Whether financial market can continue its development will depend on the timing of Federal Reserve to end its quantitative easing and how the other countries' easing monetary policy will adopt. Citing from the report issued by Global Insight which predicts that 2015 world economic growth rate will be at 3%, of which US at 3.1%, Euro area at 1.7%, Japan at 1%, China at 6.5%, Singapore at 3.6%, South Korea at 3.5% and Hong Kong at 3%. Taiwan economic growth is predicted at 3.78% from the Taiwan's Directorate-General of Budget, Accounting and Statistics' view due to its optimistic outlook toward the domestic demand.

Based on the current environment, our economy will achieve moderate growth in 2015. While this will benefit the Taiwan's insurance industry, the reinsurance market is still influenced by excess capacity, deterioration of pricing and weakened terms and conditions. Consequently, the ratings agencies have assigned a negative outlook to the reinsurance sector. In the face of competition and the challenging business environment, we will prudently assume our business and adopt a sound investment strategy to create business portfolio with risk control and profit stability

Central Reinsurance Corporation Annual Report 2014 14

2014 Annual Report 02

COMPANY PROFILE

II. COMPANY PROFILE

A. Date of Incorporation

October 31, 1968

B. Company History

Central Re was established by the Ministry of Finance (MOF) on October 31, 1968 with the mission of promoting the sound development and sustainable growth of the domestic insurance industry. Central Re was founded with capital stock of NT$15 million, but after numerous capital injections, the company’s paid-up capital reached its current NT$5,622.8 million.

Central Re is the sole domestic reinsurance company in Taiwan and specializes in undertaking reinsurance of domestic and international non-life and life insurance companies. In line with the trends of liberalization and globalization, Central Re completed its privatization process on July 11, 2002. However, at present, the Taiwan’s Ministry of Finance remains the second-largest shareholder of Central Re. Meanwhile, the Evergreen Group, one of the top transportation groups in the world, is Central Re’s largest shareholder.

To increase its competitiveness, Central Re adopted the Evergreen Group’s motto of “Challenge, Innovation and Teamwork”. The company will continue to become a market paradigm to enhance clients’ value. Its vision is to become Asia’s best reinsurer.

15 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 03

CORPORATE GOVERNANCE REPORT

III. CORPORATE GOVERNANCE REPORT

A. Organization

==> picture [416 x 497] intentionally omitted <==

Central Reinsurance Corporation Annual Report 2014 16

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Rela- tion	-	-	-	-
	Name	-	-	-	-
	Title	-	-	-	-
Other Position		-	Adjunct Associate Professor, Dept. of Risk Management and Insurance, National Chengchi University	-	-
Experience & Education		-	Deputy Director General, Dept. of Insurance, Ministry of Finance President, Central Reinsurance Corp. MBA, The College of Insurance, New York City	-	Chairman, Evergreen Marine Corp. (Taiwan) Ltd. Boston University
Sharehold- ing by Other Nominee	�	0	0	0	0
	Shares	0	0	0	0
Spouse & Dependents Shareholding	�	-	0	-	0
	Shares	-	0	-	0
Present Shareholding	�	35.13	0.18	35.13	1.16
	Shares	197,541,037	1,000,735	197,541,037	6,541,899
Shareholding when Elected	�	35.13	0	35.13	0
	Shares	197,541,037	0	197,541,037	0
Date of Initial Election, Appointment		2002. 10.29	1993. 09.29	2002. 10.29	2007. 06.12
Tenure (Years)		3 Years	3 Years	3 Years	3 Years
Date Elected		2014. 06.11	2014. 06.11	2014. 06.11	2014. 06.11
Name		Evergreen International Corp.	Representative : Yang, Cheng-Tui	Evergreen International Corp.	Representative : Chang, Kuo-Cheng
Title		Chairman		Vice Chairman

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Rela- tion	-	-
	Name	-	-
	Title	-	-
Other Position		-	Group Executive officer, Legal, Evergreen Group Director: Evergreen International Storage &Transport Corp., EVA Airways Corp., Taipei Port Container Terminal Corp., Super Max Engineering Enterprise Corp. Ltd., Chang Yung-Fa Foundation, Chang Yung-Fa Charity Foundation
Experience & Education		-	Executive Vice President, Legal &Insurance, EVA Airways Corp. Master degree in Maritime Law, National Taiwan Ocean University
Sharehold- ing by Other Nominee	�	0	0
	Shares	0	0
Spouse & Dependents Shareholding	�	-	0
	Shares	-	0
Present Shareholding	�	35.13	0
	Shares	197,541,037	0
Shareholding when Elected	�	35.13	0
	Shares	197,541,037	0
Date of Initial Election, Appointment		2002. 10.29	2014. 06.11
Tenure (Years)		3 Years	3 Years
Date Elected		2014. 06.11	2014. 06.11
Name		Evergreen International Corp.	Representative : Tai, Jiin-Chyuan
Title		Director

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Rela- tion	-	-
	Name	-	-
	Title	-	-
Other Position		Finance Executive Officer, Evergreen International Corp. Supervisor: Evergreen Marine Corp. (Taiwan) Ltd., Evergreen Sky Catering Corp., Uni Airways Corp, Ever Accord Construction Corp., Evergreen Logistics Corp., Evergreen International Engineering Corp., Round-The-World Travel Services Ltd.	-
Experience & Education		Senior Vice President, Finance Division of Evergreen International Corp. Ming Chuan University	-
Sharehold- ing by Other Nominee	�	0	0
	Shares	0	0
Spouse & Dependents Shareholding	�	0	-
	Shares	0	-
Present Shareholding	�	0	22.50
	Shares	0	126,502,689
Shareholding when Elected	�	0	22.68
	Shares	0	127,539,689
Date of Initial Election, Appointment		2014. 06.11	1968. 10.31
Tenure (Years)		3 Years	3 Years
Date Elected		2014. 06.11	2014. 06.11
Name		Representative : Ku Lai, Mei-Hsueh	Ministry of Finance, R.O.C.
Title		Director	Director

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Rela- tion	-	-
	Name	-	-
	Title	-	-
Other Position		Senior Executive Officer Department of Planning Ministry of Finance, R.O.C	Training Institute, Ministry of Finance Deputy Director-general
Experience & Education		Senior Executive Officer Secretariat Ministry of Finance, R.O.C Master Graduate Institute of Public Policy Science National Chung Hsing University	Northern Region Office National Property Administration Director National Property Administration, Ministry of Finance Deputy Director-General Department of Land Economics, National Chengchi University
Sharehold- ing by Other Nominee	�	0	0
	Shares	0	0
Spouse & Dependents Shareholding	�	0	0
	Shares	0	0
Present Shareholding	�	0	0
	Shares	0	0
Shareholding when Elected	�	0	0
	Shares	0	0
Date of Initial Election, Appointment		2011. 06.15	2014. 07.25
Tenure (Years)		3 Years	2.83 Years
Date Elected		2014. 06.11	2014. 07.25
Name		Representative : Lee, Yi-Fen	Representative : Chen, Kuan-Pao
Title		Director	Director

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Rela- tion	-
	Name	-
	Title	-
Other Position		Dean, Office of International & Cross-Strait Academic Exchange, Soochow University Professor, Soochow University School of Law Chief Executive Officer, John Tung Foundation Member, Administrative Appeal Review Committee, Executive Yuan
Experience & Education		Dean, Chinese Culture University College of Law Juris Doctor, University of Iowa
Sharehold- ing by Other Nominee	�	0
	Shares	0
Spouse & Dependents Shareholding	�	0
	Shares	0
Present Shareholding	�	0
	Shares	0
Shareholding when Elected	�	0
	Shares	0
Date of Initial Election, Appointment		2008. 06.13
Tenure (Years)		3 Years
Date Elected		2014. 06.11
Name		Yau, Sea-Wain
Title		Independent Director

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Rela- tion	-	-
	Name	-	-
	Title	-	-
Other Position		-	Yuanta Futures Co., Ltd.- Vice President
Experience & Education		Director, Global Life Insurance Company Master of Science Department of Risk Management and Insurance Georgia State University USA	Pricewaterhouse Coopers- Partner University of Alabama- School of Business- Master of Accountancy
Sharehold- ing by Other Nominee	�	0	0
	Shares	0	0
Spouse & Dependents Shareholding	�	0	0
	Shares	0	0
Present Shareholding	�	0	0
	Shares	0	0
Shareholding when Elected	�	0	0
	Shares	0	0
Date of Initial Election, Appointment		2014. 06.11	2014. 06.11
Tenure (Years)		3 Years	3 Years
Date Elected		2014. 06.11	2014. 06.11
Name		Tsen, Ron-Syou	Chou, Yu-Cheng
Title		Independent Director	Independent Director

2014 Annual Report 03

CORPORATE GOVERNANCE REPORT

1. Major Shareholder of Institutional Shareholder

March 30, 2015

	Major Shareholders of the Institutional Shareholders	Major Shareholders of the Institutional Shareholders
Name of Institutional
Shareholders
	Name	Percentage (%)

Evergreen International Corp.	Chang Yung-Fa Foundation	28.86%
	Chang Kuo-Cheng	16.67%
	Chang Kuo-Hua	12.90%
	Chang Kuo-Ming	12.19%
	Lee Yu-Mei	7.14%
	Chen Hui-Chu	5.81%
	Yang Mei-Chen	5.10%
	Chang Yung-Fa Charity Foundation	5.00%
	Chang Yung-Fa	5.00%
	Tseng Chiung-Hui	1.33%
Ministry of Finance, R.O.C.	Non-profit organization	-

��If the Shareholders of above-mentioned table are corporation, the Principal Shareholders of these corporation are as follows:

March 30, 2015

		Major Shareholders of the	Major Shareholders of the
		Institutional Shareholders
Legal Entity	Name of Institutional Shareholders

			Percentage
		Name
			(%)


Evergreen International Corp.	Chang Yung-Fa Foundation	Non-profit organization	-
	Chang Yung-Fa Charity Foundation

23 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 03

CORPORATE GOVERNANCE REPORT

Professional qualifications and independence analysis of directors

	Meet One of the Following Professional Qualification	Meet One of the Following Professional Qualification	Meet One of the Following Professional Qualification
	Requirements, Together with at Least Five Years Work			Independence Criteria(Note)
		Experience
	An Instructor or	A Judge, Public	Have Work
	Higher Position in	Prosecutor, Attorney,	Experience
Criteria	a Department of	Certified Public	in the Areas
Name	Commerce, Law,	Accountant, or Other	of											Number of Other
	Finance,	Professional or	Commerce,											Public Companies in
	Accounting, or	Technical Specialist	Law,											Which the Individual is
	Other Academic	Who has Passed a	Finance, or											Concurrently Serving
	Department	National	Accounting,	1	2	3	4	5	6	7	8	9	10	as an Independent
	Related to the	Examination and	or Otherwise											Director
	Business Needs of	been Awarded a	Necessary
	the Company in a	Certificate in a	for the
	Public or Private	Profession Necessary	Business of
	Junior College,	for the Business of	the
	College or	the Company	Company
	University
Yang, Cheng-Tui	�		�	�	�		�	�	�	�	�	�		0
Chang, Kuo-Cheng			�	�	�		�	�		�	�	�		0
Yau, Sea-Wain	�	�	�	�	�	�	�	�	�	�	�	�	�	0
Tsen, Ron-Syou	�		�	�	�	�	�	�	�	�	�	�	�	0
Chou, Yu-Cheng	�	�	�	�	�	�	�	�	�	�	�	�	�	0
Lee, Yi-Fen			�	�	�	�	�		�	�	�	�		0
Chen, Kuan-Pao			�	�	�	�	�		�	�	�	�		0
Tai, Jiin-Chyuan			�		�	�	�				�	�		0
Ku Lai, Mei-Hsueh			�		�	�	�				�	�		0

Note: Please tick the corresponding boxes if directors or supervisors have been any of the following during the two years prior to being elected or during the term of office.

Not an employee of the Company or any of its affiliates.
Not a director or supervisor of any of the Company's affiliates. The same does not apply, however, in cases where the person is an independent director of the Company's parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares.
Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the preceding three subparagraphs.
Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the top five in holdings.
Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company.
Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof.
Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
Not been a person of any conditions defined in Article 30 of the Company Law.
Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

Central Reinsurance Corporation Annual Report 2014 24

Spouse or Relatives within the Second Degree Holding Position as Manager	Relation -ship	-	-	-	-	-
	Name	-	-	-	-	-
	Title	None	None	None	None	None
Current Position(s) in Other Companies		None	None	None	None	None
Principal Work Experience and Academic Qualifications		1. Executive Vice President, Risk Management Division of Evergreen International Corp. 2. B.B.A. in Maritime Science and Management, National Taiwan Ocean University	1. Senior Vice President, Risk Management Division of Evergreen International Corp. 2. B.S. in Maritime Science, National Taiwan Ocean University	1. Senior Vice President, Life & Health Division of Central Re 2. B.A. in Economics, National Chung Hsin University	1. Junior Vice President, Finance Division of Evergreen International Corp. 2. M.B.A., Chung Hua University	1. Junior Vice President, Computer Division of Evergreen International
Shareholding by Other Nominee	%	0	0	0	0	0
	Shares	0	0	0	0	0
Spouse & Dependents Shareholding	%	0	0	0	0	0
	Shares	0	0	0	0	0
Shares Held Directly	%	0	0	0.03	0.01	0
	Shares	0	0	144,928	33,736	0
Date of Accession		2006.08.07	2012.07.25	2012.07.25	2006.01.01	2011.01.01
Name		Juang, Chong-Tsang	Tsai, Bai-Long	Ko, Hsiao-Nan	Cheng, Ching-Fen	Chang, Yung-Ning
Title		President	Executive Vice President	Chief Auditor	Executive Vice President	Senior Vice President

Spouse or Relatives within the Second Degree Holding Position as Manager	Relation -ship		-	-	-	-	-
	Name		-	-	-	-	-
	Title		None	None	None	None	None
Current Position(s) in Other Companies			None	None	None	None	None
Principal Work Experience and Academic Qualifications		Corp. 2. B.B.A, National Taiwan University	1. Junior Vice President, Accounting Department of Central Re 2. B.B.A, National Chengchi University	1. Junior Vice President, Investment Department of Central Re 2. M.B.A., National Taipei University	1. Senior Vice President, Planning Division of Central Re 2. M.S. in Chemical Engineering, National Cheng Kung University	1. Auditor (JVP), Auditing Division of Central Re 2. B.B.A., Feng Chia University	1. Junior Vice President, Personnel Division of Evergreen International Corp. 2. B.L., National Chung Hsin University
Shareholding by Other Nominee	%		0	0	0	0	0
	Shares		0	0	0	0	0
Spouse & Dependents Shareholding	%		0	0	0	0	0
	Shares		0	0	0	0	0
Shares Held Directly	%		0.07	0.01	0.00	0.02	0.00
	Shares		404,838	51,000	227	107,100	5,000
Date of Accession			2011.01.01	2013.01.01	2009.03.01	2013.01.01	2014.06.16
Name			Chen, Yueh-Ying	Chung, Chih-Hung	Lin, Cheng-Yen	Wu, Hsien-Hung	Hsu, Tzu-Cheng
Title			Senior Vice President	Senior Vice President	Senior Vice President	Auditor (DSVP)	Deputy Senior Vice President

Spouse or Relatives within the Second Degree Holding Position as Manager	Relation -ship	-	-	-	-
	Name	-	-	-	-
	Title	None	None	None	None
Current Position(s) in Other Companies		None	None	None	None
Principal Work Experience and Academic Qualifications		1. Junior Vice President, Investment Department of Central Re 2. B.B.A, National Taiwan University	1. Manager, Actuarial Dept. of MSIG Mingtai insurance Corp. 2. M.B.A. in Actuarial Science, Feng Chia University	1. Junior Vice President, Legal & Claim Department of Central Re 2. M.B.A., College of Insurance, New York City, U.S.A.	1. Junior Vice President, Life & Health Department of Central Re 2. B.B.A. in Statistics, National Chengchi University
Shareholding by Other Nominee	%	0	0	0	0
	Shares	0	0	0	0
Spouse & Dependents Shareholding	%	0	0	0	0
	Shares	0	0	0	0
Shares Held Directly	%	0	0	0.05	0
	Shares	0	0	288,809	0
Date of Accession		2008.01.01	2011.07.20	2013.01.01	2012.01.01
Name		Hsiung, Pei-Ching	Lin, Yu-Te	Ting, Wen-Cheng	Liu, Yu-Hsueh
Title		Deputy Senior Vice President	Appointed Actuary	Deputy Senior Vice President	Deputy Senior Vice President

2014 Annual Report 03

CORPORATE GOVERNANCE REPORT

C. Implementation of Corporate Governance

a. The Composition and Operations of the Board of Directors

The Board of Directors consists of nine directors (three independent directors are included).
The Audit Committee comprises all independent directors. Starting from June 11, 2014, the Audit Committee took over the duties of Supervisors specified under the relevant laws and regulations, and the Supervisors were terminated as of June 11, 2014.
The Board Meetings were convened eight (8) times in 2014.

The directors’ attendance status is as follows:

				Attendance Rate in Person(%)
		Attendance in Person	By Proxy
Title	Name				Remarks


Chairman	Evergreen International Corp. Representative : Yang, Cheng-Tui	8	0	100 %	Re-elected on June 11, 2014
Vice Chairman	Evergreen International Corp. Representative : Chang, Kuo-Cheng	0	3	0%	Terminated on June 11,2014
		5	0	100%	Appointed on June 11,2014
Independent Director	Yau, Sea-Wain	8	0	100 %	Re-elected on June 11,2014
Independent Director	Tsen, Ron-Syou	5	0	100 %	Newly elected on June 11, 2014
Independent Director	Chou, Yu-Cheng	5	0	100 %	Newly elected on June 11, 2014
Independent Director	Wu, Chin-Shun	3	0	100%	Terminated on June 11,2014
Director	Ministry of Finance, R.O.C. Representative: Lee, Yi-Fen	8	0	100 %	Re-elected on June 11, 2014
Director	Ministry of Finance, R.O.C. Representative: Chen, Kuan-Pao	3	0	100 %	Appointed on July 25, 2014
Director	Ministry of Finance, R.O.C. Representative: Lin, Shyh-Laang	4	0	100 %	Terminated on June 23, 2014
Director	Evergreen International Corp.	5	0	100 %	Newlyelected

Central Reinsurance Corporation Annual Report 2014 28

2014 Annual Report 03

CORPORATE GOVERNANCE REPORT

				Attendance Rate in Person(%)
		Attendance in Person	By Proxy
Title	Name				Remarks


	Representative: Tai, Jiin-Chyuan				on June 11, 2014
Director	Evergreen International Corp. Representative: Ku Lai, Mei-Hsueh	5	0	100%	Newly elected on June 11, 2014
Director	Evergreen International Corp. Representative: Juang , Chong-Tsang	3	0	100%	Terminated on June 11, 2014
Supervisor	Liao, Shuh-Yuan	3	0	100%	Terminated on June 11,2014
Supervisor	Hsiang-Li Investment Corp. Representative: Wu, Kuang-Hui	2	0	66.67%	Terminated on June 11, 2014
Supervisor	Hsiang-Li Investment Corp. Representative: Ku Lai, Mei-Hsueh	3	0	100%	Terminated on June 11, 2014

b. The Composition and Operations of the Supervisor and Audit Committee

Supervisor

According to Article 218-2 of the Company Law, the supervisors of the Company may attend the meeting of the board of directors to express their opinions.

The supervisors’ attendance status in 2014 are as follows�

		Attendance in Person	Attendance Rate(%)
Title	Name			Remark

Supervisor	Liao, Shuh-Yuan	3	100%	Terminated on June 11,2014
Supervisor	Hsiang-Li Investment Corp. Representative: Wu,Kuang-Hui	2	66.67%	Terminated on June 11, 2014
Supervisor	Hsiang-Li Investment Corp. Representative: Ku Lai, Mei-Hsueh	3	100%	Terminated on June 11, 2014

The supervisors understand the finance and business status of the Company

29 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 03

CORPORATE GOVERNANCE REPORT

by communicating with the internal auditors and the independent accountants. The internal auditors have submitted the audit reports to the supervisors periodically, and the Company’s independent accountants have presented the financial report and audit status to the supervisors periodically.

2. Audit Committee

(1) The Audit Committee consists of all of the independent directors of the Company. Four regular meetings were convened during June 11, 2014 ~ Dec. 31, 2014.
(2) The members’ attendance status is as follows�

		Attendance in Person	By Proxy	Attendance Rate(%)
Title	Name				Remark

Independent Director	Yau, Sea-Wain	4	0	100 %	None
Independent Director	Tsen, Ron-Syou	4	0	100 %	None
Independent Director	Chou, Yu-Cheng	4	0	100 %	None

Central Reinsurance Corporation Annual Report 2014 30

	None
Deviations from the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and Reasons

Implementation Status	(1) The Company has established procedures of complaints. The appointed spokesman or his deputy, as well as the Stocks Department and the General Affairs Department are responsible dealing with the shareholders suggestions and complaints. (2) The Stocks Department is responsible for collecting the updated information of major shareholders and lists the ultimate owners of these major shareholders during the suspension period roster's registration. (3) The Company has established the procedure to strictly regulate the activities of trading between the Company and its affiliates.
Item	1.Shareholding Structure & Shareholders’ Rights (1) Method of handling shareholder suggestions or complaints (2) The Company’s possession of a list of major shareholders and a list of ultimate owners of these major shareholders (3) Risk management mechanism and “firewall” between the Company and its affiliates

31 Central Reinsurance Corporation Annual Report 2014

	None	None	None
Deviations from the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and Reasons

Implementation Status	(1) The Company has three independent directors, namelyYau, Sea-Wain, Tsen, Ron-Syou and Chou, Yu-Cheng. (2) The Company’s Accounting Department conducts the evaluation of the external auditor’s independence and reports to the Board once a year, together with a CPA’s independent account statement.	The Company has designated the Stocks Department and the General Affairs Department to communicate with stakeholders on a case by case basis, as needed. Furthermore, the contact information providing access to the Company’s spokesperson and its relevant departments is available on the Company’s website.	(1) The Company has set up a Chinese/English website (www.centralre.com) to disclose information regarding the Company’s financials, business and corporate governance status. (2) The Company has assigned appropriate persons to collect and disclose company information. The Company has established Procedures for Handling Material Insider Information and for a spokesperson system. No Investor Conference was held in the year 2014.
Item	2.Composition and Responsibilities of the Board of Directors (1) Independent Directors (2) Regular evaluation of CPAs’ independence	3.Ways of communication with stakeholders	4.Disclosure of Information (1) Establishment of a corporate website to disclose information regarding the Company’s financials, business and corporate governance status (2) Other ways of disclosing information(e.g., maintaining an English-language website, appointing responsible people to handle the collection and disclosure of information, appointing spokespersons, webcasting of investors’ conferences)

Central Reinsurance Corporation Annual Report 2014 32

	None	6. If the Company has established corporate governance principles based on the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”, please describe any discrepancy between the principles and their implementation: The Company has established Corporate Governance Principles based on the “Corporate Governance Best-Practice Principles for Insurance Companies” and the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”. There are no discrepancies within the principles and their implementation.
Deviations from the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and Reasons

Implementation Status	The Company’s Board of Directors has established an Audit Committee, a Remuneration Committee and an Enterprise Risk Management Committee. The Audit Committee is empowered by its Charter to conduct any study or investigation it deems appropriate to fulfill its responsibilities. The Audit Committee is comprised of three independent directors. The Audit Committee Charter is available on the Company’s corporate website. The Remuneration Committee assists the Board in discharging its responsibilities related to the Company’s compensation and benefits policies, plans and programs, and in the evaluation and compensation of the Company’s executives. The Remuneration Committee is comprised of three independent directors. The Remuneration Committee Charter is also available on the Company’s corporate website. The Enterprise Risk Management Committee’s primary responsibility is to oversee and approve the Company-wide risk management practices to assist the Board. The Enterprise Risk Management Committee is comprised of an independent director appointed by the Board, and all department heads as members.
Item	5.Operations of the Company’s Nomination Committee, Compensation Committee, or other committees of the Board of Directors

Central Reinsurance Corporation Annual Report 2014

	7. Other important information to facilitate a better understanding of the Company’s corporate governance practices (e.g., employee rights, employee benefits, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors): (1) Status of employee rights and employee benefits: Please refer to the “Labor relations” section on pages 65 of this Annual Report. (2) Status of risk management policies and risk evaluation: Please refer to the “Risk Management” section on pages 156 of the Chinese Annual Report. (3) The Company has been purchasing D&O insurance for its directors since the year 2015. (4) Directors’ training records in 2014 and 2015:
Deviations from the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and Reasons

Implementation Status
Item

Central Reinsurance Corporation Annual Report 2014 34

		Name Date Sponsoring Organization Course Training Hours Yang, Cheng-Tui 2014.07.31 Taiwan Corporate Governance Association Corporate Governance Framework and Trend Analysis 3 Chang, Kuo-Cheng 2014.07.31 Taiwan Corporate Governance Association Corporate Governance Framework and Trend Analysis 3 Yau, Sea-Wain 2014.07.31 Taiwan Corporate Governance Association Corporate Governance Framework and Trend Analysis 3 2014.08.25 Securities & Futures Institute Corporate Ethical Management and Social Responsibility Forums 3 2015.01.22 Securities & Futures Institute Corporate Social Responsibility Report – Seminar on Demonstrating the Value of Sustainable Operation 3 Tsen, Ron-Syou 2014.07.31 Taiwan Corporate Governance Association Corporate Governance Framework and Trend Analysis 3 2014.08.25 Securities & Futures Institute Corporate Ethical Management and Social Responsibility Forums 3 2014.11.20 Financial Supervisory Commission, R.O.C The 10th Taipei Corporate Governance Forum 6 Chou, Yu-Cheng 2014.01.08 Taiwan Securities Association Promotion of the IFRS Policy and Corporate Governance 3 2014.02.26 Taiwan Securities Association Practice of Forensic Accounting for Fraud Detection 3 2014.04.10 Taiwan Securities Association Introduction to Latest News on Taxation Law 3
Deviations from the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and Reasons

Implementation Status
Item

35 Central Reinsurance Corporation Annual Report 2014

		Name Date Sponsoring Organization Course Training Hours Chou, Yu-Cheng 2014.06.11 Taiwan Securities Association Amendments to Enterprises Mergers and Acquisitions Act 3 2014.07.31 Taiwan Corporate Governance Association Corporate Governance Framework and Trend Analysis 3 2014.08.19 Certified Public Accountant, R.O.C Analysis and Strategy to Latest Business Entity Accounting Act 3 2014.09.09 Securities & Futures Institute Corporate Ethical Management and Social Responsibility Forums 3 2014.11.20 Financial Supervisory Commission, R.O.C The 10th Taipei Corporate Governance Forum 6 2015.01.22 Securities & Futures Institute Corporate Social Responsibility Report – Seminar on Demonstrating the Value of Sustainable Operation 3 Lee, Yi-Fen 2014.07.21 Training Institute, Ministry of Finance Corporate Governance and Operating Practice of Board of Directors and Supervisors 3 2014.07.31 Taiwan Corporate Governance Association Corporate Governance Framework and Trend Analysis 3 2014.08.04 Training Institute, Ministry of Finance The Regulations of M & A and Mergers of Financial Institutions 3 2014.08.25 Securities & Futures Institute Corporate Ethical Management and Social Responsibility Forums 3
Deviations from the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and Reasons

Implementation Status
Item

Central Reinsurance Corporation Annual Report 2014 36

		Name Date Sponsoring Organization Course Training Hours Lee, Yi-Fen 2015.01.22 Securities & Futures Institute Corporate Social Responsibility Report – Seminar on Demonstrating the Value of Sustainable Operation 3 Chen, Kuan-Pao 2014.07.31 Taiwan Corporate Governance Association Corporate Governance Framework and Trend Analysis 3 2014.08.04 Training Institute, Ministry of Finance The Regulations of M & A and Mergers of Financial Institutions 3 2014.09.09 Securities & Futures Institute Corporate Ethical Management and Social Responsibility Forums 3 2014.11.20 Financial Supervisory Commission, R.O.C The 10th Taipei Corporate Governance Forum 6 Ku Lai, Mei-Hsueh 2014.07.31 Taiwan Corporate Governance Association Corporate Governance Framework and Trend Analysis 3 2014.09.18 Securities & Futures Institute Corporate Ethical Management and Social Responsibility Forums 3 2015.01.22 Securities & Futures Institute Corporate Social Responsibility Report – Seminar on Demonstrating the Value of Sustainable Operation 3 Tai, Jiin-Chyuan 2014.11.20 Financial Supervisory Commission, R.O.C The 10th Taipei Corporate Governance Forum 3
Deviations from the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and Reasons

Implementation Status
Item

37 Central Reinsurance Corporation Annual Report 2014

	8. If the Company has implemented a self corporate governance evaluation or has authorized any other professional organization to conduct such an evaluation, the evaluation results, major deficiencies or suggestions, and improvements are stated as follows: None
Deviations from the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and Reasons

Implementation Status
Item

Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 03

CORPORATE GOVERNANCE REPORT

d. The Composition and Operations of the Remuneration Committee

The Remuneration Committee was established in 2011 and consists of three (3) members.
The duties of the Remuneration Committee are as follows�
(1) Establish and periodically review the performance evaluation and remuneration policy, system, standards, and structure for directors, supervisors and managerial officers.
(2) Periodically evaluate and establish the remuneration of directors, supervisors, and managerial officers.
The Remuneration Committee convened four (4) meetings in 2014.

The members' attendance status is as follows�

		Attendance in Person	By Proxy	Attendance Rate(%)
Title	Name				Remark

Convener	Yau, Sea-Wain	2	0	100%	Newly appointed on June 11, 2014
Member	Tsen, Ron-Syou	2	0	100%
Member	Chou, Yu-Cheng	2	0	100%
Convener	Wu, Chin-Shun	2	0	100%	Terminated on June 11, 2014
Member	Yau, Sea-Wain	1	1	50%
Member	Juang , Chong-Tsang	2	0	100%	Terminated on March 19,2014

39 Central Reinsurance Corporation Annual Report 2014

	None	None
Deviations from “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons

Implementation Status	(1) Corporate Social Responsibility Policy of Central Re was established and disclosed on our website, http://www.centralre.com/content/information/information09.ht m (2) The Project Division is responsible to coordinate relative departments of proposing and enforcing the corporate social responsibility policies. (3) Please refer to 2014 Corporate Social Responsibility Report page 36~38.	(1) Please refer to 2014 Corporate Social Responsibility Report page 31~32.
Item	1.Exercising Corporate Governance (1) The company declares its corporate social responsibility policy and examines the results of the implementation. (2) The company establishes exclusively (or concurrently) dedicated units to be in charge of proposing and enforcing the corporate social responsibility policies. (3) The company organizes regular training on business ethics and promotion of matters prescribed in the preceding Article for directors, supervisors and employees, and should incorporate the foregoing into its employee performance appraisal system to establish a clear and effective reward and discipline system.	2.Fostering a Sustainable Environment (1) The company endeavors to utilize all resources more efficiently and uses renewable materials which have a low impact on the environment.

Central Reinsurance Corporation Annual Report 2014 40

	None	None
Deviations from “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons

Implementation Status	(2) Please refer to 2014 Corporate Social Responsibility Report page 31~32. (3) The General Affairs Department is responsible for the promotion of related environmental management and maintenance systems. (4) Please refer to 2014 Corporate Social Responsibility Report page 31~32.	(1) Please refer to 2014 Corporate Social Responsibility Report page 38~44. (2) Please refer to 2014 Corporate Social Responsibility Report page 38~39 & 43~44. (3) Please refer to 2014 Corporate Social Responsibility Report page 33~34.
Item	(2) The company establishes proper environmental management systems based on the characteristics of their industries. (3) The company establishes dedicated units or assigns dedicated personnel for environment management to maintain the environment. (4) The company monitors the impact of climate change on its operations and should establish company strategies for energy conservation and carbon and greenhouse gas reduction.	3. Preserving Public Welfare (1) The company complies with relevant labor laws and regulations, protects the legal rights and interests of employees, and has in place appropriate management methods and procedures. (2) The company provides safe and healthy work environments for its employees, and organizes training on safety and health for its employees on a regular basis. (3) The company establishes and discloses policies on consumer rights and interests and provides a clear and

41 Central Reinsurance Corporation Annual Report 2014

		None
Deviations from “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons

Implementation Status	(4) This item is not applicable, since Central Re is a reinsurance company. (5) Please refer to 2014 Corporate Social Responsibility Report page 44~49.	(1) We have published the Corporate Social Responsibility Report annually since 2014. The report was prepared in accordance with the GRI G4 guidelines published in 2013. (2) The reports are available on our website, http://www.centralre.com/content/information/information09.ht m
Item	effective procedure for accepting consumer complaints. (4) The company cooperates with its suppliers to jointly foster a stronger sense of corporate social responsibility. (5) The company, through commercial activities, non-cash property endowments, volunteer service or other free professional services, participates in community development and charities events.	4.Enhancing Information Disclosure (1)Themeasures of disclosing relevant and reliable information relating to their corporate social responsibility. (2)The companyproduces corporate social responsibility reports disclosing the status of their implementation of the corporate social responsibility policy.

Central Reinsurance Corporation Annual Report 2014 42

	5. If the Company has established corporate social responsibility principles based on “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy between the principles and their implementation: Central Re will establish corporate social responsibility principles based on “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies” in 2015.	6. Other important information to facilitate better understanding of the Company’s corporate social responsibility practices (e.g., systems and measures that the company has adopted with respect to environmental protection, community participation, contribution to society, service to society, social and public interests, consumer rights and interests, human rights, safety and health, other corporate social responsibilities and activities, and the status of implementation.�� We have published the Corporate Social Responsibility Report annually since 2014 in accordance with the GRI G4 guidelines published in 2013. The reports are available on our website, http://www.centralre.com/content/information/information09.htm	7. If the products or corporate social responsibility reports have received assurance from external institutions, they should state so below: None
Deviations from “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons

Implementation Status
Item

43 Central Reinsurance Corporation Annual Report 2014

E. Ethical Corporate Management Ethical corporate management at the Company and related implementation
		None
	Deviations from “Ethical Corporate Management Best-Practice Principles for TWSE/GTSM Listed Companies” and Reasons

	Implementation Status	(1)The Company has established Ethical Corporate Management Best Practice Principles according to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies and has disclosed at its website (www.centralre.com). When engaging in commercial activities, the Board of Directors and the management team shall comply with the principles. (2)The Company has established Ethical Corporate Management Procedures and Behavior Guideline and provides educational training to the Board of Directors and the management team periodically.
	Item	1. Establishment of Corporate Conduct and Ethics Policy and Implementation Measures (1) The company’s guidelines on corporate conduct and ethics are provided in internal policies and disclosed publicly. The Board of Directors and the management team demonstrate their commitments to implement the policies (2) Establish relevant policies for preventing any unethical conduct. The implementation of relevant procedures, guidelines and training mechanism are provided in the policies

Central Reinsurance Corporation Annual Report 2014 44

		None
Deviations from “Ethical Corporate Management Best-Practice Principles for TWSE/GTSM Listed Companies” and Reasons

Implementation Status	(3) The Company has amended the internal procedures to prevent any unethical conduct especially regarding procurement and investment activities.	(1) The Company engages the reinsurance business. Both the insurance contracts and the reinsurance contracts are utmost good faith contract. Additionally, the Company includes relevant clauses as appropriate in the business contracts to prevent doing business with those involved in unethical conduct. (2) The Company has assigned Audit Office in charge of promotion and execution of the Company’s Ethical Corporate Management Best Practice Principles. The Audit Office has reported the related implementation situation to the Board of Directors meetings on Dec. 24, 2014.
Item	(3) Establish appropriate measures for preventing bribery and illegal political contribution for higher potential unethical conduct in the relevant policies	2. Corporate conduction and ethics compliance practice (1) The company shall prevent doing business with whomever has unethical records and include business conduct and ethic related clauses in the business contracts (2) Set up dedicated (non-dedicated) unit in charge of promotion and execution of the company’s corporate conduct and ethics. The board of directors supervises such execution and compliance of the policies.

45 Central Reinsurance Corporation Annual Report 2014

	None
Deviations from “Ethical Corporate Management Best-Practice Principles for TWSE/GTSM Listed Companies” and Reasons

Implementation Status	(3)The Company has established procedures to strictly regulate the conflict of interest regarding trading with affiliates. According to The Company’s Rules of Procedure for Board of Directors Meetings, if a director is an interested party in relation to an agenda item, the director shall state the important aspects of the interested party relationship at the respective meeting and shall recuse himself or herself from the discussion or the voting on the item, and may not exercise voting rights as proxy for another director. (4)The Company has established both Accounting System and Internal Control and Audit System according to the Implementation Rules for Insurance Internal Control and Audit System and the Regulations Governing the Preparation of Financial Reports by Enterprises Engaging in Insurance. The Company’s audit office will audit the implementation of corporate governance in 2015. According to the article 26 of the Implementation Rules for Insurance Internal Control and Audit System, when the Company engages an accountant to audit its annual financial statements, it asks the same accountant to audit its internal control system.
Item	(3) Establish policies to prevent conflict of interest and provides appropriate communication and complaint channels. (4) Establish effective accounting and internal control systems for the implementation of policies, and the internal or external auditors audit such execution and compliance.

Central Reinsurance Corporation Annual Report 2014 46

	None	None
Deviations from “Ethical Corporate Management Best-Practice Principles for TWSE/GTSM Listed Companies” and Reasons

Implementation Status	The article 21 of the Company’s Ethical Corporate Management Procedures and Behavior Guideline has included a whistle-blowing system. The whistle-blowing system has regulated its procedures and secret mechanism. The system has regulated as well to protect Prosecutors and publish the persons violating the policies.	(1) The Company has disclosed its Ethical Corporate Management Best Practice Principles and its recent implementation situation at its website. (2) The Company has appointed personnel to gather and post the relating information at the website of Market Observation Post System.
Item	3. Establish the channels for reporting any ethical irregularities and set up punishment for violations of the policies	4. Strengthening Information disclosure (1) A corporate website that publishes information relating to the company’s corporate conducts and ethics (2) Other information disclosure channels (e.g. maintaining an English website, designating personnel to handle information collection and disclosures)

47 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 03

CORPORATE GOVERNANCE REPORT

F. Material Resolutions of Shareholders Meeting and Board of Directors Meeting

a. Material Resolutions of Shareholders Meeting


Date	MajorResolutions	Execution

June 11, 2014	Approval of the distribution of earnings of the year 2013 A. Cash Dividends: NT$674,730,000. Cash dividend per share NT$1.2. B. Remuneration to Directors and Supervisors: NT$3,100,000. C. Bonus to Employees: NT$5,995,648.	1. The Board Meeting convened on June 30, 2014 resolved the record date for distribution of cash dividends on July 26, 2014 and payment date on Aug. 18, 2014. 2. The cash dividend was distributed on Aug.18,2014.
	Amending Articles of Incorporation.	The Company’s revised Articles of Incorporation was approved and registered as per the document, Jing-Shou-Shang Zi No.10301160240 issued by the Ministry of Economic Affairs. Additional tasks have been processed in accordance with revisedArticle of Incorporation.
	Amending Regulations for Electing Directors and Supervisors.	Related actions on behalf of the Company have been conducted in accordance with revised Regulations for Electing Directors.
	Amending Procedures for Acquiring and Disposing of Assets.	Related actions on behalf of the Company have been conducted in accordance with revised Procedures for Acquiring and Disposing of Assets.
	Amending Procedures for Transaction of Financial Derivatives.	Related actions on behalf of the Company have been conducted in accordance with revised Procedures for Transaction of Financial Derivatives.
	Election of new Directors of the Company.	Nine Directors (including three Independent Directors) and Audit Committee have operated pursuant to the relevant regulations.

Central Reinsurance Corporation Annual Report 2014 48

2014 Annual Report 03

CORPORATE GOVERNANCE REPORT

b. Material Resolutions of Board of Directors Meeting


Date	Major Proposals

Jan. 27, 2014	(1) To approve the 2013 year-end bonus to managers. (2) To approve the 2013 year-end bonus to the Chairman and Vice Chairman.
Mar. 24, 2014	(1) To approve the 2013 remuneration to directors and supervisors of the Company. (2) To approve the 2013 bonus to employee. (3) To approve the Financial Statements of the year 2013. (4) To approve the distribution of earnings of the year 2013. (5) To approve the Business Report of the year 2013. (6) To approve the 2013 Internal Control statement. (7) To amend the Internal Control System and Internal Audit Implementation Rules, and Internal Control System of Shareholder Services procedures. (8) To amend Articles of Incorporation. (9) To amend Regulations for Electing Directors and Supervisors. (10) To amend Rules for Procedures of the Meeting of the Board of Directors. (11) To amend Procedures for Acquiring and Disposing of Assets and Procedures for Transaction of Financial Derivatives. (12) To amend Remuneration Committee Charter. (13) To establish Audit Committee Charter. (14) To re-elect the directors and supervisors of the Company. (15) To discuss lifting the restriction of "Non-Competition" for the newly elected directors. (16) To stipulate the date and venue for the 2014 Annual General Meeting of Shareholders.
Apr. 30, 2014	(1) To appoint the Company’s Certified Public Accountants and evaluate CPA’s independence and speciality. (2) To amend the Internal Control System and Internal Audit Implementation Rules. (3) To amend Rules Governing the Transactions Other Than Loan Extension between The Company and Its Interested Parties. (4) To amend Rules Governing the Scope of Powers of Independent Directors. (5) To examine the roster of directors candidates (including independent directors) submitted by the shareholders. (6) To resolve non-acceptance of shareholders’ proposals submitted after the submission deadline.

49 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 03

CORPORATE GOVERNANCE REPORT


Date	Major Proposals

Jun. 11, 2014	(1) To re-elect Mr. Yang, Cheng-Tui as the Chairman of the Board of Directors. (2) To re-elect Mr. Chang, Kuo-Cheng as the Vice Chairman of the Board of Directors. (3) To appoint Mr. Yau Sea-Wain, Mr. Tsen Ron-Syou and Mr. Chou Yu-Cheng, as members of theRemunerationCommittee. (4) To appoint Mr. Tsen Ron-Syou, the independent Director, as the convener of theEnterpriseRisk Management Committee.
Jun. 30, 2014	(1) To amend the Internal Control System and Internal Audit Implementation Rules. (2) To approve the record date for distribution of cash dividends on Jul. 26, 2014 and payment date on Aug. 18, 2014. (3) To amend the compensation structure and performance incentive system for directors and supervisors. (4) To approve 2014 remuneration to the Chairman and Vice Chairman. (5) To approve 2014 transportation allowances to the directors. (6) To approve 2014 remuneration and the compensation of functional committee members to the Independent Directors.
Aug. 20, 2014	(1) To approve the Financial Statements of the first half of year 2014. (2) To establish the Procedures for Handling Material Inside Information. (3) To amend the Internal Control System and Internal Audit Implementation Rules. (4) To amend the Risk Management Committee Charter.
Oct. 29, 2014	(1) To establish Corporate Governance Principles. (2) To amend the Internal Control System and Internal Audit Implementation Rules. (3) To amend the Risk Management Committee Charter. (4) To amend The Company's Legal Compliance System. (5) To establish the Standard Operational Procedure to Comply with Anti-Money Laundering and Countering Terrorism Financing Regulations. (6) To appoint Ting, Wen-Cheng, Deputy Senior Vice President, as Legel Compliance Officer.
Dec. 24, 2014	(1) To approve Operation Plan and Budget of the year 2015. (2) To amend the Internal Control System and Internal Audit Implementation Rules. (3) To approve the 2015 Annual Audit Plan. (4) To approve Corporate Social Responsibility Policy and 2013 Corporate Social Responsibility Report.

Central Reinsurance Corporation Annual Report 2014 50

2014 Annual Report 03

CORPORATE GOVERNANCE REPORT


Date	Major Proposals

	(5) To establish the Ethical Corporate Management Best Practice Principles and report its operation situation. (6) To approve the Company's Legal Compliance Plan of the year 2015. (7) To establish Directions Governing Anti-Money Laundering and Countering Terrorism Financing. (8) To amend Rules for Procedures of the Meeting of the Board of Directors. (9) To amend Audit Committee Charter. (10)To amend Rules Governing the Scope of Powers of Independent Directors. (11)To establish the Codes of Ethical Conduct. (12)To approve obtaining Directors’ and Officers’ Liability Insurance policy. (13)To amend the compensation structure and performance incentive system for managers. (14)To approve the 2015 remuneration to managers. (15)To approve the 2015 compensation structure and performance incentive system for directors. (16)To approve 2015 remuneration to the Chairman and Vice Chairman. (17)To approve 2015 transportation allowances to the directors. (18)To approve 2015 remuneration and the compensation of functional committee members to the Independent Directors.
Feb. 11, 2015	(1) To stipulate the date and venue for the 2015 Annual General Meeting of Shareholders. (2) To approve the 2014 year-end bonus to managers. (3) To approve the 2014 year-end bonus to the Chairman and Vice Chairman.
Mar. 25, 2015	(1) To approval the 2014 remuneration to directors and supervisors of the Company. (2) To approve the 2014 bonus to employee. (3) To approve the Business Report of the year 2014. (4) To approve the Financial Statements of the year 2014. (5) To approve the distribution of earnings of the year 2014. (6) To amend the Internal Control System and Internal Audit Implementation Rules, Procedures for Transaction of Financial Derivatives, Policies and Procedures for Transaction and Risk Management of Financial Derivatives. (7) To establish Procedures for Ethical Management and

51 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 03

CORPORATE GOVERNANCE REPORT

	Major Proposals Guidelines for Conduct. (8) To approve the 2014 Internal Control Statement. (9) To approve lifting the restriction of “non-competition” for Mr. Chang, Kuo-Cheng, Vice Chairman.
Date

G. Changes in Shareholdings and shares Pledged by Directors, Supervisors, Managers and Major Shareholders


		2014		As of March 30, 2015

Title	Name	Increase	Increase	Increase	Increase
		(Decrease)		(Decrease)
			(Decrease)		(Decrease)
		In		In
			Share Pledged		Share Pledged
		Shareholding		Shareholding

Chairman	Evergreen International Corp.	0	0	0	0
	Representative: Yang, Cheng-Tui	0	0	0	0
Vice Chairman	Evergreen International Corp.	0	0	0	0
	Representative: Chang, Kuo-Cheng	0	0	0	0
Independent Director	Yau, Sea-Wain	0	0	0	0
Independent Director	Tsen, Ron-Syou	0	0	0	0
Independent Director	Chou, Yu-Cheng	0	0	0	0
Director	Ministry of Finance, R.O.C.	0	0	(1,037,000)	0
	Representative: Lee, Yi-Fen	0	0	0	0
	Representative: Chen, Kuan-Pao	0	0	0	0
Director	Evergreen International Corp.	0	0	0	0
	Representative: Tai, Jiin-Chyuan	0	0	0	0
	Representative: Ku Lai, Mei-Hsueh	0	0	0	0
President	Juang, Chong-Tsang	0	0	0	0

Central Reinsurance Corporation Annual Report 2014 52

2014 Annual Report 03

CORPORATE GOVERNANCE REPORT


		2014		As of March 30, 2015

Title	Name	Increase	Increase	Increase	Increase
		(Decrease)		(Decrease)
			(Decrease)		(Decrease)
		In		In
			Share Pledged		Share Pledged
		Shareholding		Shareholding

Major Shareholder	Ministry of Finance, R.O.C.	0	0	(1,037,000)	0
Major Shareholder	Evergreen International Corp.	0	0	0	0
Executive Vice President	Tsai, Bai-Long	0	0	0	0
Chief Auditor	Ko, Hsiao-Nan	0	0	0	0
Executive Vice President	Cheng, Ching-Fen	0	0	0	0
Senior Vice President	Chang, Yung-Ning	0	0	0	0
Senior Vice President	Chen, Yueh-Ying	0	0	0	0
Senior Vice President	Chung, Chih-Hung	0	0	0	0
Senior Vice President	Lin, Cheng-Yen	0	0	0	0
Auditor (DSVP)	Wu, Hsien-Hung	0	0	0	0
Deputy Senior Vice President	Hsu, Tzu-Cheng	5,000	0	0	0
Deputy Senior Vice President	Hsiung, Pei-Ching	0	0	0	0
Appointed Actuary	Lin, Yu-Te	0	0	0	0
Deputy Senior Vice President	Ting, Wen-Cheng	0	0	0	0
Deputy Senior Vice President	Liu, Yu-Hsueh	0	0	0	0

53 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 04

CAPITAL OVERVIEW

IV. CAPITAL OVERVIEW

A. Source of Capital Stock

a. Issued Share

Unit: thousand shares / NT$ thousands

		Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital	Remark	Remark
	Par						Capital
Month/
	Value						Increased by
Year		Shares	Amount	Shares	Amount	Sources of Capital
	(NTD)						Assets Other

							thanCash
11/1982	10	50,000	500,000	50,000	500,000	The Company's share capital increased by 485,000 from the original share capital 15,000 before public issuance.	-
11/1983	10	60,000	600,000	60,000	600,000	Cash offering 100,000	-
08/1984	10	70,000	700,000	70,000	700,000	Cash offering 100,000	-
06/1987	10	90,000	900,000	90,000	900,000	Cash offering 200,000	-
11/1987	10	100,000	1,000,000	100,000	1,000,000	Cash offering 100,000	-
02/1990	10	109,900	1,099,000	109,900	1,099,000	Cash offering 99,000	-
01/1991	10	120,000	1,200,000	120,000	1,200,000	Cash offering 101,000	-
12/1995	10	200,000	2,000,000	200,000	2,000,000	Cash offering 800,000	-
03/1999	10	300,000	3,000,000	300,000	3,000,000	Cash offering 1,000,000	-
06/2002	10	500,000	5,000,000	300,000	3,000,000	Amend Articles of Incorporation.	-
08/2003	11	500,000	5,000,000	360,000	3,600,000	Cash offering 600,000	-
11/2004	12	500,000	5,000,000	420,000	4,200,000	Cash offering 600,000	-
08/2005	11.5	500,000	5,000,000	500,000	5,000,000	Cash offering 800,000	-

Central Reinsurance Corporation Annual Report 2014 54

2014 Annual Report 04

CAPITAL OVERVIEW

		Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital	Remark	Remark
	Par						Capital Increased by Assets Other thanCash
Month/
	Value
Year		Shares	Amount	Shares	Amount	Sources of Capital
	(NTD)


08/2007	10	600,000	6,000,000	525,000	5,250,000	Capitalization of retained earnings 250,000	-
08/2008	10	600,000	6,000,000	551,250	5,512,500	Capitalization of retained earnings 262,500	-
07/2013	10	600,000	6,000,000	562,275	5,622,750	Capitalization of retained earnings 110,250	-

b. Type of Stock

		Unit:thousand shares / NT$thousands	Unit:thousand shares / NT$thousands	Unit:thousand shares / NT$thousands
		Authorized Capital
Share Type				Remarks

	Issued Shares	Un-issued Shares	Total Shares


Common Shares	562,275	37,725	600,000	Based on Total Shares Outstanding as of March 30, 2015

B. Shareholders Structure

					As of March 25,2015	As of March 25,2015
			Other Juridical Person		Foreign Institutions & Natural Persons
				Domestic
	Government	Financial
Item				Natural		Total
	Agencies	Institutions
				Persons


Number of Shareholders	1	1	39	7,579	41	7,661
Shareholding (shares)	127,002,689	21,020	335,464,595	84,168,355	15,618,341	562,275,000
Percentage	22.59%	0%	59.66%	14.97%	2.78%	100%

55 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 04

CAPITAL OVERVIEW

C. Diffusion of Ownership and List of Principal Shareholders

a. Diffusion of Ownership (Common Shares)

		As of March 25,2015	As of March 25,2015
	Number of	Number of
Range of Shareholdings			Holding (%)
	Shareholders	Shares

1 - 999	2,671	339,194	0.06
1,000 - 5,000	2,992	6,421,667	1.14
5,001 - 10,000	738	5,196,629	0.92
10,001 - 15,000	395	4,638,844	0.83
15,001 - 20,000	173	3,061,371	0.54
20,001 - 30,000	225	5,377,730	0.96
30,001 - 50,000	179	6,945,263	1.24
50,001 - 100,000	127	8,664,180	1.54
100,001 - 200,000	85	11,914,071	2.12
200,001 - 400,000	38	11,190,866	1.99
400,001 - 600,000	12	5,777,529	1.03
600,001 - 800,000	7	4,571,666	0.81
800,001 - 1,000,000	2	1,758,410	0.31
1,000,001and above	17	486,417,580	86.51
Total	7,661	562,275,000	100

b. List of Principal Shareholders

As of March 25, 2015

Shareholding	Number of
		Holding (%)
Entity	Shares

Evergreen International Corp.	197,541,037	35.13
Ministryof Finance,R.O.C.	127,002,689	22.59
Evergreen International Storage & Transport Corp.	48,788,966	8.68
Evergreen Marine Corp.(Taiwan)Ltd.	47,491,873	8.45
EVA Airways Corp.	33,526,675	5.96
EFG Bank	7,516,407	1.34
Chang,Kuo-Cheng	6,541,899	1.16
Tsai,Han-Chang	3,050,076	0.54
Hsiang-Li Investment Corp.	2,610,040	0.46
Dimensional Emerging Markets Value Fund	2,395,016	0.43

Central Reinsurance Corporation Annual Report 2014 56

2014 Annual Report 04

CAPITAL OVERVIEW

D. Disclosure of the Share Prices and Related Information for the

Past Two Fiscal Years

NT$


Year			01/01/2015
	2014	2013
Items			-03/30/2015


Market Prices per Share
Highest	18.20	14.40	17.25
Lowest	14.15	12.75	15.90
Average	16.00	13.56	16.74
Net Worth per Share
Before Distribution	16.82	16.07	NA
After Distribution	(Note)	14.87	NA
Earnings per Share
Weighted Average Shares	562,275,000	562,275,000	NA
Diluted Earnings per Share	1.55	1.30	NA
Adjusted Diluted Earnings per Share	(Note)	1.30	NA
Dividends per Share
Cash Dividends	(Note)	1.20	NA
Stock Dividends
Dividends from Retained Earnings	(Note)	-	NA
Dividends from Capital Surplus	(Note)	-	NA
Accumulated Undistributed Dividends	(Note)	-	NA
Return on Investment
Price/Earnings Ratio	10.23	10.42	NA
Price/Dividend Ratio	(Note)	11.29	NA
Cash Dividend Yield Rate	(Note)	8.86%	NA

Note: Earnings distribution for the year of 2014 has not yet been resolved at the stockholders' meeting as of the reporting date.

E. Dividend Policy and Earnings Distribution Implementation Status

a. Dividend Policy

Under the Company's Articles of Incorporation, the current year's earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 20% of the remaining amount shall be set aside as legal reserve, recognize or reverse special reserve in accordance with regulations, and

57 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 04

CAPITAL OVERVIEW

accumulated unappropriated earnings of the prior period. Appropriation of the remainder shall be proposed by the Board of Directors and resolved by the stockholders.

Bonus distributed to the employees should account from 0.5% to 5% of the total distributed amount and can either be in the form of cash or stock upon resolution of the stockholders, and remuneration paid to directors should account for 1% at most of the total distributed amount.

The Company’s dividends are distributed in the form of cash dividends and stock dividends in a coordinated way, among which, the cash dividends shall account for at least 50% of the total dividends distributed. Employees’ bonus may be distributed in the form of stocks or cash through a resolution in the stockholders’ meeting.

b. Earnings Distribution Implementation Status

		NT$
Year Items	2014	2013
Proposal bythe Board of Directors Meeting	March 25,2015	March 24,2014
Stockholders’ Meeting	May27,2015	June 11,2014
Bonuses to Employees	7,141,169(Note)	5,995,648
Remuneration to Directors’ and Supervisors	2,878,000(Note)	3,100,000
Cash Dividends	1.20(Note)	1.20

Note: Earnings distribution for the year of 2014 has not yet been resolved at the stockholders’ meeting as of the reporting date.

Central Reinsurance Corporation Annual Report 2014 58

2014 Annual Report 05

BUSINESS OPERATIONS OVERVIEW

V.BUSINESS OPERATIONS OVERVIEW

A. Business Activities

a. Business Scope

Breakdown by Source

NT$ thousands

Gross Premium	Gross Premium	Gross Premium
Year	2013		2014
Item	Amount	Percentage (%)	Amount	Percentage (%)
Domestic Non-Life Business	8,121,090	51.89	8,422,688	51.51
Domestic Life Business	5,863,213	37.47	6,472,138	39.59
Subtotal	13,984,303	89.36	14,894,826	91.10
International Non-Life Business	1,511,443	9.66	1,385,164	8.47
International Life Business	153,947	0.98	69,878	0.43
Subtotal	1,665,390	10.64	1,455,042	8.90
Total	15,649,693	100.00	16,349,868	100.00

2. Breakdown By Line

NT$ thousands

Gross Premium	Gross Premium	Gross Premium
Year	2013		2014
Line	Amount	Percentage (%)	Amount	Percentage (%)
Fire	1,794,472	11.47	1,804,408	11.04
Marine Hull	331,614	2.12	271,699	1.66
Marine Cargo	453,283	2.90	420,628	2.57
Automobile	3,090,949	19.75	3,305,225	20.21
Aviation	3,420	0.02	5,081	0.03
Engineering	315,068	2.01	305,696	1.87
Miscellaneous Casualty	1,297,948	8.29	1,331,595	8.14
Fish Vessel	25,162	0.16	23,796	0.15
Compulsory Automobile Liability	1,368,038	8.74	1,402,150	8.58
Compulsory Motorcycle liability	903,093	5.77	884,062	5.41
Residential Earthquake	49,486	0.32	53,512	0.33
Life	2,274,962	14.54	2,346,284	14.35
Personal Accident	1,456,568	9.31	846,340	5.18
Health	2,285,630	14.60	3,349,392	20.48
Total	15,649,693	100.00	16,349,868	100.00

59 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 05

BUSINESS OPERATIONS OVERVIEW

3. Further Development of new products, clients and markets

(1) Domestic Non-Life Business

The non-life insurers are actively developing new products to meet customer's requirements to enhance their competitiveness. Central Re, as the only domestic reinsurer, takes this opportunity to deliver innovative and tailor-made solutions for our clients in the area of product development and underwriting. We work with our clients to grow their profession and business. Such relationship enhancement is beneficial to Central Re in expanding our market share.

(2) Domestic Life Business

To cope with the problems presented by an aging population in Taiwan, Financial Supervisory Commission encourages life insurance companies to develop protection insurance such as annuity, health insurance and long term care insurance, etc. Moreover, life insurance policyholders are allowed to transfer their policies into other categories, such as annuity, health insurance and long term care insurance, etc. This became effective in August 2014 to meet a wide range of different fund needs of insurance policyholders. The transfers are expected to allow the insured to get compensation while they are still alive and financially benefit more elderly insurance policyholders. Accordingly, we provide these new product development services for disability insurance, critical illness insurance and other health insurance to expand business opportunities in these fields.

(3) International Non-life Business

For International business, China, Japan and South Korea are our core markets and we expand business in these markets with a stable and deliberate attitude. On the other hand, we keep exploring other potential market to diversify and optimize our portfolio.

Central Reinsurance Corporation Annual Report 2014 60

2014 Annual Report 05

BUSINESS OPERATIONS OVERVIEW

b. Industry Overview

1. Market Players

According to statistics released by the Insurance Bureau at the end of 2014, there were 54 insurance companies in Taiwan, of which 29 were life insurance companies, 22 were non-life insurance companies and 3 were reinsurance companies. Out of the 29 life insurance companies, 24 were domestic companies while 5 were branches of foreign companies. The 22 non-life insurance companies include 17 domestic and 5 foreign companies.

Number of Insurance Companies in Taiwan over the Past Five Years

				Non-Life Insurance	Non-Life Insurance	Non-Life Insurance	Non-Life Insurance		Life Insurance	Life Insurance	Life Insurance	Life Insurance
				Local		Foreign			Local		Foreign
												Liaison
Year	Total	Reinsurance					Liaison				Branch
					Offshore	Branch		Headq		Offshore		Office
			Headquarter	Branch			Office in		Branch		in
					Branch	in Taiwan		uarter		Branch		in
							Taiwan				Taiwan
												Taiwan

2010	57	3	17	163	15	6	9	23	129	13	8	4
2011	57	3	17	164	12	6	9	24	129	13	7	3
2012	57	3	17	164	11	6	9	24	129	13	7	3
2013	56	3	17	164	12	6	9	24	123	13	6	3
2014	54	3	17	165	10	5	8	24	123	13	5	2

Source�Insurance Bureau, Financial Supervisory Commission

2. Premium Income

The total premium income of the domestic insurance industry during 2014 was NT$2,903,350 million, a rise of 7.2% over the previous year. Non-life insurance premium income accounted for NT$132,220 million, a rise of 5.86% over the previous year. Total life insurance premium income was NT$2,771,130 million, a rise of 7.26% over 2013.

Premium Income over the Past Five Years NT$ millions

Year			Non-Life	Non-Life	Life	Life
	Insurance Industry		Insurance		Insurance		Premium Income; Non-Life vs Life
	Amount	Growth Rate	Amount	Growth Rate	Amount	Growth Rate	. Insurance
		(%)		(%)		(%)
2010	2,418,655	14.71	105,806	3.88	2,312,849	15.26	1:21.9
2011	2,311,204	(4.44)	113,033	6.83	2,198,171	(4.96)	1:19.5
2012	2,598,831	12.44	120,483	6.59	2,478,348	12.75	1:20.6
2013	2,708,436	4.22	124,904	3.67	2,583,532	4.24	1:20.7
2014	2,903,350	7.20	132,220	5.86	2,771,130	7.26	1:21.0

Source: Taiwan Insurance Institute

61 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 05

BUSINESS OPERATIONS OVERVIEW

c. Long-term and Short-term Development

Long-term Development
(1) Implement legal compliance, risk management, internal control and corporate governance activities
(2) Uphold sound business ethics, contribute to the insurance market, and fulfillment of corporate social responsibility
(3) Promote our professional image, strengthen employee's training and career development
(4) Focus on providing tailor-made reinsurance solutions to increase customer satisfactions
(5) Cultivate Taiwan market to pursue long term and steady underwriting profit
(6) Prudently expand international business and increase overseas business from direct market
(7) Strengthen capital structure and enhance utilization efficiency of capital
Short-Term Development
(1) Implement corporate governance activities, ethical corporation management and fulfillment of corporate social responsibility
(2) Satisfy clients by tailor-made solutions based on their requirements to gain the profitable traditional proportional reinsurance.
(3) Strengthen capital structure to enhance company's solvency
(4) Adopt a sound investment strategy to achieve our goals of steady revenue and earnings growth
(5) Prudently expand international business to diversify our business portfolio
(6) Maintain client relationships by providing actuarial services, supports of new products development, professional seminars, discussion of regulations, etc
(7) Integrate risk management and operation decisions by means of practicing risk management mechanism to enhance the ability of risk governance

Central Reinsurance Corporation Annual Report 2014 62

2014 Annual Report 05

BUSINESS OPERATIONS OVERVIEW

B. Market Overview

a. Breakdown by Region

NT$ thousands

Year	2013	2013	2014	2014
Region		Percentage		Percentage
	Amount		Amount
		(%)		(%)

Domestic Inward Business	13,984,303	89.36	14,894,826	91.10
Overseas Inward Business	1,665,390	10.64	1,455,042	8.90
Total	15,649,693	100.00	16,349,868	100.00

b. Market Share

In Taiwan market, our market share at the end of 2014 was as follows.

		NT$millions
Year	Non-Life	Life
Item	Insurance	Insurance
Written Premium	132,220	2,771,130
Outward Premium	41,729	45,591
Cession Rate (%)	31.56	1.65
Central Re's Inward	8,423	6,472
Our Market Share (%)	20.19	14.20

c. Market Development

1. Domestic Non-Life Business

The economic growth in recent years had contributed to the increase of car sales and overall business activities. Combined with the upward auto insurance pricing, it has achieved a stable growth for non-life insurance premium income. Following optimistic economic outlook in 2015, it is expected that premium income will continue to grow along with reasonable underwriting profit.

2. Domestic Life Business

Facing the aging population with fewer children, the competent authority encourages life insurance company to develop aging-society care and nursing-related insurance products and strengthen the promotion of such products with a wide range of insurance protection. Moreover, the

63 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 05

BUSINESS OPERATIONS OVERVIEW

competent authority has relaxed restrictions on buying insurance via internet and improved its availability. With types of products more diversified and sales channels more convenient, reinsurance business will have room to grow.

3. International Non-life Business

After several catastrophes in 2011 such as Japan Tohoku Earthquake, Christchurch Earthquake and Thailand Flood, the renewal prices had substantially increased, with terms improved in the following years. At the same time, more and more new underwriting capacity were accumulated and injected into the market. However, with less natural perils activities over recent years, global market insurance losses were considerably reduced and excessive underwriting capacity were accumulated. The reinsurance pricing remains soft and competition are heating up. As a result, the profit margins of some insurance and reinsurance companies were affected. If no severe catastrophe occurs in the near future, this trend is expected to continue for a period of time.

Central Reinsurance Corporation Annual Report 2014 64

2014 Annual Report 05

BUSINESS OPERATIONS OVERVIEW

C. Human Resources

Year	Year	2013	2014	2015 (as of March 30)
Number of Employees		133	133	132
Average Age		40	40.73	40.21
Average Years of Service		9.25	9.96	9.67
Education	Masters	45.87%	45.11%	44.70%
	Universityor College	53.38%	54.14%	54.54%
	Others	0.75%	0.75%	0.76%

D. Labor Relations

a. Central Re’s various employee benefit programs, pursuing further education, training, retirement system and its practice, employee/ employer agreements and conditions of various safeguard measures of rights and interests of employees.
Employee benefits program
- (1) Annual paid leaves are granted according to “Labor Standards Act”.
- (2) Insurance: It covers National Health Insurance, Labor Insurance and TPA for employees travelling overseas.
- (3) Health Care: It provides regular health check-up (including new employee health check-up) to ensure body health of employees
- (4) Pursuing further education and training:
  - Central Re actively encourages employees to enhance personal professional capabilities. In 2014, it totals 379 person-times to participate in various domestic financial, reinsurance or internal training programs. Moreover, employees are encouraged to acquire professional license to enhance personal abilities (referring to page 3 of the Chinese annual report for more details.)
- (5) Performance Bonus: Year-end bonus is provided on annual basis.
- (6) Employee Bonus: Every fiscal year, the company will prepare a fixed

65 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 05

BUSINESS OPERATIONS OVERVIEW

percentage of after tax profit for employees as employee bonus, and will distribute to employees subject to the approval of shareholders meeting.

(7) The Employee Welfare Committee set up to handle various employee benefits: It is funded by the company based on revenue and by employee based on salary level on a monthly basis.
(8) Subsidies: Central Re provides subsidies for wedding, funeral, injuries or illnesses.
Retirement system
(1) Central Re has specific Employee Retirement Guidelines.
(2) Central Re has set up a Labor Pension Supervisory Committee, which was approved by the Taipei City Government.
(3) Central Re implemented the New Labor Pension System in July 2005.
Labor negotiations and protection of employee benefits

To maintain harmonious labor relations, the company established a Labor-Management Meeting to efficiently and effectively communicate with employees.

b. Losses caused by labor disputes in the recent year:

None

c. Employee behavior/ethical standards & Employee safety and sanitary policy

Central Re has established policies and rules as a guide for employee conduct, rights, responsibilities, and ethical standards.
(1) Working Rules

Central Re’s working rules clearly define the rights and obligations of management and labor.

(2) Code of Conduct

Central Re has a code of ethical conduct that all directors, managers

Central Reinsurance Corporation Annual Report 2014 66

2014 Annual Report 05

BUSINESS OPERATIONS OVERVIEW

and employees are expected to adhere to and advocate in accordance with the highest ethical standards.

Employee safety and sanitary policy

Central Re’s employee safety and sanitary policy is posted on the intranet and is summarized as follows.

(1) Guards and security systems have been installed at all main base stations and work offices to protect staff, property and information security.
(2) The fire drill and labor safety training are conducted periodically according to disaster prevention and protection plan to reduce risks of employee injury and property loss from natural disasters.
(3) The Prevention Policy of Sexual harassment and its advocacy have been announced on the intranet with a complaints procedure set up.
(4) Labor Safety and Hygiene Rules and its annual management plan have been made and followed.
(5) Energy-saving policies have been established to reduce carbon emissions.

67 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 05

BUSINESS OPERATIONS OVERVIEW

E. Important Contracts

a. Non-life Business


Type of	Counterparty	Period	Major Contents	Restrictions
Contract

Reinsurance contracts	Domestic and overseas non-life insurance companies	2014.1.1-2014.12.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
	Overseas non-life insurance companies	2014.4.1-2015.3.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
Retrocession contracts	Domestic and overseas non-life insurance companies	2014.1.1-2014.12.31	Non-life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas non-life reinsurance companies	2014.1.1-2014.12.31	Non-life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas non-life reinsurance Companies	2014.1.1-2014.12.31	Non-life reinsurance inward businesses	some contracts include exclusion clauses
	Overseas non-life reinsurance Companies	2014.4.1-2015.3.31	Non-life reinsurance inward businesses	some contracts include exclusion clauses
Catastrophe Reinsurance contracts	Overseas non-life reinsurance companies	2014.2.1-2015.1.31	To protect our net retention excess catastrophe losses	The contracts include exclusion clauses

b. Life Business


Type of
	Counterparty	Period	Major Contents	Restrictions
Contract


Reinsurance contracts	Domestic and overseas life insurance companies	2014.1.1-2014.12.31	Life reinsurance inward businesses	Some contracts include exclusion clauses
Retrocession contracts (Non-Cat)	Domestic life insurance companies	2014.1.1-2014.12.31	Life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas life reinsurance companies	2014.1.1-2014.12.31	Life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas life reinsurance companies	2014.4.1-2015.3.31	Life retrocession inward businesses	Some contracts include exclusion clauses
Catastrophe Reinsurance contracts (Cat)	Overseas life reinsurance companies	2014.2.1-2015.1.31	To protect our net retention excess catastrophe losses	The contracts include exclusion clauses

Central Reinsurance Corporation Annual Report 2014 68

2014 Annual Report 06

FINANCIAL INFORMATION

VI. FINANCIAL INFORMATION

A. Financial Statement for Recent Five Years

a. Condensed balance sheets and statements of comprehensive income for the past five fiscal years

Condensed Balance Sheets – Adoption of IFRSs

NT$ thousands

Year	Year		From 2011 To 2014(Note 1)	From 2011 To 2014(Note 1)
Items		2014	2013	2012	2011
Cash and Cash Equivalents		18,430,910	17,673,887	17,008,182	16,112,004
Account Receivable		399,901	183,877	310,154	413,625
Financial Assets		9,909,822	9,814,286	9,617,139	8,818,044
Reinsurance Contract Assets		3,859,592	3,877,374	3,490,724	3,776,030
Property and Equipment		214,772	203,973	207,133	209,550
Intangible Assets		1,531	2,142	3,438	3,243
Other Assets		1,192,639	1,181,693	1,463,858	1,444,152
Total Assets		34,009,167	32,937,232	32,100,628	30,776,648
Account Payable		577,906	393,767	852,881	611,588
Financial Liabilities		66,470	11,785	1,266	0
Insurance Liabilities		23,664,460	23,382,630	23,090,610	22,934,621
Provisions		5,778	772	0	0
Other Liabilities		237,637	114,730	161,950	109,867
Total Liabilities	Before Distribution	24,552,251	23,903,684	24,106,707	23,656,076
	After Distribution	(Note 2)	24,578,414	24,382,332	23,656,076
Capital		5,622,750	5,622,750	5,512,500	5,512,500
Capital Reserve		300,000	300,000	300,000	300,000
Retained Earnings	Before Distribution	3,369,901	3,178,535	2,833,627	2,155,817
	After Distribution	(Note 2)	2,503,805	2,447,752	2,155,817
Other Equity		164,265	(67,737)	(652,206)	(847,745)
Total Equity	Before Distribution	9,456,916	9,033,548	7,993,921	7,120,572
	After Distribution	(Note 2)	8,358,818	7,718,296	7,120,572

Note �

1.The above financial statements are prepared in accordance with the “Rules for the Preparation of Financial Reports by Insurance Institutions” effective at January 1, 2013.
2.Earnings distribution for the year of 2014 has not yet been resolved at the stockholders’ meeting as of the reporting date.

69 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 06

FINANCIAL INFORMATION

2. Condensed Statement of Comprehensive Income – Adoption of IFRSs

NT$ thousands

Year	From	2012 To 2014(Note 1)	2012 To 2014(Note 1)

Items	2014	2013	2012

Operating Revenue	16,283,563	15,384,494	14,350,515
Gross Profit	1,376,146	1,322,146	1,134,404
Net Operating Income	1,001,012	944,214	773,699
Non-Operating Income and Expenses	(1)	586	19,947
Income from Continuing Operations before Tax	1,001,011	944,800	793,646
Income from Continuing Operations after Tax	870,874	732,090	678,934
Net Income	870,874	732,090	678,934
Total Other Comprehensive Income for The Year(after tax)	227,224	583,162	194,415
Total Comprehensive Income for The Year	1,098,098	1,315,252	873,349
Earnings per Share(after tax)(NT$)(Note 2)	1.55	1.30	1.21

Note�

The above financial statements are prepared in accordance with the “Rules for the Preparation of Financial Reports by Insurance Institutions” effective at January 1, 2013.
Earnings distribution for the year of 2014 has not yet been resolved at the stockholders’ meeting as of the reporting date.

Central Reinsurance Corporation Annual Report 2014 70

2014 Annual Report 06

FINANCIAL INFORMATION

b. Condensed balance sheets and statements of income for the past five financial years

Condensed Balance Sheets – Adoption the GAAP of R.O.C.

		NT$ thousands	NT$ thousands	NT$ thousands
Year		From 2010 To 2012 (Note)
Items		2012	2011	2010
Cash and Cash Equivalents		17,008,182	16,112,004	15,755,264
Account Receivable		2,388,138	2,712,761	1,343,221
Investments		9,617,139	8,818,044	9,736,378
Reinsurance Reserve Assets		1,475,820	1,542,526	1,516,981
Fixed Assets		207,133	209,550	155,391
Intangible Assets		3,438	3,243	11,062
Other Assets		1,399,128	1,376,355	1,371,828
Total Assets		32,098,978	30,774,483	29,890,125
Account Payable		926,767	605,932	815,779
Financial Liabilities		1,266	-	75,924
Liabilities Reserves		23,090,610	22,934,621	20,796,203
Other Liabilities		86,954	115,456	156,606
Total Liabilities	Before Distribution	24,105,597	23,656,009	21,844,512
	After Distribution	24,381,222	23,656,009	22,395,762
Capital		5,512,500	5,512,500	5,512,500
Capital Reserve		300,000	300,000	300,000
Retained Earnings	Before Distribution	2,700,597	2,021,229	2,414,560
	After Distribution	2,314,722	2,021,229	1,863,310
Other Adjustments to Stockholders’ Equity		(519,716)	(715,255)	(181,447)
Total Stockholders’ Equity	Before Distribution	7,993,381	7,118,474	8,045,613
	After Distribution	7,717,756	7,118,474	7,494,363

Note� The above financial statements are prepared in accordance with the “Rules for the Preparation of Financial Reports by Insurance Institutions” effective at January 1, 2011.

71 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 06

FINANCIAL INFORMATION

2. Condensed Statement of Income – Adoption the GAAP of R.O.C.

NT$ thousands

	From	2010 To 2012(Note 1)	2010 To 2012(Note 1)
Year
Item	2012	2011	2010
Operating Revenue	14,350,515	13,204,985	13,494,685
Gross Profit	1,134,404	476,213	1,166,573
Net Operating Income	774,222	126,900	776,935
Non-Operating Income and Gains	19,979	13,135	43,475
Non-Operating Expenses and Losses	(32)	(2,943)	(14)
Income from Continuing Operations before Tax	794,169	137,092	820,396
Income from Continuing Operations after Tax	679,368	120,417	704,869
Extraordinary Gain /Loss	0	0	0
Cumulative Effect of Changes in Accounting Principles	0	37,502	0
Net Income	679,368	157,919	704,869
Earnings per Share(after tax)(NT$)(Note 2)	1.21	0.28	1.25

Note�

The above financial statements are prepared in accordance with the “Rules for the Preparation of Financial Reports by Insurance Institutions” effective at January 1, 2011.
Earnings per share were adjusted retroactively based on the number of shares after distribution for the past years.

c. Independent Auditors’ Name and Opinion


CPA Firm	CPA’s Name	Audit Opinion

PricewaterhouseCoopers, Taiwan	Kuo, Puo-Ju Lai,Chung-Hsi	Unqualified Opinion
PricewaterhouseCoopers, Taiwan	Chen, Hsien-I Lee,Hsiu-Ling	Unqualified Opinion
PricewaterhouseCoopers, Taiwan	Chen, Hsien-I Lee, Hsiu-Ling	Modified Unqualified Opinion
PricewaterhouseCoopers, Taiwan	Chen, Hsien-I Lee, Hsiu-Ling	Modified Unqualified Opinion
PricewaterhouseCoopers, Taiwan	Chen, Hsien-I Lee,Hsiu-Ling	Unqualified Opinion

Central Reinsurance Corporation Annual Report 2014 72

2014 Annual Report 06

FINANCIAL INFORMATION

B. Financial Analyses for Recent Five Years

a. Financial Analyses – Adoption of IFRSs

Year	From 2012 To 2014 (Note 1)	From 2012 To 2014 (Note 1)	From 2012 To 2014 (Note 1)
Items	2014	2013	2012
Operating ability
Changes in Gross Premiums	4.47%	8.92%	4.18%
Changes in Reinsurance Claims Paid	7.45%	0.85%	8.48%
Changes in Retention Premiums	3.55%	9.99%	4.19%
Profitability
Return on Total Assets	2.60%	2.25%	2.16%
Return on Equity	9.42%	8.60%	8.98%
Net Investment Gain on Available Fund	1.40%	1.59%	2.28%
Return on Investments	1.37%	1.55%	2.22%
Retention Combined Ratio(Note 2)	106.04%	98.69%	102.62%
Retention Expenses Ratio(Note 2)	31.70%	33.94%	32.39%
Retention Loss Ratio(Note 2)	74.34%	64.75%	70.23%
Operating Structure
Retention Premiums on Equity	161.41%	163.18%	167.66%
Gross Premiums on Equity	172.89%	173.24%	179.74%
Net Reinsurance Commission on Equity	1.06%	1.08%	1.38%
Insurance Liabilities on Equity	250.23%	258.84%	288.85%
Changes in Equity	4.69%	13.01%	12.27%
Expenses Ratio	31.54%	33.78%	32.29%
Analysis of financial ratio in last two years. (If the difference doesn’t exceed 20%, the analysis is not required) 1. Changes in Gross Premiums and Changes in Retention Premiums less than last year�Mainly due to the gross premiums increased in 2014 less than in 2013. 2. Changes in reinsurance claims paid more than last year�Mainly due to reinsurance claims paid increased in 2014. 3. Changes in Equity less than last year�Mainly due to the changes in unrealized gain on available-for-sale financial assets in 2014 less than in 2013.

Note:

The above financial analyses are prepared in accordance with the “Rules for the Preparation of Financial Reports by Insurance Institutions” effective at January 1, 2013, and these ratios are the key performance indicators of the company.
Pursuant to Article 3 of the “Regulations for Management of the Reserve for Compulsory Automobile Liability Insurance”, prior to amending legislation on December 31, 2013, the company shall set aside an amount equal to 1% of earned pure premium over the last 12 months as claims reserve for incurred but not reported losses. Effective January 1, 2014, claims reserve for incurred but not reported losses

73 Central Reinsurance Corporation Annual Report 2014

2014 Annual Report 06

FINANCIAL INFORMATION

are set aside based on past claim experience and expense using the loss development triangle method, of that amount, 60% and 45% of earned pure premium for reinsurance assumed shall be set aside as claims reserve for incurred but not reported losses of automobile and motor reinsurance assumed under compulsory automobile liability insurance, respectively. The fixed percentage referred to in the preceding paragraph shall be calculated by the professional institution entrusted by the competent authority in accordance with the formulation of premium rates under the Act and the past claim experience and expense of the overall industry using the loss development triangle method. The fixed percentage should then be submitted to the competent authority for approval prior to public announcement.

b. Financial Analyses – Adoption the GAAP of R.O.C.

Year	From 2010 To 2012 (Note)	From 2010 To 2012 (Note)	From 2010 To 2012 (Note)
Items	2012	2011	2010
Operating ability
Changes in Gross Premiums	4.18%	4.02%	(3.77%)
Changes in Reinsurance Claim Paid	8.48%	8.23%	(1.90%)
Changes in Retention Premiums	4.19%	4.64%	(2.10%)
Profitability
Return on Total Assets	2.16%	0.53%	2.36%
Return on Equity	8.99%	2.08%	8.73%
Net Investment Gain on Available Fund	2.65%	0.35%	2.90%
Return on Investments	2.58%	0.34%	2.75%
Retention Combined Ratio(Note)	102.62%	103.43%	94.40%
Retention Expenses Ratio(Note)	32.39%	30.36%	31.84%
Retention Loss Ratio(Note)	70.23%	73.07%	62.56%
OperatingStructure
Retention Premiums on Equity	167.67%	180.70%	152.78%
Gross Premiums on Equity	179.76%	193.75%	164.80%
Net Reinsurance Commission on Equity	1.38%	1.54%	2.02%
Insurance Liabilities on Equity	288.87%	318.03%	254.73%
Changes in Equity	12.29%	(11.52%)	(0.66%)
Expenses Ratio	32.29%	30.38%	32.45%

Note�The financial analyses of the fiscal year of 2012 and 2011 were prepared in accordance with “Rules for the Preparation of Financial Reports by Insurance Institutions” effective at January 1, 2011, and the financial analyses of the fiscal year of 2010 was prepared in accordance with the accounting practices generally accepted in the insurance industry, and “Rules Governing the Preparation of Financial Statements by Securities Issuers” effective at January 1, 2010. These ratios are the key performance indicators of the company.

AI assistant

Central Re — Annual Report 2014

52207_rns_2015-06-03_0c891cec-22de-41ed-a5fe-987b90a4876e.pdf

CONTENTS

I. LETTER TO SHAREHOLDERS

Chairman

A. Operating Performance in 2014

a. Operating Results

1. Underwriting Operations

2. Financial Situation

3. Credit Ratings

Financial Strength Ratings

b. Budget implementation

c. Profitability Analysis

d. Research and Development

B. Business Plan in 2015

a. Operating Strategies

b. Operating Objective

C. Development Strategy

D. External Competitive, Regulatory and Macroeconomic

Environment

a. External Competitive Environment

b. Regulatory Environment

1. Insurance Act

c. Macroeconomic Environment

II. COMPANY PROFILE

A. Date of Incorporation

B. Company History

III. CORPORATE GOVERNANCE REPORT

A. Organization

1. Major Shareholder of Institutional Shareholder

C. Implementation of Corporate Governance

a. The Composition and Operations of the Board of Directors

The directors’ attendance status is as follows:

b. The Composition and Operations of the Supervisor and Audit Committee

2. Audit Committee

d. The Composition and Operations of the Remuneration Committee

F. Material Resolutions of Shareholders Meeting and Board of Directors Meeting

a. Material Resolutions of Shareholders Meeting

b. Material Resolutions of Board of Directors Meeting

G. Changes in Shareholdings and shares Pledged by Directors, Supervisors, Managers and Major Shareholders

IV. CAPITAL OVERVIEW

A. Source of Capital Stock

a. Issued Share

b. Type of Stock

B. Shareholders Structure

C. Diffusion of Ownership and List of Principal Shareholders

a. Diffusion of Ownership (Common Shares)

b. List of Principal Shareholders

D. Disclosure of the Share Prices and Related Information for the

Past Two Fiscal Years

E. Dividend Policy and Earnings Distribution Implementation Status

a. Dividend Policy

b. Earnings Distribution Implementation Status

V.BUSINESS OPERATIONS OVERVIEW

A. Business Activities

a. Business Scope

2. Breakdown By Line

3. Further Development of new products, clients and markets

(1) Domestic Non-Life Business

(2) Domestic Life Business

(3) International Non-life Business

b. Industry Overview

1. Market Players

2. Premium Income

c. Long-term and Short-term Development

B. Market Overview

a. Breakdown by Region

b. Market Share

c. Market Development

1. Domestic Non-Life Business

2. Domestic Life Business

3. International Non-life Business

C. Human Resources

D. Labor Relations

b. Losses caused by labor disputes in the recent year:

c. Employee behavior/ethical standards & Employee safety and sanitary policy

E. Important Contracts

a. Non-life Business

b. Life Business

Central Re Annual Report 2014