Central Re - Annual Report 2016 | FinancialReports.eu

2016

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Annual Report Printed on 2 April, 2017

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CONTENTS
ONE. LETTER TO SHAREHOLDERS	1
A. 2016 Operating Report	3
B. Summary of the 2017 Business Plan	10
C. Future Development Strategies	12
D. Influences of the External Competition, Regulatory Environment and Macro Environment	13
TWO. COMPANY PROFILE	18
A. Date of Incorporation	18
B. Company History	18
THREE. CORPORATE GOVERNANCE REPORT	19
A. Organization	19
B. Directors and Management Team	20
C. Implementation of Corporate Governance	29
D. Corporate Social Responsibility	44
E. Ethical Corporate Management	55
F. Material Resolutions of Shareholders Meeting and Board of Directors Meeting	64
G. Information on CPA Professional Fees and Replacement of Certified Public Accountant	67
H. Changes in Shareholdings and Shares Pledged by Directors, Managers and Major Shareholders	69
FOUR. CAPITAL OVERVIEW	71
A. Source of Capital Stock	71
B. Shareholders Structure	72
C. Diffusion of Ownership and List of Principal Shareholders	72
D. Disclosure of the Share Prices and Related Information for the Past Two Fiscal Years	73
E. Dividend Policy and Earnings Distribution Implementation Status	74
FIVE. BUSINESS OPERATIONS OVERVIEW	75
A. Business Activities	75
B. Market Overview	80
C. Human Resources	82
D. Labor Relations	82
E. Important Contracts	86
SIX. FINANCIAL INFORMATION	88
A. Financial Statement for Recent Five Years	88
B. Financial Analyses for Recent Five Years	92
C. Audit Committee’s Review Report	94
D. Financial Statements and Report of Independent Accountants	94

ONE. LETTER TO SHAREHOLDERS

Dear Shareholders,

Since its establishment in 1968, Central Reinsurance Corporation (Central Re) has been diligently contributing to Taiwan's reinsurance market for nearly fifty years. To actively expand our international reinsurance business, the Company has also established the Offshore Insurance Units (OIU) in 2016. Adhering to our steady and prudent philosophy, we have been fully devoted to the development of our core business in reinsurance as well as optimized fund utilization. Looking back on 2016, non-life insurance industry in Taiwan was suffered from Meinong earthquake which resulted in higher loss ratio than the previous years. In addition, the fluctuation in international financial market and the continuous low interest rate have both affected the efficiency of fund utilization. Therefore, Central Re has been facing a very challenging business environment. Despite these, the Company still reported good business results in 2016 - thanks for the efforts of all employees and the support of our shareholders. The operating revenue for the year is NTD13.444 billion, after-tax profit amount to NTD766 million and earnings per share (after tax) is NTD1.36. These are roughly the same as those of the preceding year. The distributable earning, nevertheless, is slightly lower than that of the preceding year after setting apart the legal and special reserves required by law.

In terms of financial strength and capital structure, the Company has been continuously devoted to solidifying its financial basis and improving the effectiveness of fund utilization. As a whole, the Company maintains a robust financial structure. The total amount of technical reserves for retained business has reached NTD22.168 billion. The paid-in capital is NTD5.623 billion and the equity before distribution of dividends is NTD9.499 billion, being the highest in recent years.

In 2017, Standard & Poor's affirmed our credit rating of "A" with stable outlook based on the Company’s very strong capital and earnings, solid domestic market position and strong liquidity profile. Taiwan Ratings Corp. also confirmed our rating of "twAA+".

In addition, another international rating agency A.M. Best has continuously recognized our operation performance and reaffirmed our A rating and stable outlook in July 2016. Long term good credit ratings will not only be beneficial for the acquisition of quality business, but also demonstrate our good solvency capability to protect our commitment to our customers.

1 Central Reinsurance Corporation Annual Report 2016

Looking forward, the management team will commit to the corporate spirits of "Challenge, Innovation and Teamwork" to diligently cultivate the domestic market, build up international perspective and prudently expand business. In the meantime, we will also practice appropriate capital management and sound investment activities to achieve our goals of steady increase of revenue and profit and sustainable development of our enterprise, thereby fulfilling our vision to become "The Best Professional Reinsurer in Asia". We thank all shareholders for your continuous support and guidance from you and hope you will all have good health and wishes come true.

Chairman

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Central Reinsurance Corporation Annual Report 2016

A. 2016 Operating Report

Central Reinsurance Corporation is the sole domestic professional reinsurance company in Taiwan, mainly engaged in non-life and life reinsurance business for domestic and overseas insurance firms. Adhering to its business philosophy of ethical management, stability and integrity, the Company is devoted to maintaining the good order of the insurance market, diversifying risk for its customers, facilitating the development of insurance industry and fulfilling its corporate responsibilities. To ensure the sustainable development of the Company and keep pace with the market trend, the Company has been actively improving its service to domestic customers; in the meantime expanding its international market through robust strategies. The ultimate purpose is to enlarge its operational foundation and diversify the risk of geographical concentration.

With the collective efforts of all its employees, the Company reports a net income of NT$765,790 thousand for the year of 2016. Appended below is the Company's operating report for 2016:

(I) Implementation of the Operating Plan

1. Business Performance:

The gross premium written for the year is NT$14,041,751 thousand, being NT$741,511 thousand or approximately 5.6% over the budgeted NT$13,300,240 thousand. An analysis is provided below based on business type:

(1) Non-life Reinsurance:

The gross premium written NT$10,071,595 thousand, being NT$532,585 thousand or approximately 5.6% over the budgeted NT$9,539,010 thousand. The difference was mainly because of the increase in automobile insurance and casualty insurance.

(2) Life Reinsurance:

The gross premium written NT$3,970,156 thousand, being NT$208,926 thousand or approximately 5.6% over the budgeted NT$3,761,230 thousand. The difference was mainly because of the increase from health insurance.

3 Central Reinsurance Corporation Annual Report 2016

2. Financial Management:

(1) Capital Management:

As at the end of 2016, the total paid-in capital of the Company is NT$5,622,750 thousand. Total shareholders' equity before distribution is NT$9,499,209 thousand. The capital structure of the Company remains strong.

(2) Reserve Adequacy:

In order to build up a solid financial basis and strengthen its solvency, the Company provides adequate reserves. At the end of 2016, the sum of various reserves is NT$22,168,024 thousand.

(3) Fund Investment:

The investment income is NT$171,419 thousand, being NT$208,688 thousand or 54.9% less than the budgeted NT$380,107 thousand.

3. Credit Ratings:

In 2017, Standard & Poor's affirmed its credit rating of "A" with stable outlook based on the Company’s very strong capital and earnings, solid domestic market position and strong liquidity profile. Taiwan Ratings Corp. also confirmed the Company’s rating of "twAA+".

Meanwhile, A. M. Best affirmed the Company’s "A" rating with stable outlook in July 2016 in recognition of its management performance. Good credit ratings are helpful for developing reinsuring high-quality business. They also prove the Company's strong solvency to fulfill its commitment to customers.

The latest ratings are shown as follows.


Rating Agency	Rating	Outlook

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

Central Reinsurance Corporation Annual Report 2016 4

(II) Budget Implementation and Financial Status

The comparison between the actual and budgeted of the year was shown as follows:

follows:
			NT$thousands
Item	Actual	Budget	Achievement(%)
Operating Revenues	13,444,095	13,158,222	102.17
Operating Costs	12,220,148	11,884,690	102.82
Gross Operating Income	1,223,947	1,273,532	96.11
Operating Expenses	310,036	331,972	93.39
Net Operating Income	913,911	941,560	97.06
Non-Operating Income and Expenses	-1,190	0	-100.00
Income from Continuing Operations Before Tax	912,721	941,560	96.94
Income Tax Expense	146,931	161,420	91.02
Net Income	765,790	780,140	98.16

(III) Profitability Analysis

The table below shows an analysis on the profitability ratios of 2016 as compared to those of 2015: The earing per share (after tax) for 2016 is NT$1.36, the same as that of 2015.

Ratio	Year	2016	2015	Average
Profitability	Return on Assets (%)	2.29	2.28	2.29
	Return on Equity (%)	8.13	8.14	8.14
	Net Operating Income / Paid-Up Capital (%)	16.25	17.49	16.87
	Income from Continuing Operations Before Tax/Paid-Up Capital(%)	16.23	17.46	16.85
	Net Profit Margin (%)	5.70	5.44	5.57
	Earnings Per Share (After Tax)(NT$)	1.36	1.36	1.36

5 Central Reinsurance Corporation Annual Report 2016

(IV) Research & Development

Research & Development/Customer Service
(1) To strengthen its internal control and increase the efficiency at work, the Company has been continuously developing integrated information management system. An off-site back-up system has also been established to ensure the smooth operation of the system. In future, the Company will continue making system adjustments and upgrades to support the development plan of the Company and accommodate to statutory requirements. The implementation of data warehouse enables multi-faceted information analysis to assist with the strategic and business decision-making by the management team.
(2) The Company endeavors to absorb and adopt the most advanced concepts and technologies from the global market to achieve integrated risk management on a continuous basis. Based on its successful experience in risk management, the Company also provides relevant consulting services to customers and assists the competent authority in facilitating risk management policies and regulations for the industry. It is hoped that the collective efforts would help improving the technology standards in risk management for the industry.
(3) By means of market analysis and consumer demand observation, the Company provides tailored services to achieve higher quality standard and build up marketing competitiveness. Various supporting programs are offered to customers on a timely basis, including new product design, underwriting and claim management expertise, regulatory and actuarial consulting services, etc. The purpose is to solidify customer relationship and create superior business opportunities and platforms on an ongoing basis.
(4) In order to render value-added services to customers and improve its professional image, the Company has organized many professional seminars in 2016.

Central Reinsurance Corporation Annual Report 2016 6

Seminars or programs for our non-life insurance clients:

a. Executive Summit of Non-life Insurance Companies
b. Future Talent -Reinsurance Principles and Practices
c. Seminars for Reinsurance Managers in Non-Life Insurance Industry- A Brief Overview of the Management of Accident and Health Insurance coverage for Less than 3 Years by Non-Life Insurance Companies based on the Life Insurance industry's experience
d. New Definition of Critical Illnesses and Interpretation of Pathology Reports
e. Tumor Underwriting

Seminars or programs for our life insurance clients:

a. Seminar on Aging Products of Life Insurance in Japan
b. Seminar Series for Underwriting and Claims of Life Insurance: Tumor Underwriting, Financial Underwriting, Underwriting Assessment of Abnormal ECG and Relevant Heart Diseases, Basics of Reinsurance for Underwriters
c. Medical Insurance Seminar: Underwriting and Claims Assessment of Common Mental Illnesses

The Company has provided various professional seminars to satisfy our clients’ needs for years. Participants were given the opportunities to discuss the market status and future trends, share information and improve their professional expertise. The course and seminars also contributed to the tightening of customer relationship for the Company.

Talent Development
(1) The Company administers the following on-job training through its training system:
- a. Regular Training: Internally, the Company organizes regular internal training to improve employees' work attitude, job competency and encourage self-growth.
  - Organized "Orientation for New Employees", which was attended by 6 persons.
  - Organized "Compliance training and promotion": total four sessions,

7 Central Reinsurance Corporation Annual Report 2016

which were attended by 180 persons.

Organized "Internal Audit - Internal Control Self-Assessment" training, which was attended by 57 persons.
Organized "Money Laundering Prevention Training and Promotion
- ": 2 sessions were conducted, which were attended by 77 persons.
Organized "Personal Information Protection - Basic Awareness Course", which was attended by 52 persons.
Organized "Ethical Corporate Management Training", which was attended by 44 persons.
Organized "2016 Risk Management Training": 4 sessions were conducted, which were attended by 107 persons.
b. Professional training: to enhance the employees' professional knowledge and expertise and elevate their work efficiency, the Company also organizes various courses to accommodate the needs of staff at different levels, including professional know-how, techniques, concepts and practices:
Assigned employees for external courses or seminars on shareholder services, general administration, labor safety and human resources management, etc.: total 9 persons.
Assigned employees to attend external professional training or seminars on financial, accounting and investment: total 50 persons.
Assigned employees to attend external professional reinsurance and actuarial training: total 221 persons.
Assigned employees to attend external professional training/seminars on risk management and loss control: total 38 persons.
c. Statutory Training: According to the "Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises", the Company requires its auditors and compliance personnel to attend the statutory training and meet the required training hours, in the meantime improve their professional expertise thereof. � External training for auditors: attended by 36 persons.
External training for compliance personnel: attended by 14 persons.

Central Reinsurance Corporation Annual Report 2016 8

(2) To support its operating plan and develop reinsurance professionals, the Company also sent employees overseas to attend international conventions, to observe best practices and to participate in training courses: total 10 persons.
(3) On an ongoing basis, the Company encourages its employees to obtain professional licenses for their jobs. So far, a total of 59 employees have acquired domestic or international licenses on non-life/life insurance and financial management.
a. The certificate as a qualified insurance underwriter of non-life insurance: 20
b. The certificate as a qualified claim adjuster of non-life insurance: 9
c. The certificate as a qualified insurance underwriter of life insurance: 5
d. The certificate as a qualified claim adjuster of life insurance: 3
e. Fellow of the Actuarial Institute of Chinese Taipei: 2
f. International Certificates: CPCU 2 persons, ACII 1 person, DipCII 1 person, SOA ASA 2 persons, CAS ACAS 1 person, ALU 1 person, FLMI 5 persons, LOMA ACS 3 persons, LOMA AAPA 1 person, FRM 2 persons, ARM 1 person.
(4) To optimize its human resources, the Company endeavors to place employees at the most suitable positions in terms of personal interest and strengths, in the meantime fulfill the human resources strategies. During the year, therefore, the Company has recruited 6 new employees, arranged job transfer for 10 employees and promoted 12 employees.

9 Central Reinsurance Corporation Annual Report 2016

B. Summary of the 2017 Business Plan

Based on the competitive market, the regulatory influence and business environment, the Company has established its 2017 operating plan as follows:

(I) Business Strategies

Strengthen capital structure management; improve the effectiveness of capital utilization.
(1) Solidify the financial strength and capital base, so as to expand the underwriting capacity and elevate risk tolerance.
(2) Conduct proper assessment on asset/return relationship, exercise caution in asset allocation to improve the effectiveness of capital utilization and create shareholder value.
Constantly improve the Company's risk management abilities; in the meantime ensure full implementation of the risk management mechanisms.
(1) Apply strategically risk management; align business decisions with risk management policies.
(2) Grasp the development trend of emerging risks to ensure prudent control of catastrophe risk accumulation.
(3) Ensure the suitability of the risk transactions undertaken; execute the risk control procedures effectively.
(4) Instill a culture of risk awareness; incorporate risk management into daily routines.
Focus on customer demands and provide feedback to the insurance market.
(1) Grasp market trends and organize professional seminars, aiming to providing value-added service to customers and enhance customer relationship.
(2) Accommodate customer needs by providing tailored reinsurance services; create a business development platform with good quality.

Central Reinsurance Corporation Annual Report 2016 10

(3) Actively participate in research programs relating to actuarial and statistics, insurance operations, risk management and corporate governance, etc., to contribute to the professional development of the local insurance market.
Adhere to sound investment strategies.

Adopt safe and steady investment strategies, supported by prudent risk management. The purpose is to achieve stable business income to ensure the sustainable development of reinsurance business.

(II)Sales Forecast and Basis

Looking forward to this year, we expect the global economy to recover at a slow pace. However, the soft market trend continued in the reinsurance market, and rating agencies remain holding a conservative outlook toward the global reinsurance industry. This could partly offset the positive effects of increased insurance demand accompanying the economic growth. The Company expects that the sales performance of the year will be the same as that of last year, or will have a moderate growth.

(III)Important Production and Sales Policies

Facing the challenging environment, the Company will, as a rating A evaluated by international credit rating agencies, adhere to the principles of prudent underwriting and cautious expanding to develop its domestic and overseas business; in the meantime establish a best business portfolio with integrated risk management and optimized profitability.

11 Central Reinsurance Corporation Annual Report 2016

C. Future Development Strategies

The Company is committed to becoming the "The Best Professional Reinsurer in Asia". It has built up the following development strategies based on the changes in business environment and market trends:

Continue cultivating domestic market; achieve good business performance on a long-term basis by optimizing the domestic resources.
Steadily expand international business; optimize the business portfolio; consolidate resources for developing international facultative reinsurance business; strengthen quality control to grow overseas business, both in terms of quality and quantity.
Provide customer-oriented services to increase service effectiveness and customer satisfaction.
Steadily improve the efficiency of fund utilization; enhance fund structure management to ensure the sustainable management of the Company.
Enhance compliance and internal audit/control procedures; strengthen risk management; implement good corporate governance.
Fulfill corporate social responsibilities; achieve sound ethical corporate management to facilitate the continuous development of the insurance market.
Devote to talent development to create motivating visions for employees.

Central Reinsurance Corporation Annual Report 2016 12

D. Influences of the External Competition, Regulatory Environment and Macro Environment

(I) External Competition

As at the end of 2016, there were three reinsurance companies in Taiwan. Apart from the Company, the other two were General Reinsurance AG Taiwan Branch and RGA Global Reinsurance Company Limited Taiwan Branch. While the high retention ratio maintained by domestic insurers has led to the slowdown of domestic reinsurance market, the momentum in global reinsurance capacity remains abundance. The Company, therefore, is still facing a challenging business environment.

(II) Regulatory Environment

1. The Insurance Act

In order to encourage insurance enterprises to participate in public infrastructure investment, the competent authority amended Article 146-5 of the Insurance Act in 2016. According to the amended version, investments made by insurance enterprises in public utilities are no longer subject to the restrictions set forth in relevant articles of the Act. However, when the insurance enterprise or its representative serves as a director or supervisor of the invested company, the number of directors or supervisors appointed by the insurance enterprise shall not exceed one third of the total number of directors or supervisors of the invested company, and the insurance enterprise shall not appoint any person to act as manager of the invested company.

The Company will comply with the aforementioned amendments when engaged in such investment in future.

Regulations Governing Foreign Exchange Business Operated by Insurance Enterprises

To support the insurance enterprises to develop the market and secure new business opportunities, the competent authority has partially amended the Regulations respectively on March 23 and December 30, 2016. The competent authority has, in the meantime, incorporated relevant provisions to allow

13 Central Reinsurance Corporation Annual Report 2016

insurance enterprises to operate foreign currency loan business. The major amendments are as follows:

(1) A new provision was added, stipulating that insurance enterprises may operate foreign currency loans in its role as a participant of a foreign currency syndicated loan. The relevant compliance requirements for managing such business are incorporated into the amendments as well. (Amendments of Article 3 and 14)
(2) If an insurance enterprise applies for foreign exchange business that is not yet approved by the Central Bank of the R.O.C., the Central Bank may specify the relevant compliance requirements in the letter of approval. (Amendment of Article 4)
(3) When an insurance enterprise applies for foreign exchange business, its heads of compliance, audit and accounting units shall issue a statement to confirm their compliance with the applicable laws, relevant regulations and accounting standards of the competent authority. (Amendment of Article 6)

The Company will comply with the aforementioned amendments when applying for such foreign exchange business in future.

Regulations Governing Use of Insurer’s Funds in Special Projects, Public Utilities and Social Welfare Enterprises

In order to encourage the insurance enterprises to invest in public utilities, social welfare enterprises, domestic entrepreneurs and the five major innovative industries, the competent authority has partially amended the Regulations on February 3 and August 31, 2016 respectively. The major amendments are as follows:

(1) A new provision was added, stipulating that insurance enterprises may invest in lawfully-established limited partnership. The relevant compliance requirements for investing in such business are incorporated into the amendment as well. (Amendment of Article 5)
(2) Insurance enterprises are no longer required to submit their investment plans and provide investment purposes when investing in the companies prescribed in Article 3 and Article 4 of the Regulations, subject to that they

Central Reinsurance Corporation Annual Report 2016 14

have presented the assessment opinions issued by qualified CPA regarding the financial adequacy of the investment and opinions provided by a qualified lawyer confirming the legality thereof. If the invested company has been established for less than one year, it is not necessary for the insurance enterprise to present the financial report of such invested companies. (Amendment of Article 8)

(3) Insurance enterprises investing in limited partnership in accordance with the Regulations are still required to submit relevant documents and obtain approval from the competent authority in advance. Once the approval is acquired, however, the insurance enterprise may participate in the cash capital increase of the invested enterprise without further approval, subject to that there is no increase to its original share against the total investment in the project and that the relevant documents are submitted to the competent authority for subsequent review. For insurance enterprises investing in one and the same venture investment enterprise, the competent authority has also relaxed the threshold amount for exemption of the approval procedures. (Amendment of Article 9)

The Company has established/revised relevant internal rules to comply with the aforementioned Regulations.

4. Money Laundering Control Act

To strengthen the money laundering prevention system, meet international standards and increase the transparency of fund flow, the competent authority announced significant amendments on the Act on December 28, 2016, which shall enter into force six months thereafter. The main amendments are as follows:

(1) Amended the behavior patterns of money laundering. (Amendment of Article 2)
(2) Revised the minimum punishment against serious crimes to an imprisonment of 6 months; extended the scope of serious crimes used in the Act and removed the threshold on the property or property interests obtained from committing such crimes. (Amendment of Article 3)

15 Central Reinsurance Corporation Annual Report 2016

(3) Included new provisions to set forth the punishment against avoiding, refusing or hampering the inspection by the competent authority. (Amendment of Article 6)
(4) Included the obligations on customer due diligence and retention of transaction records. (Amendments of Article 7 and 8)
(5) Added the exemption clause on confidentiality obligations when a financial institution reports large cash transactions and suspicious transactions to meet statutory requirements. (Amendments of Article 9 and 10)
(6) Included the provision that the competent authority may apply countermeasures against high-risk countries or regions of money laundering and terrorism financing. (Amendment of Article 11)
(7) Set forth the punishment against behaviors of evading the anti-money laundering obligations or the attempts to do so, as well as the disposal of property or property interests acquired thereby; expand the scope of confiscation to include the property or property interests obtained through money laundering activities. (Amendments of Article 15 and 18)

The Company will enhance its compliance operations in respect of anti-money laundering and countering the financing of terrorism in accordance with the aforementioned amendments of Money Laundering Control Act and relevant regulations.

(III) Macro Environment

According to the updated statistics announced by a number of international economic institutes such as World Bank, Global Insight and International Monetary Fund, higher growth rates in global economy and trade are expected in 2017, as compared to those of 2016. The macro-economy is expected to recover at a slow speed. However, there are still concerns about the potential fluctuation in global finance market caused by changes in economic/trade policies by the US new government, the uncertainty in the political and economic situation of the European countries, and the probability of debt crisis in the emerging markets caused by the outflow of funds and currency devaluation.

Central Reinsurance Corporation Annual Report 2016 16

In the "National Income and Domestic Economic Outlook" issued by the Directorate General of Budget, Accounting and Statistics (DGBAS) in February, 2017, the forecast made by Global Insight was cited: The global economic growth rate for 2017 is estimated at 2.8%, of which USA is expected to have a moderate growth of 2.3%, EU 1.6%, China 6.5%, South Korea 2.7%, Hong Kong 1.8%, and Singapore 1.5%. As to Taiwan, the increase in overseas market demand and the government's active efforts in revitalizing the economy will both lead to gradual warm-up of the domestic demand. DGBAS therefore forecast a growth rate of 1.92% for year 2017, a slight rise when compared with last year.

Looking at the world economic situation as a whole, the growth will remain being impacted by the potential risks in spite of the gradual warming trend. The insurance industry will inevitably be influenced by the economic environment. In terms of the management of reinsurance industry, the results of contract renewal for the year reflect the abundance of capital and the weak rate in the market. Regardless of the slight deviation in different markets, the overall environment remains challenging. To achieve its business objectives in this challenging environment, the Company will adhere to its principles of robust management; focus on its core business and strengthen capital management.

17 Central Reinsurance Corporation Annual Report 2016

TWO. 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$5,622.75 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.

Central Re was approved to set up OIU in September 2015 and started doing business on January 1, 2016. With the establishment of OIU and its tax benefit, Central Re will be able to enhance its competitiveness and improve the quality of its overseas business to achieve a better mixture of overall portfolios.

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 "The Best Professional Reinsurer in Asia".

Central Reinsurance Corporation Annual Report 2016 18

THREE. CORPORATE GOVERNANCE REPORT

A. Organization

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Central Reinsurance Corporation Annual Report 2016


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 Director: Chang Yung-Fa Foundation, Chang Yung-Fa Charity Foundation	-	Director: Chang Yung-Fa Charity Foundation Supervisor: Evergreen International Corp.
Experience & Education		-	Deputy Director General, Dept. of Insurance, Ministry of Finance, R.O.C. President, Central Reinsurance Corp. MBA, The College of Insurance, New York City	-	Chairman, Evergreen Marine Corp. (Taiwan) Ltd. Boston University(BSBA)
Sharehold - ing by Other Nominee	�	0	0	0	0
	Share s	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, Appoint- ment		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
Gender		-	M	-	M
Name		Evergreen International Corp.	Representative: Yang, Cheng-Tui	Evergreen International Corp.	Representative: Chang, Kuo-Cheng
Nationality or Place of Registration		Republic of China		Republic of China
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		-	President, Evergreen International Corp. Director: EVA Airways Corp., Evergreen International Storage &Transport Corp., Evergreen International Corp., Uni Airways Corp., Evergreen Sky Catering Corp., Evergreen Security Corp., Shun An Enterprise Corp., Evergreen Aviation Technologies Corp., Taipei Port Container Terminal Corp., Super Max Engineering Enterprise Corp., Chang Yung-Fa Foundation, Chang Yung-Fa Charity Foundation	Finance Executive Vice President, Evergreen International Corp.
Experience & Education		-	Legal Executive Vice President, Evergreen International Corp. Master degree in Maritime Law, National Taiwan Ocean University	Senior Vice President, Finance Division of Evergreen International Corp.
Sharehold - ing by Other Nominee	�	0	0	0
	Share s	0	0	0
Spouse & Dependents Shareholding	�	-	0	0
	Shares	-	0	0
Present Shareholding	�	35.13	0	0
	Shares	197,541,037	0	0
Shareholding when Elected	�	35.13	0	0
	Shares	197,541,037	0	0
Date of Initial Election, Appoint- ment		2002.10.29	2014.06.11	2011.06.15
Tenure (Years)		3 Years	3 Years	3 Years
Date Elected		2014. 06.11	2014. 06.11	2014. 06.11
Gender		-	M	F
Name		Evergreen International Corp.	Representative: Tai, Jiin-Chyuan	Representative: Ku Lai, Mei-Hsueh
Nationality or Place of Registration		Republic of China		Republic of China
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		Supervisor: Evergreen Marine Corp. (Taiwan) Ltd., EVA Airways Corp., Evergreen Sky Catering Corp., Uni Airways Corp., Ever Accord Construction Corp., Evergreen Logistics Corp.	-	Deputy Director General, Department of Planning, Ministry of Finance, R.O.C.	Acting Director General, Training Institute, Ministry of Finance, R.O.C
Experience & Education		Ming Chuan University	-	Senior Executive Officer, Department of Planning, Ministry of Finance, R.O.C. Master Graduate, Institute of Public Policy Science, National Chung Hsing University	Director, Northern Region Office, National Property Administration Deputy Director
Sharehold - ing by Other Nominee	�		0	0	0
	Share s		0	0	0
Spouse & Dependents Shareholding	�		-	0	0
	Shares		-	0	0
Present Shareholding	�		21.92	0	0
	Shares		123,266,689	0	0
Shareholding when Elected	�		22.68	0	0
	Shares		127,539,689	0	0
Date of Initial Election, Appoint- ment			1968.10.31	2011.06.15	2014.07.25
Tenure (Years)			3 Years	3 Years	2.83 Years
Date Elected			2014. 06.11	2014. 06.11	2014. 07.25
Gender			-	F	M
Name			Ministry of Finance, R.O.C.	Representative: Lee, Yi-Fen	Representative: Chen, Kuan-Pao
Nationality or Place of Registration			Republic of China	Republic of China	Republic of China
Title			Director	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, School of Law, Soochow University Executive Director & Chief Executive Officer, John Tung Foundation	-
Experience & Education		General, National Property Administration, Ministry of Finance, R.O.C. Department of Land Economics, National Chengchi University	Dean, College of Law, Chinese Culture University Juris Doctor, University of Iowa	Life Insurance Products Review Committee Member, Insurance Bureau, Financial Supervisory Commission Director, Global Life Insurance Company Master of Science,
Sharehold - ing by Other Nominee	�		0	0
	Share s		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, Appoint- ment			2008.06.13	2014.06.11
Tenure (Years)			3 Years	3 Years
Date Elected			2014. 06.11	2014. 06.11
Gender			M	M
Name			Yau, Sea-Wain	Tsen, Ron-Syou
Nationality or Place of Registration			Republic of China	Republic of China
Title			Independent Director	Independent Director

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Rela- tion		-
	Name		-
	Title		-
Other Position			Vice President, Yuanta Futures Co., Ltd.
Experience & Education		Department of Risk Management and Insurance, Georgia State University, USA MBA, National Taiwan University Master degree of Insurance, Feng Chia University	Partner, PricewaterhouseCoo -pers Master of Accounting, University of Alabama
Sharehold - ing by Other Nominee	�		0
	Share s		0
Spouse & Dependents Shareholding	�		0
	Shares		0
Present Shareholding	�		0
	Shares		0
Shareholding when Elected	�		0
	Shares		0
Date of Initial Election, Appoint- ment			2014.06.11
Tenure (Years)			3 Years
Date Elected			2014. 06.11
Gender			M
Name			Chou, Yu-Cheng
Nationality or Place of Registration			Republic of China
Title			Independent Director

April 2, 2017

1. Major Shareholders of Institutional Shareholders

1. Major Shareholders of Institutional Shareholders	1. Major Shareholders of Institutional Shareholders	1. Major Shareholders of Institutional Shareholders
April 2, 2017

	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.	Government	NA

If the shareholders of above-mentioned table are corporation, the principal shareholders of these corporations are as follows:

		April 2, 2017	April 2, 2017

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


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

25 Central Reinsurance Corporation Annual Report 2016

Professional qualifications and independence analysis of directors

April 2, 2017

April 2, 2017	April 2, 2017	April 2, 2017	April 2, 2017	April 2, 2017	April 2, 2017	April 2, 2017	April 2, 2017	April 2, 2017	April 2, 2017	April 2, 2017	April 2, 2017	April 2, 2017	April 2, 2017	April 2, 2017
	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											Number of Other
	Commerce, Law,	Accountant, or Other	of											Public Companies
	Finance,	Professional or	Commerce,											in Which the
	Accounting, or	Technical Specialist	Law,											Individual is
	Other Academic	Who has Passed a	Finance, or											Concurrently
	Department	National	Accounting,	1	2	3	4	5	6	7	8	9	10	Serving as an
	Related to the	Examination and	or Otherwise	� � � � � � �	� � � � � � �	� � � � � � �	� � � � � � � � �	� � � �	� � � � � �	� � � � � � �	� � � � � � � � �	� � � � � � � � �		Independent
Name	Business Needs of	been Awarded a	Necessary											Director
	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 Chang, Kuo-Cheng Yau, Sea-Wain Tsen, Ron-Syou Chou, Yu-Cheng Lee, Yi-Fen Chen, Kuan-Pao Tai, Jiin-Chyuan Ku Lai, Mei-Hsueh	� � � �	� �	� � � � � � � � �										� � �	0 0 0 0 0 0 0
														0 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 the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
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 is 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. These restrictions do not apply to any member of the remuneration committee who exercises powers pursuant to Article 7 of the “Regulations Governing the Establishment and Exercise of Powers of Remuneration Committees of Companies whose Stock is Listed on the TWSE or Traded on the TPEx“.
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 2016 26

April 2, 2017	Spouse or Relatives within the Second Degree Holding Position as Manager	Title Name Relation- ship None None None None None None
	Current Position(s) in Other Companies None 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, Risk Management Department of Central Re 2. M.S. in Chemical Engineering, National Cheng Kung 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 Corp. 2. B.B.A, National Taiwan University 1. Deputy Senior Vice President, Project Division of Central Re 2. M.B.A. in Actuarial Science, Feng Chia University
	Shareholding by Other Nominee	% 0 0 0 0 0 0
		Shares 0 0 0 0 0 0
	Spouse & Dependents Shareholding	% 0 0 0 0 0 0
		Shares 0 0 0 0 0 0
	Shareholding	% 0 0 0.00 0.01 0 0
		Shares 0 0 227 33,736 0 0
	Date of Accession	2006.08.07 2012.07.25 2016.07.01 2006.01.01 2011.01.01 2016.01.01
	Gender	M M M F F M
	Name	Juang, Chong-Tsang Tsai, Bai-Long Lin, Cheng-Yen Cheng, Ching-Fen Chang, Yung-Ning Lin, Yu-Te
	Nationality	Republic of China Republic of China Republic of China Republic of China Republic of China Republic of China
	Title	President Executive Vice President Chief Auditor Executive Vice President Senior Vice President Appointed Actuary (SVP)

April 2, 2017	Spouse or Relatives within the Second Degree Holding Position as Manager	Title Name Relation- ship None None None None None None
	Current Position(s) in Other Companies None None None None None None
	Principal Work Experience and Academic Qualifications 1. Senior Vice President, Project Division of Central Re 2. M.B.A., National Taipei University 1. Junior Vice President, Personnel Division of Evergreen International Corp. 2. B.L., National Chung Hsing University 1. Junior Vice President, Investment Department of Central Re 2. B.B.A, National Taiwan 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 1. Manager, Accounting Department of Central Re 2. B.B.A, Fu Jen Catholic University
	Shareholding by Other Nominee	% 0 0 0 0 0 0
		Shares 0 0 0 0 0 0
	Spouse & Dependents Shareholding	% 0 0 0 0 0 0
		Shares 0 0 0 0 0 0
	Shareholding	% 0.01 0.00 0 0.05 0 0
		Shares 51,000 5,000 0 288,809 0 0
	Date of Accession	2015.04.01 2014.06.16 2008.01.01 2013.01.01 2012.01.01 2016.04.01
	Gender	M M F M F F
	Name	Chung, Chih-Hung Hsu, Tzu-Cheng Hsiung, Pei-Ching Ting, Wen-Cheng Liu, Yu-Hsueh Yeh, Shih-Hsuan
	Nationality	Republic of China Republic of China Republic of China Republic of China Republic of China Republic of China
	Title	Senior Vice President Deputy Senior Vice President Deputy Senior Vice President Deputy Senior Vice President Deputy Senior Vice President Deputy Junior Vice President (Principal Accounting Officer)

C. Implementation of Corporate Governance

(I) The Composition and Operations of the Board of Directors

The Board of Directors consists of nine directors (three independent directors are included).
The Board Meetings were convened eight (A) times in 2016.

The directors’ attendance status is as follows:

				Attendance Rate in Person (%) �B/A�
		Attendance in Person (B)
			By Proxy
Title	Name				Remarks



Chairman	Evergreen International Corp. Representative : Yang, Cheng-Tui	8	0	100%	None
Vice Chairman	Evergreen International Corp. Representative : Chang, Kuo-Cheng	5	3	62.5%	None
Independent Director	Yau, Sea-Wain	8	0	100%	None
Independent Director	Tsen, Ron-Syou	8	0	100%	None
Independent Director	Chou, Yu-Cheng	8	0	100%	None
Director	Ministry of Finance, R.O.C. Representative: Lee, Yi-Fen	8	0	100%	None
Director	Ministry of Finance, R.O.C. Representative: Chen, Kuan-Pao	8	0	100%	None
Director	Evergreen International Corp. Representative: Tai, Jiin-Chyuan	5	3	62.5%	None
Director	Evergreen International Corp. Representative: Ku Lai, Mei-Hsueh	8	0	100%	None

29 Central Reinsurance Corporation Annual Report 2016

(II) The Composition and Operations of the Audit Committee

The Audit Committee consists of all of the independent directors of the
Company. Six (A) regular meetings were convened in 2016.
The members’ attendance status is as follows.



Title	Name	Attendance	By Proxy	Remark
		in Person(B)

Independent Director Independent Director Independent Director	Yau, Sea-Wain Tsen, Ron-Syou Chou, Yu-Cheng	6 6 6	0 0 0	None None None

Central Reinsurance Corporation Annual Report 2016 30

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None	None None
Implementation Status1	Brief Explanation	The Company has established the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx ListedCompanies”. The information has been disclosed on the Company’s website and MOPS.	(1) The dedicated unit of the Company handles stock affairs including legal and non-legal issues according to the existing procedure. All shareholders of the Company are able to ask for our stock service via the hotline, email or the Company’s website. (2) The Company submits a monthly report listing the shareholdings of directors, managers and major shareholders (over 10% shareholdings) to the authorities according to Article 25 of Securities and Exchange Act. Moreover, the Company also discloses the latest shareholdings of major shareholders (over 5%
	No
	Yes	○	○ ○
	Evaluation Item	1. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPExListed Companies”?	2. Shareholding structure & shareholders’ rights (1) Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure? (2) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares?

31 Central Reinsurance Corporation Annual Report 2016

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None None	None
Implementation Status1	Brief Explanation	shareholdings) and the top ten shareholders on the Company’s annual report. (3) Rules are made to strictly regulate the activities of trading, endorsement and loans between the Company and its affiliates. (4) To protect shareholders’ rights and fairly treat shareholders, the Company has established the internal rules to forbid insiders trading on undisclosed information. The Company has also strongly advocated these rules in order to prevent any violations.	(1) In accordancewith paragraph 3 of Article 22 of “Corporate Governance Best Practice Principles” of the Company, diversification of the Board members shall be taken into consideration. According to paragraph 4 of the same Article, all members of the Board shall have the professional knowledge, skills, and experience necessary to perform their duties. The Skill Matrix of the Board members is as follows:
	No
	Yes	○ ○	○
	Evaluation Item	(3) Does the company establish and execute the risk management and firewall system within its conglomerate structure? (4) Does the company establish internal rules against insiders trading with undisclosed information?	3. Composition and Responsibilities of the Board of Directors (1) Does the Board develop and implement a diversified policy for the composition of its members?

Central Reinsurance Corporation Annual Report 2016 32

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons										None None
Implementation Status1	Brief Explanation										Independent Director Chou, Yu-Cheng M � � (2) In order for the sound supervision and reinforcement of management, the Company established the Enterprise Risk Management Committee in addition to the Remuneration Committee and the Audit Committee. These functional committees shall be responsible for the Board of Directors. (3) The Company has formulated rules and procedures for evaluating the Board’s performance and conducted it. The Company uses
		Asset Management						�
		Law			�				�
		Risk Management	�						�	�
		Finance / Accounting				�	�				�
		Insurance	�							�
		Management	�	�	�	�	�	�	�	�	�
		Gender	M	M	M	F	F	M	M	M	M
		Name	Yang, Cheng-Tui	Chang, Kuo-Cheng	Tai, Jiin-Chyuan	Ku Lai, Mei-Hsueh	Lee, Yi-Fen	Chen, Kuan-Pao	Yau, Sea-Wain	Tsen, Ron-Syou	Chou, Yu-Cheng
		Title	Chairman	Vice Chairman	Director	Director	Director	Director	Independent Director	Independent Director	Independent Director

	No
	Yes										○ ○
	Evaluation Item										(2) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee? (3) Does the company establish a standard to measure the performance of the Board, and

33 Central Reinsurance Corporation Annual Report 2016

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None	None
Implementation Status1	Brief Explanation	two methods to evaluate the performance of the Board. a. Self-assessment of Board members: Board members fill in the "Self-Assessment Questionnaire for Board Members" at the end of each year. b. Assessment of the Board: The dedicated unit of the Company conducts the assessment of the Board’s performance at the end of each year. (4) The Company assesses the professional service performed and independence of CPAs annually, and CPAs, in the meantime, are issue a declaration of independence for auditing of the financial statements. The engagement, remuneration and independence assess of CPAs for financial statements auditing and corporate income tax return compliance in 2017 has been approved by the Board of Directors on March 22, 2017. The CPAs appointed by the Company are in compliance with the Company's independent evaluation standards and are eligible for auditing the Company.	The Supervisory Division is in charge of corporate governance affairs, and the financial officer is in charge of supervision. The main duty are as follows:
	No
	Yes	○	○
	Evaluation Item	implement it annually? (4) Does the company regularly evaluate the independence of CPAs?	4. Does the company set up a corporate governance unit or appoint personnel responsible for corporate governance matters (including but not limited to providing

Central Reinsurance Corporation Annual Report 2016 34

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons		None
Implementation Status1	Brief Explanation	(1)To produce agenda of Board Meeting and provide meeting notice with sufficient meeting material to each director no later than 7 days prior to the Board Meeting date. To remind director to recuse himself or herself from the discussion and voting when the director has personal interest in the proposal. To provide minutes to directors within 20 days after the meeting and public announce according to the regulations. (2)To register the date of Shareholders’Meeting, produce meeting notice, meeting handbook and minutes, and apply to MOEA for registration after amendment of“Articles of Incorporation”or election of directors. (3)To Assist Chairmanin the meeting (including Shareholders’ Meeting, Board Meeting, meeting of Remuneration Committee and Audit Committee), including explanation of regulations related to proposal content and procedures for the meeting.	The Company provides detailed contact information, including telephonenumbers and email addresses in the “Stakeholder Area” section of the corporate website. In addition, personnel are in place to exclusively deal with issues of social responsibility, ensuring that various interested parties have channels to communicate with the Company.
	No
	Yes		○
	Evaluation Item	information for directors and supervisors to perform their functions, handling work related to meetings of the Board of Directors and the shareholders' meetings, filing company registration and changes to company registration, and producing minutes of board meetings and shareholders’meetings)?	5. Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?

35 Central Reinsurance Corporation Annual Report 2016

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Whereas stock department is managed by the Company itself, the Shareholders’ Meeting is conducted following government regulation and corporate guideline to ensure its lawfulness, effectiveness and safeness.	None None
Implementation Status1	Brief Explanation	The Company does not assign any agency to be in charge of its shareholder’smeetings.	(1) The Company has set up a Chinese/English website (http://www.centralre.com) to disclose information regarding the Company’s financials, business and corporate governance status. (2) The Company has assigned appropriate persons to handle information collection and disclosure. The Company has established a spokesman system. The Company will hold or join in one investor conference in the year 2017.
	No	○
	Yes		○ ○
	Evaluation Item	6. Does the company appoint a professional shareholder service agency to deal with shareholder affairs?	7. Information Disclosure (1) Does the company have a corporate website to disclose both financial standings and the status of corporate governance? (2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and

Central Reinsurance Corporation Annual Report 2016 36

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons		None
Implementation Status1	Brief Explanation		Please refer to the details as follows:
	No
	Yes		○
	Evaluation Item	disclosure, creating a spokesman system, webcasting investor conferences)?	8. Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, 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)?

37 Central Reinsurance Corporation Annual Report 2016

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Course	Analyzation of Enterprise treatment–Focusing on Latest Labor Management Dispute	Fraud Risk Governance–Recognition of Risk Management of Fraud
Implementation Status1	Brief Explanation
		Sponsoring Organization	Taiwan Corporate Governance Association	Taiwan Corporate Governance Association
	No
		Study Date	2016/10/11	2016/11/23
	Yes
	Evaluation Item
		Training hours	3H	3H
		Name	Yang, Cehng-Tui
		Title	Chairman

Central Reinsurance Corporation Annual Report 2016 38

==> picture [448 x 746] intentionally omitted <==

----- Start of picture text -----

Reasons
Best-Practice Principles for
Companies” and
Deviations from “the TWSE/TPEx Listed
Corporate Governance
Focusing on Latest Labor Focusing on Latest Labor Focusing on Latest Labor
– – –
Course
Recognition of Risk Management of Recognition of Risk Management of
– – Risk Trend and Opportunity
Secret and Prevent Fraud to Strengthen –
–
1
Analyzation of Enterprise treatment Management Dispute Analyzation of Enterprise treatment Management Dispute The Trend of Low Carbon Development after Paris Agreement, Taipei Session Fraud Risk Governance Fraud How to Protect Trade Corporate Governance Effectiveness of Independent Directors The Practice of Independent Directors and Functional Committees Analyzation of Enterprise treatment Management Dispute Fraud Risk Governance Fraud Analyzation of Global The International Trend of Long-term Encouragement and Design of Bonus System for Directors and Senior Officers
Implementation Status Brief Explanation
Sponsoring Organization
Taiwan Corporate Governance Association Taiwan Corporate Governance Association Wbcsd Global Network Partner Taiwan Corporate Governance Association Taiwan Corporate Governance Association Taiwan Corporate Governance Association Taiwan Corporate Governance Association Taiwan Corporate Governance Association Taiwan Corporate Governance Association Taiwan Corporate Governance Association Taiwan Corporate Governance Association
No
Yes
Study Date 2017/3/24 2017/3/31
2016/10/11 2016/10/11 2016/10/13 2016/11/23 2016/3/15 2016/7/22 2016/7/29 2016/10/11 2016/11/23
3H 3H 3H 3H 3H 3H 3H 3H 3H 3H 3H
hours
Training
Name Chang,
Kuo-Cheng
Evaluation Item Yau, Sea-Wain Tsen, Ron-Syou
Title Vice
Chairman Director Director
Independent Independent
----- End of picture text -----

39 Central Reinsurance Corporation Annual Report 2016

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Course	The Introduction of the Newest Tax Law and Regulation	2016 Corporate Governance Forum–Insider Trading and Corporate Social Responsibility	Digital Finance–Challenges, Opportunities and Corporate Governance	Legal Liability and Case Analysis of Trade Secrets Act		Analyzation of Enterprise treatment–Focusing on Latest Labor Management Dispute	Fraud Risk Governance–Recognition of Risk Management of Fraud	2016 Seminar: Invest yourself & Innovation of value	2016 Corporate Governance summit XII	The Trend of Low Carbon Development after Paris Agreement, Taipei Session	The 11th Taipei Corporate Governance Forum
							Apply for Securities Trading on the Stock Exchange or Over-the-Counter Market (OTC) Listing and Corporate Social Responsibility
Implementation Status1	Brief Explanation

		Sponsoring Organization	Taiwan Securities Association	Securities and Futures Institute	Taiwan Securities Association	Taiwan Securities Association	Taiwan Securities Association	Taiwan Corporate Governance Association	Taiwan Corporate Governance Association	The Institute of Internal Auditors-Chinese Taiwan	Taiwan Corporate Governance Association	Wbcsd Global Network Partner	Financial Supervisory Commission R.O.C.(Taiwan)
	No
		Study Date	2016/1/13	2016/1/26	2016/3/16	2016/6/15	2016/7/21	2016/10/11	2016/11/23	2016/4/28& 2016/4/29	2016/10/6	2016/10/13	2016/10/20
	Yes
	Evaluation Item
		Training hours	3H	3H	3H	3H	3H	3H	3H	12H	3H	3H	3H
		Name			Chou, Yu-Cheng						Lee, Yi-Fen
		Title			Independent Director						Director

Central Reinsurance Corporation Annual Report 2016 40

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons											Director Ku Lai, Mei-Hsueh 3H 2016/6/16 Securities and Futures Institute The Second Edition Awarding Ceremony and Lecture of Evaluation of Corporate Governance 3H 2016/10/11 Taiwan Corporate Governance Association Analyzation of Enterprise treatment–Focusing on Latest Labor Management Dispute 3H 2016/11/23 Taiwan Corporate Governance Association Fraud Risk Governance–Recognition of Risk Management of Fraud	Director Ku Lai, Mei-Hsueh 3H 2016/6/16 Securities and Futures Institute The Second Edition Awarding Ceremony and Lecture of Evaluation of Corporate Governance 3H 2016/10/11 Taiwan Corporate Governance Association Analyzation of Enterprise treatment–Focusing on Latest Labor Management Dispute 3H 2016/11/23 Taiwan Corporate Governance Association Fraud Risk Governance–Recognition of Risk Management of Fraud	Director Ku Lai, Mei-Hsueh 3H 2016/6/16 Securities and Futures Institute The Second Edition Awarding Ceremony and Lecture of Evaluation of Corporate Governance 3H 2016/10/11 Taiwan Corporate Governance Association Analyzation of Enterprise treatment–Focusing on Latest Labor Management Dispute 3H 2016/11/23 Taiwan Corporate Governance Association Fraud Risk Governance–Recognition of Risk Management of Fraud
		Course	Fraud Risk Governance-Recognition of Risk Management of Fraud	2016 Corporate Governance Forum–Insider Trading and Corporate Social Responsibility	Analyzation of Enterprise treatment-Focusing on Latest Labor Management Dispute	The Trend of Low Carbon Development after Paris Agreement, Taipei Session	The Board Meeting and Internal Audit and Internal Control System	Money Laundering Control Act and Case Analysis I	Money Laundering Control Act and Case Analysis II	Analyzation of Enterprise treatment–Focusing on Latest Labor Management Dispute	Fraud Risk Governance–Recognition of Risk Management of Fraud	The Second Edition Awarding Ceremony and Lecture of Evaluation of Corporate Governance	Analyzation of Enterprise treatment–Focusing on Latest Labor Management Dispute	Fraud Risk Governance–Recognition of Risk Management of Fraud
Implementation Status1	Brief Explanation
		Sponsoring Organization	Taiwan Corporate Governance Association	Securities and Futures Institute	Taiwan Corporate Governance Association	Wbcsd Global Network Partner	Training Institute, Ministry of Finance, R.O.C.	Training Institute, Ministry of Finance, R.O.C.	Training Institute, Ministry of Finance, R.O.C.	Taiwan Corporate Governance Association	Taiwan Corporate Governance Association	Securities and Futures Institute	Taiwan Corporate Governance Association	Taiwan Corporate Governance Association
	No
		Study Date	2016/11/23	2016/1/26	2016/10/11	2016/10/13	2016/10/26	2016/11/14	2016/11/23	2016/10/11	2016/11/23	2016/6/16	2016/10/11	2016/11/23
	Yes
	Evaluation Item
		Training hours	3H	3H	3H	3H	3H	3H	3H	3H	3H	3H	3H	3H
		Name	Lee, Yi-Fen			Chen, Kuan-Pao				Tai, Jiin-Chyuan			Ku Lai, Mei-Hsueh
		Title	Director			Director				Director			Director

Central Reinsurance Corporation Annual Report 2016

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	(1)The Company has publicly announced the English material information on MOPS. (2)The Company encourages directors for education continuously according to the “Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies”.
Implementation Status1	Brief Explanation
	No
	Yes
	Evaluation Item	9. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures.

Central Reinsurance Corporation Annual Report 2016 42

(IV) The Composition and Operations of the Remuneration Committee

The Remuneration Committee was established in 2011 and consists of three independent directors.
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 and managerial officers.
(2) Periodically evaluate and establish the remuneration of directors and managerial officers.
The Remuneration Committee convened three (A) meetings in 2016.

The members' attendance status is as follows:


		i
Title	Name	Attendance n	By	Remark
		Person (B)	Proxy

Convener Member Member	Yau, Sea-Wain Tsen, Ron-Syou Chou, Yu-Cheng	3 3 3	0 0 0	None None None

43 Central Reinsurance Corporation Annual Report 2016

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

	Brief Explanation (Note 2)	(1) The Company has established the "Central Reinsurance Corporation - Corporate Social Responsibility Policy" and "Central Reinsurance Corporation - Corporate Social Responsibility Principles" as the guidelines for fulfilling the Corporate Social Responsibilities and as the basis for relevant management measures. All business units shall set up their annual operating plans based on the aforementioned policies and principles and to implement the plans accordingly. Each year, the Company conducts regular performance review on such activities. The review results will be used as the basis for making the annual CSR plans for the forthcoming year, and will be incorporated into the "Corporate Social Responsibility Report" of the Company. The "2016 Corporate Social Responsibility Report" of the Company has been disclosed on the Market Observation Post System:http://mops.twse.com.tw/mops/web/t100sb11 as well as the official website of the Company: http://www.centralre.com/content/information/information09.htm.
Implementation Status (Note1)
	No
	Yes	○

	Evaluation Item	1.Implementation of Corporate Governance (1) Has the Company established its corporate social responsibility policies or systems? Has a performance review been conducted thereof?

Central Reinsurance Corporation Annual Report 2016 44

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

	Brief Explanation (Note 2)	(2) Each year, the Company organizes regular CSR-related trainings including ethical corporate management, personal information protection, compliance and internal audit/control. From time to time, it also assigns our employees to participate in external training or seminars on corporate governance and corporate social responsibility. (3) Under the leadership of the President and focusing on the four major aspects of “implementing corporate governance”, “developing a sustainable environment”, “preserving public welfare” and “enhancing information disclosure”, the Company has appointed its Project Division as the responsible department to facilitate the project and coordinate all department heads to implement various initiatives based on the annual operating plan of the respective business unit. The implementation status and achievements are incorporated into the “Corporate Social Responsibility Report” of the Company, which will be regularly presented to the board of directors each year.
Implementation Status (Note1)
	No
	Yes	○ ○

	Evaluation Item	(2) Has the Company arranged regular training on corporate social responsibilities? (3) Has the Company appointed a full-time (part-time) business unit to facilitate CSR-related matters? Has the board of directors delegated a senior management level to administer these matters and to provide updated status to the board?

45 Central Reinsurance Corporation Annual Report 2016

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

	Brief Explanation (Note 2)	(4) The Company has established fair and reasonable remuneration policies to fully achieve the purposes of attracting and retaining talents. Employee performance reviews are conducted based on criteria such as “Work performance”, “Character”, “Knowledge, Experience & Skills” and “Reliability”. Suppose that employees have violated regulations or internal rules, such as work rules, principles of ethical corporate management or code of ethical conducts, the violated behaviors will be assessed in the performance appraisal, and subject to disciplinary actions prescribed in the work rules, based on the severity of the violation. Similarly, employees having contribution to the Company will be rewarded based on their extent of contribution.	(1) The Company endeavors to improve the efficiency of energy utilization by adjusting its operational/service procedures and adopting high-performance equipment. The measures taken include: making announcements through online channels, reducing photocopies, promoting paperless meetings, raising the temperature setting of central air-conditioners and changing to energy-saving lighting systems comprehensively.
Implementation Status (Note1)
	No
	Yes	○	○

	Evaluation Item	(4) Has the Company established reasonable remuneration policies? Has it aligned the employee performance evaluation system with its corporate social responsibility policies? Is there a specific and effective reward and disciplinary system?	2. Sustainable Environment Development (1) Is the Company devoted to improving the efficiency in resource utilization? Does it use reusable material with low environmental impact?

Central Reinsurance Corporation Annual Report 2016 46

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

	Brief Explanation (Note 2)	(2) The Company is a professional reinsurer, not within significant pollution and energy intensive industries. Hence, ISO14001 or relevant environmental management systems are not applicable to the Company. Nevertheless, the Company has made efforts in natural environment protection and established the "Central Reinsurance Corporation - Guidelines for Promoting Energy Conservation/Carbon Reduction." The General Affairs Department is responsible for formulation, implementation and maintenance of relevant environmental management systems and action plans. The General Affairs Department also arranges environmental education for all employees duly. (3) The Company's management objective of energy conservation and carbon reduction is 0.5% reduction in water and electricity consumption annually. The methods are as follows: a. Promote the concept of water and electricity conservation on a regular basis. b. Set the air-conditioner at a temperature of 26-28 degrees; clean and maintain the air-conditioners on a regular basis to improve the energy efficiency.
Implementation Status (Note1)
	No
	Yes	○ ○

	Evaluation Item	(2) Has the Company established suitable environmental management system based on the characteristics of the industry? (3) Is the Company alert to the influence of climate change on its operational activities? Has it implemented a Greenhouse Gas Inventories System and established strategies for energy conservation/carbon reduction and GHG reduction?

47 Central Reinsurance Corporation Annual Report 2016

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

	Brief Explanation (Note 2)	c. Use T5 lights to replace traditional lighting devices; save power consumption; turn off the lights for one hour during lunch breaks. d. Purchase the electrical goods affixed with energy-saving labels. The following measures are also being strengthened: a. Facsimiles are transmitted via electronic files without printing to reduce the use of paper and carbon toner. b. Encourage employees to commute by public transportation or by bicycle.	(1) In accordance with the requirements set forth in the Employment Service Act and Act of Gender Equality in Employment, the Company is committed to ensuring equal employment opportunity to all its employees and job candidates. Furthermore, the Company neither compels employees to labor nor hire child workers. All the human resources policies of the Company are established in accordance with the Labor Standards Act and relevant regulations. (2) The Company has built up dedicated telephone line and e-mail address to receive employee grievance, as well as sexual harassment case. The whistle-blower's identity and the contents of
Implementation Status (Note1)
	No
	Yes		○ ○

	Evaluation Item		3. Preserving Public Welfare (1) Has the Company established relevant management policies and procedures based on the International Bill of Human Rights and relevant regulations? (2) Has the Company established employee grievance mechanisms and channels? Are the complaints properly dealt with?

Central Reinsurance Corporation Annual Report 2016 48

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

	Brief Explanation (Note 2)	the report will be kept confidential. On receiving a grievance or whistle-blowing case, the Company will assign dedicated personnel to investigate and manage the case immediately. There was no grievance case in 2016. (3) In order to provide a safe and healthy working environment to employees, the Company is committed to accident prevention and environmental hygiene. In addition to routine inspections on water quality and carbon dioxide level in the office area, the Company also organizes employee safety training and fire drills. An office access control system is in place. Employee physical examinations are offered on a regular basis. (4) The Company provides smooth communication channels for its employees. Issues regarding to the rights and obligations of employees may be communicated through face-to-face discussions with the supervisors, e-mails or meetings. With respect to any operational changes which may have significant impact on employees, the Company will notify the employees through meetings or other reasonable channels.
Implementation Status (Note1)
	No
	Yes	○ ○

	Evaluation Item	(3) Has the Company provided a safe and healthy working environment for its employees as well as relevant training on a regular basis? (4) Has the Company established a regular communication mechanism with its employees? With regard to any operational changes which may have significant impact on the employees, does the Company notify the employees through a reasonable method?

Central Reinsurance Corporation Annual Report 2016

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

	Brief Explanation (Note 2)	(5) To develop employees' job competency, the Company provides various internal and external professional training programs for employees, and attending overseas training or international conferences. In addition, employees are also encouraged to attend diversified self-learning and development programs. In 2016, there were 368 attendances to attend related domestic courses including finance and reinsurance. The Company also organizes various internal professional training, and encourages employees to acquire various professional certificates to improve their competitiveness. (6) As a reinsurance company, the Company provides reinsurance services based on the needs of customers. Customers are welcomed to consult the Company or file a complaint through the website, e-mail address or telephone of the Company. (7) This item is not applicable, since Central Re is a reinsurance company.
Implementation Status (Note1)
	No
	Yes	○ ○ ○

	Evaluation Item	(5) Has the Company established effective competency development plans for its employees? (6) Has the Company established relevant consumer protection policies and complaint procedures with regard to its R&D, procurement, production, operational and service flows? (7) With regard to the marketing and labeling of its products and services, has the Company followed relevant regulations and international standards?

Central Reinsurance Corporation Annual Report 2016 50

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

	Brief Explanation (Note 2)	(8) As a current practice, before establishing business partnerships with suppliers, the Company proceeds to survey their company registration information, professional background and performance in the past. Especially the Company puts emphasis on the records of suppliers’ impact on the environment and society. (9) The Company must evaluate the legitimacy and the records of integrity behavior of its suppliers, its customers and all trading partners when being engaged in business. The contracts between the Company and its suppliers must state the clauses of integrity management, which the Company is entitled to terminate the contracts and request for a compensation for damages if the suppliers breach the clauses of integrity management.	(1) The Company has disclosed its "Corporate Social Responsibility Policies", "Corporate Social Responsibility Principles" and annual "Corporate Social Responsibility Reports" in its official website. The information has also been reported to the Market Observation Post System (http://mops.twse.com.tw/mops/web/t100sb11). With regard to the Company’s achievement in fulfilling the corporate social responsibilities has also been disclosed in the
Implementation Status (Note1)
	No
	Yes	○ ○	○

	Evaluation Item	(8) Before engaging a new supplier, has the Company checked whether the supplier has any previous record of environmental or social impact? (9) Has the Company included a provision in its contracts with the main suppliers that the Company is entitled to terminate or rescind the contract at any time when the supplier is involved in activities which have breached its corporate social responsibility or have significant environmental or social impact?	4. Enhancing Information Disclosure (1) Has the Company disclosed through its website or the Market Observation Post System important and reliable information relating to corporate social responsibility?

Central Reinsurance Corporation Annual Report 2016


Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

	Brief Explanation (Note 2)	annual report.Please visit the “Corporate Social Responsibility” section of the Company’s official website: http://www.centralre.com/content/information/information09.htm and The “Corporate Interest Parties” section of the Company’s official website: http://www.centralre.com/content/information/information07.htm.
Implementation Status (Note1)
	No
	Yes

	Evaluation Item

Central Reinsurance Corporation Annual Report 2016 52

		The Company offers services such as “Compulsory Automobile Liability Insurance” and “Residential Earthquake Insurance”. c. Facilitating the Exchange of Knowledge among Insurance Professionals In 2016, the Company organized a total of twelve external seminars, which was participated by nearly 470 persons. The seminars covered eight subjects, including “Aging products of life insurance in Japan” and “A Brief Overview of the Management of Accident and Health Insurance coverage for Less than 3 Years by Non-Life Insurance Companies based on the Life Insurance industry's experience”. d. Supporting Public Welfare and Contributing to the Society In 2015, the Company donated NTD300,000 to the Chang Yung-Fa Foundation to sponsor the Australia Debut of the Evergreen Symphony Orchestra owned and supervised by the Foundation. Under a cooperation program with Eden Social Welfare Foundation, the Company invited Eden’s blind massage therapists to provide massage services at the venue of the Company’s 2016 customer engagement activity.The purpose is to create work opportunities and demonstrate our care to the less advantaged, in the meantime encourage social contribution and participation. In the same year, the Company also purchased a total of 128 egg role gift boxes from the Workshop with Happiness (Syin-Lu Social Welfare Foundation) for our employees, as well as the hand-made soap gift boxes produced in the Tucheng Sheltered Workshop of Taiwan Foundation for the Blind for our customers. e. Implement Strict Risk Control Measures to safeguard the rights and interests of our customers and all interested parties For insurance companies, risk management is an important part of corporate governance. Appropriate risk management helps to reduce the probability of incorrect business decision, minimize or avoid potential loss, in the meantime pursue optimized profit for the Company with acceptable risk. The Company, therefore, is devoted to building up an effective risk management system to fulfill its commitments to customers and all interested parties. As a professional reinsurance service provider, the Company is devoted to building up an integrated risk management system to support the insurance firms when accommodating the insurance requirements of the public against natural catastrophes and man-made disasters. The risk management system is also important for the Company to cope with its overall operating risks and maintaining adequate solvency, thereby safeguarding the rights and interests of its customers and all interested parties.
Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

	Brief Explanation (Note 2)
Implementation Status (Note1)
	No
	Yes

	Evaluation Item

Central Reinsurance Corporation Annual Report 2016

		In order to effectively plan, supervise and implement the risk management affairs, the Company has established its Enterprise Risk Management Committee, which reports directly to the board of directors. The Committee is composed of independent directors, the president and all department heads, with the independent director being the chairperson. In addition to providing regular reports to the board of directors, the Committee is also responsible to execute the risk management policies set forth by the board of directors. f. Providing a Safe and Healthy Working Environment The Company is committed to accident prevention and environmental hygiene. In addition to routine inspections on water quality and carbon dioxide level in the office area, the Company also organizes employee safety training and fire drills. An office access control system is in place. Employee physical examinations are offered on a regular basis. (3) With regard to the Company’s other achievements in fulfilling the corporate social responsibilities, please visit the “Corporate Social Responsibility” section ofthe Company’s official website: http://www.centralre.com/content/information/information09.htm.	7.If the Company's Corporate Social Responsibility Report has been approved by relevant certification institutions, please explain accordingly: Not applicable.	Note: 1. Explanation should be provided in the field of "Brief Explanation" regardless whether the answer to "Implementation Status" is "Yes" or "No". 2. If the Company has compiled a Corporate Social Responsibility Report, you may provide the relevant page number or reference in the CSR report instead of a "Brief Explanation".
Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

	Brief Explanation (Note 2)
Implementation Status (Note1)
	No
	Yes

	Evaluation Item

Central Reinsurance Corporation Annual Report 2016 54

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

Implementation Status (Note 1)	Brief Illustration	(1) The "Ethical Corporate Management Best-Practice Principles" of the Company have been reviewed by its Audit Committee, approved by the Board of Directors and reported to the shareholders at annual general meeting. The Company has disclosed the Principles on its website and the Market Observation Post System in accordance with the regulations. The contents of the Principles include the policies for ethical corporate management, relevant measures and the preventive programs against unethical behaviors. All personnel of the Company are required to observe these principles, including the directors, managers, employees and individuals with actual control power. (2) To carry out the policies for ethical corporate management, the Company has made great efforts in preventing dishonest behaviors. Through its "Procedures for Ethical Corporate Management and Guidelines for Conduct", the Company has
	No
	Yes	○ ○
	Evaluation Item	1. Establish the ethical corporate management policy and programs (1) Has the company declared its ethical corporate management policies and procedures in its guidelines and external documents, as well as the commitment from its board to implement the policies? (2) Has the Company established relevant programs to prevent dishonest behaviors and described therein the procedures, code of conducts, disciplinary rules and

Central Reinsurance Corporation Annual Report 2016

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

Implementation Status (Note 1)	Brief Illustration	provided specific rules for its employees, regarding of the important matters when executing business as well as the disciplinary and grievance systems against dishonest behaviors. The Company also conducts internal review on a yearly basis to identify whether any dishonest behaviors have in business management. (3) Focusing on business activities carrying a higher risk of being involved in an unethical conducts, the Company has implemented strict internal control procedures as follows: a. As prescribed in its "Investment Risk Management Operational Guidelines", the Company should agree with the transaction counterparties, intermediate institutions and custodian institutions in advance on the bank account for receiving returned or discounted commission, handling fees or management fees arising from investment activities. The main beneficiary shall be the Company. Regular audit and follow-up should be carried out by a business unit (the Finance Department) independent from the executing business unit. b. According to its "Regulations Governing Donations", the Company should disclose on its official website, on a
	No
	Yes	○
	Evaluation Item	appeal systems against violations? Have these been practically implemented? (3) Has the Company adopted any preventive measures against the business activities within their business scope which are at a higher risk of being involved in unethical conducts, either as prescribed in paragraph 2, Article 7 of the "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies" or those would otherwise exist?

Central Reinsurance Corporation Annual Report 2016 56


Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

Implementation Status (Note 1)	Brief Illustration	consolidated basis, all donations made to political parties, interested parties and public welfare groups. Donations made to interested parties should be resolved in the board meeting in advance. Before making political donations, the Company should ensure its full compliance with the requirements set forth in the Political Donation Act. Donations to non-interested parties with an amount of NTD500,000 or above should be approved in the board meeting in advance. c. According to the "Guidelines for Entertainment Expenses Reimbursement“of the Company, entertainment expenses shall, in principle, be allowed for business-related purposes only, including catering, general gifts, year festival gifts, as well as cash payments for wedding or funerals. To curb dishonest behaviors, sending gifts and cash gifts should be in accordance with the standards set forth in the Company's "Guidelines Governing the Gifts and Cash Gifts Sent for Ceremonies and Celebrations". d. To prevent dishonest behaviors, it has been prescribed in the Company's "Personnel Administration Procedures" that the associated employees of the Company should not be involved in any underhanded lending/ borrowing, or improper funneling of interests with any relationship parties that have
	No
	Yes
	Evaluation Item

57 Central Reinsurance Corporation Annual Report 2016

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

Implementation Status (Note 1)	Brief Illustration	business dealings, including construction contractors, financial institutions, and providers of office suppliers.	(1) As a reinsurance company, the Company is engaged in the reinsurance business in local and overseas reinsurance market, and Reinsurance contracts are established accordingly. An insurance contract is a contract based upon the utmost good faith. A reinsurance contract is a kind of insurance contracts, so is absolutely subject to the principle of good faith. In other words, all reinsurance contracts signed by the Company are contracts of utmost good faith. The Company has included an ethical corporate management clause in the contracts signed with its distributors, suppliers, customers or other business counterparties. The Company would claim to terminate or rescind the contract whenever the counterparty is involved in dishonest conducts. (2) The Human Resources Department of the Supervisory Division shall be the dedicated business unit to facilitate ethical corporate management, and shall report the implementation status to the board of directors at the end of each year.
	No
	Yes		○ ○
	Evaluation Item		2. Carry out Ethical Corporate Management (1) Has the Company checked the creditworthiness record of its counterparties and included a specific ethical conduct clause in its contracts with the counterparties? (2) Has the Company established a full-time (part-time) business unit to facilitate matters on ethical corporate management, which is subordinate to

Central Reinsurance Corporation Annual Report 2016 58

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

Implementation Status (Note 1)	Brief Illustration	The Auditing Division shall be responsible to audit and evaluate whether the preventive measures established for ethical corporate management have been effectively implemented. The Auditing Division shall also review the compliance status on relevant business operations on a regular basis. (3) With regard to the transactions with interested parties, the Company has provided specific mechanisms and procedures in its "Policies and Procedures for Conducting Non-loan Transactions with Interested parties" and "Internal Procedural Guidelines for Conducting Non-loan Transactions with Interested parties". It is stipulated in the "Regulations Governing Procedures for Board of Directors' Meetings" of the Company that, if any director, manager or other interested party attending the meeting has a stake with any agenda item, the person shall state the important aspects of the interested party relationship at the respective meeting. The person may not participate in the discussion or voting process, and further, shall enter recusal during the discussion and voting.
	No
	Yes	○
	Evaluation Item	the board of directors and provides regular updates thereto? (3) Has the Company established the policies to prevent conflict of interests and provided adequate communication channels? Have these policies/measures been implemented in full?

59 Central Reinsurance Corporation Annual Report 2016

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

Implementation Status (Note 1)	Brief Illustration	To enhance the management of financial transactions between the company and its affiliated enterprises and avoid non-arm's length transactions or improper transfer of interests, the Company has established the "Procedural Guidelines Governing Financial and Business Matters Between this Corporation and its Affiliated Enterprises and Firewall Mechanisms" which has been implemented on May 27, 2016 after reviewed by the Audit Committee and resolved in the board meeting. (4) The Company has established its accounting, internal control and audit systems based on the "Regulations Governing the Preparation of Financial and Operational Reports by Insurance Enterprises" and "Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises". The Company's Auditing Division prepares the audit plans on an annual basis, which is submitted to the board of directors for review. Auditing Division executes the audit plan. The audit report based on the audit results will be submitted to the board of directors in the end. Based on Article 26 of the "Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises", the Company should also appoint the
	No
	Yes	○
	Evaluation Item	(4) Has the Company built up effective accounting and internal control systems to ensure ethical corporate management? Has it conducted regular audits either through its internal audit units or outsourced CPAs?

Central Reinsurance Corporation Annual Report 2016 60

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

Implementation Status (Note 1)	Brief Illustration	accountant to conduct the audit of on its internal control system every year, while the accountant audit and certify the Company’s financial report. (5) The Company has disclosed on its official website the "Ethical Corporate Management Best Practice Principles" and "Procedures for Ethical Corporate Management and Guidelines for Conduct" of the Company to notify employee. Related trainings are provided each year to eliminate dishonest behaviors. On a monthly basis, the Legal and Compliance Department of the Company will consolidate the cases involving violation of the Principles. Such cases will be reported in the operation and management meeting and notified to all departments to alert the employees from time to time.	Based on Article 21 of its "Procedures for Ethical Corporate Management and Guidelines for Conduct", the Company operates its whistle-blowing system through the following approaches:
	No
	Yes	○
	Evaluation Item	(5) Does the Company provide internal or external training on ethical corporate management on a regular basis?	3. Implementation of Whistle-blowing System within the Company

61 Central Reinsurance Corporation Annual Report 2016

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

Implementation Status (Note 1)	Brief Illustration	(1) The Company encourages whistle-blowing on unethical or improper behaviors by both internal and external personnel. Disciplinary actions shall be enforced, however, if any of the internal personnel is involved in false or malicious allegation. The Company has established independent mailbox and hotline for whistle-blowing, which have been announced on the official website and intranet of the Company, and have illustrated the required information which the whistle-blowers need to provide. The Human Resources unit shall be the dedicated business unit to handle the matters relating to whistle-blowing. (2) The personnel responsible to handle whistle-blowing related matters shall issue written declaration guaranteeing the confidentiality of the identity of whistle-blowers and the content of reported cases. (3) The Company would undertake to protect whistle-blowers from inappropriate disciplinary actions due to their whistle-blowing.
	No
	Yes	○ ○ ○
	Evaluation Item	(1) Has the Company established specific whistle-blowing and award systems? Does it provide convenient whistle-blowing channels and, based on the status of the reported party, appointed suitable and dedicated personnel to handle the case? (2) Has the Company established the standard operating procedures for investigating the reported case, as well as relevant confidentiality mechanisms? (3) Has the Company adopted measures to protect the whistle-blower against any inadequate treatment caused thereby?

Central Reinsurance Corporation Annual Report 2016 62

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

Implementation Status (Note 1)	Brief Illustration	The Company's "Ethical Corporate Management Best Practice Principles" and implementation status for the year have been disclosed on the official website of the Company, the Market Observation Post System and the annual report.
	No
	Yes	○
	Evaluation Item	4. Strengthen Information Disclosure (1) Has the Company announced on its website and the Market Observation Post System its Principles for Ethical Corporate Management and its achievements in implementing the Principles?

63 Central Reinsurance Corporation Annual Report 2016

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

(I) Material Resolutions of Shareholders Meeting


Date	Major Resolutions	Execution

May 27, 2016	The amendment of the“Articles of Incorporation”.	The amended Articles of Incorporation has been approved by Commerce Department, Ministry of Economic Affairs and registered (No. 10501127790) and the related actions on behalf of the Company have been conducted in accordance with revised Article of Incorporation.
	Approval of the distribution of earnings of the year 2015. Cash Dividends: NT$393,592,500. Cash dividend per share NT$0.7.	1. The Board Meeting convened on May 27, 2016 resolved the record date for distribution of cash dividends on Jun. 20, 2016 and payment date on Jul. 8, 2016. 2. The cash dividend was distributed onJul. 8,2016.

(II) Material Resolutions of Board of Directors Meeting


Date	Major Proposals

Jan. 29,2016	(1) To stipulate the date and venue for the 2016 Annual General Meeting of Shareholders. (2) To approve the 2015 year-end bonus to managers. (3) To approve the 2015year-end bonus to the Chairman and Vice Chairman.
Mar. 17, 2016	(1) To amend Articles of Incorporation. (2) To amend Compensation Structure and Performance Incentive System for Managers, and re-named it as Regulation of Payment for Managers. (3) To approve the 2015 employees’ compensation. (4) To amend Compensation Structure and Performance Incentive System for Directors, and re-named it as Regulation of Payment for Directors. (5) To approve the 2015 remuneration of Directors. (6) To approve the Business Report of the year 2015. (7) To approve the Financial Statements of the year 2015. (8) To approve the distribution of earnings of the year 2015. (9) To amend Accounting Policy. (10) To appoint the Company's Certified Public Accountants and approve the remuneration. (11) To engage PricerwaterhouseCoopers for International Financial Reporting Standards No. 9 "Financial Instruments" Agreement Procedure Project Services. (12) To change the authorizedpersons of foreign investment custodian

Central Reinsurance Corporation Annual Report 2016 64


Date	Major Proposals

	institution. (13) To amend the Internal Control System and Internal Audit Implementation Rules and Internal Control System of Shareholder Services. (14) To approve the 2015 Internal Control Statement. (15) To approve the audit report of financial derivatives transactions of the fourth quarter of 2015. (16) To approve the change of the accountingofficer.
Apr. 27, 2016	(1) To amend the Internal Control System and Internal Audit Implementation Rules. (2) To approve the Corporate Social Responsibility Report of 2015. (3) To approve the change of the internal audit officer. (4) To approve the change of the risk manager.
May 27, 2016	(1) To approve the audit report of financial derivatives transactions of the first quarter of 2016. (2) To amend the Internal Control System and Internal Audit Implementation Rules. (3) To establish the operational procedures of major loss on disclosure standard and the evaluation of its ongoing changes. (4) To establish the Procedural Guidelines Governing Financial and Business Matters Between this Corporation and its Affiliated Enterprises and Firewall Mechanisms. (5) To resolve the record date for distribution of cash dividends is on Jun. 20, 2016 and payment date is on Jul. 8, 2016. (6) To reassign the Company’s senior executive who administrates the derivatives transactions.
Jun. 30, 2016	To reassign the President as the Company’s senior executive who administrates the derivatives transactions.
Aug. 2, 2016	(1) To approve the Financial Statements of the first half of year 2016. (2) Toestablish “Procedures for Collecting, Processingor Using Personal Information of Medical Treatment and Health Examination”. (3) To amend “Plans of Security Measures for Personal Information File and Disposal Measures for Personal Information after Termination of Business”. (4) To amend the Internal Control System and Internal Audit Implementation Rules. (5) To appoint the external reviewingactuary.
Oct.27, 2016	(1) To amend the Internal Control System and Internal Audit Implementation Rules. (2) To approve the audit report of financial derivatives transactions of the second quarter of 2016. (3) To amend “Directions Governing Anti-Money Laundering and Countering Terrorism Financing”. (4) To amend “Standard Operating Procedures of Regulatory Compliance in Money Laundering Control”. (5) To establish Governing Policy of Anti-Money Laundering and Countering Terrorism Financing.

65 Central Reinsurance Corporation Annual Report 2016


Date	Major Proposals

	(6) To amend the Risk Management Policy and Procedure Guidelines, Risk Management Operational Procedures, and Risk Management Mechanisms. (7) To approve the Risk Appetite and Risk Tolerance of 2017.
Dec. 28, 2016	(1) To approve Business Plan and Budget for the year 2017. (2) To amend Accounting System. (3) To amend the Internal Control System and Internal Audit Implementation Rules. (4) To amend “Corporate Governance Best PracticePrinciples”. (5) To approve the audit report of financial derivatives transactions of the third quarter of 2016. (6) To approve the 2017 Annual Audit Plan. (7) To approve 2017 Annual Regulatory Compliance Plan. (8) To renew the Directors’ and Officers’ Liability Insurance. (9) To use "Regulation of Payment for Managers" continuously. (10) To approve the 2017 remuneration for managers. (11) To use "Regulation of Payment for Directors" continuously. (12) To approve 2017 remuneration for the Chairman and Vice Chairman. (13) To approve 2017 transportation allowances for the Directors. (14) To approve 2017 remuneration and transportation allowances of functional committee for the Independent Directors.
Jun. 24, 2017	(1) To propose to elect the directors in the 2017 Annual General Meeting of Shareholders. (2) To propose to lift restriction of non-competition of newly elected directors in the 2017 Annual General Meeting of Shareholders. (3) To stipulate the date and venue for the 2017 Annual General Meeting of Shareholders. (4) To approve the 2016 year-end bonus to managers. (5) To approve the 2016year-end bonus to the Chairman and Vice Chairman.
Mar. 22, 2017	(1) To approve the 2016 employees’ compensation. (2) To approve the 2016 remuneration of directors. (3) To approve the Business Report of the year 2016. (4) To approve the Financial Statements of the year 2016. (5) To approve the distribution of earnings of the year 2016. (6) To appoint the Company's Certified Public Accountants and approve the remuneration. (7) To engage PricerwaterhouseCoopers for International Financial Reporting Standards No. 9 "Financial Instruments" Agreement Procedure Project Services. (8) To approve the audit report of financial derivatives transactions of the fourth quarter of 2016. (9) To amend the Internal Control System and Internal Audit Implementation Rules and Internal Control System of Shareholder Services. (10) To approve the 2016 Internal Control Statement. (11) To amend “Directions Governing Anti-Money Laundering and Countering Terrorism Financing”.

Central Reinsurance Corporation Annual Report 2016 66

G. Information on CPA Professional Fees and Replacement of Certified Public Accountant

(I) Audit Fee

								NT$thousands	NT$thousands
Accounting Firm Pricewaterhouse Coopers, Taiwan	Name of CPA Chen, Hsien-I	Audit Fee 4,562		Non-audit Fee				Period Covered by CPA’s Audit 2016/01/01 ~ 2016/12/31	Remarks
			System of Design -	Company Registration -	Human Resource -	Others -	Subtotal -
	Lai, Chung- Hsi

The non-audit fee paid to certified CPA, certified office of CPA and affiliated companies account for over 1/4 to audit fee: None.
Alter the CPA Firm and the audit fee in altering year is less than that in the previous year: None.
The audit fee is reduced by over 15% compared with the previous year: None.

(II)Replacement of CPA

Regarding the former CPA

Replacement Date	March 17, 2016(Date of the Board of Directors Resolution)	March 17, 2016(Date of the Board of Directors Resolution)	March 17, 2016(Date of the Board of Directors Resolution)
Replacement reasons and explanations	Due to internal adjustments of PwC Taiwan.
Describe whether the Company terminated or the CPA did not accept the appointment	Parties Status	CPA	The Company
	Termination of appointment	Note	Note
	No longer accepted (continued) appointment	Note	Note

67 Central Reinsurance Corporation Annual Report 2016

Other issues (except for unqualified issues) in the audit reports within the last two years	None
Differences with the company	Yes	-	Accounting principles orpractices
		-	Disclosure of Financial Statements
		-	Audit scope or steps
		-	Others
	None	Note
	Remarks/specifydetails:
Other Revealed Matters	None

Note: Due to internal adjustments of PwC Taiwan, the CPAs of Central Re were changed beginning 1 ~~[st]~~ Quarter, 2016.

Regarding the successor CPA

Name of accounting firm	PricewaterhouseCoopers, Taiwan
Name of CPA	Chen,Hsien-I and Lai,Chung-Hsi
Date of appointment	Note
Consultation results and opinions on accounting treatments or principles with respect to specified transactions and the company's financial reports that the CPA might issue prior to the engagement.	None
Succeeding CPA’s written opinion of disagreement toward the former CPA	None

Note: Due to internal adjustments of PwC Taiwan, the CPAs of Central Re were changed beginning 1st Quarter, 2016.

Reply of the Previous Accountant: None.

Central Reinsurance Corporation Annual Report 2016 68

H. Changes in Shareholdings and Shares Pledged by Directors, Managers and Major Shareholders


		2016		As of April, 2,2017

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

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.	(241,000)	0	(1,125,000)	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
Major Shareholder	Ministry of Finance, R.O.C.	(241,000)	0	(1,125,000)	0
Major Shareholder	Evergreen International Corp.	0	0	0	0

69 Central Reinsurance Corporation Annual Report 2016


		2016		As of April, 2,2017

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

Executive Vice President	Tsai, Bai-Long	0	0	0	0
Chief Auditor (Note 1)	Lin, Cheng-Yen	0	0	0	0
Executive Vice President (Financial Officer)	Cheng, Ching-Fen	0	0	0	0
Senior Vice President	Chang, Yung-Ning	0	0	0	0
Appointed Actuary (Senior Vice President)	Lin, Yu-Te	0	0	0	0
Senior Vice President	Chung, Chih-Hung	0	0	0	0
Deputy Senior Vice President	Hsu, Tzu-Cheng	0	0	0	0
Deputy Senior Vice President	Hsiung, Pei-Ching	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
Deputy Junior Vice President (Principal Accounting Officer) (Note 2)	Yeh, Shih-Hsuan	0	0	0	0

Note

Lin, Cheng-Yen was appointed as Chief Auditor from July 1, 2016.
Yeh, Shih-Hsuan was appointed as Principal Accounting Officer from April 1, 2016.

Central Reinsurance Corporation Annual Report 2016 70

FOUR. CAPITAL OVERVIEW

A. Source of Capital Stock

(I) Issued Share

						thousand shares / NT$ thousands	thousand shares / NT$ thousands
		Authorized Capital		Paid-in Capital		Remark
							Capital
Month/ Year	Par Value						Increased by
	(NTD)	Shares	Amount	Shares	Amount	Sources of Capital	Assets Other
							than Cash
08/2007 08/2008 07/2013	10 10 10	600,000 600,000 600,000	6,000,000 6,000,000 6,000,000	525,000 551,250 562,275	5,250,000 5,512,500 5,622,750	Capitalization of retained earnings 250,000 Capitalization of retained earnings 262,500 Capitalization of retained earnings 110,250	None None None

(II) Type of Stock

		thousand shares / NT$thousands	thousand shares / NT$thousands	thousand shares / NT$thousands
		Authorized Capital
				Remarks
Share Type	Issued Shares	Un-issued Shares	Total Shares

Common Shares	562,275	37,725	600,000	Based on Total Shares Outstanding as of April 2,2017

71 Central Reinsurance Corporation Annual Report 2016

B.Shareholders Structure

					As of April 2, 2017	As of April 2, 2017
					Foreign
			Other	Domestic
	Government	Financial			Institutions &
Item			Juridical	Natural		Total
	Agencies	Institutions			Natural
			Person	Persons
					Persons

Number of Shareholders Shareholding (shares) Percentage	1 123,266,689 21.92%	3 81,020 0.01%	38 337,187,159 59.98%	8,420 90,369,256 16.07%	34 11,370,876 2.02%	8,496 562,275,000 100%

C.Diffusion of Ownership and List of Principal Shareholders

(I) Diffusion of Ownership (Common Shares)

	As of April 2,2017	As of April 2,2017	As of April 2,2017
	Number of
Range of Shareholdings		Number of Shares	Holding (%)
	Shareholders

1 - 999	2,678	318,250	0.06
1,000 - 5,000	3,525	7,691,670	1.37
5,001 - 10,000	910	6,728,256	1.20
10,001 - 15,000	414	4,935,227	0.88
15,001 - 20,000	230	4,155,113	0.74
20,001 - 30,000	244	5,936,862	1.06
30,001 - 50,000	195	7,503,826	1.33
50,001 - 100,000	148	10,302,360	1.83
100,001 - 200,000	77	10,414,508	1.85
200,001 - 400,000	35	10,352,086	1.84
400,001 - 600,000	14	6,638,359	1.18
600,001 - 800,000	6	3,933,183	0.70
800,001 - 1,000,000	2	1,690,600	0.30
1,000,001 and above	18	481,674,700	85.66
Total	8,496	562,275,000	100

Central Reinsurance Corporation Annual Report 2016 72

(II) List of Principal Shareholders

(II) List of Principal Shareholders
	As of April 2,2017
Shareholding
	Number of Shares	Holding (%)
Entity

Evergreen International Corp.	197,541,037	35.13
Ministry of Finance, R.O.C.	123,266,689	21.92
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	6,967,707	1.24
Chang, Kuo-Cheng	6,541,899	1.16
Tsai, Han-Chang	3,303,076	0.59
Hsiang-Li Investment Corp.	2,610,040	0.46
Jung, Ji-Cheng	1,975,000	0.35

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

Past Two Fiscal Years

			NT$
			01/01/2017~
Year
	2016	2015	04/02/2017
Items
			(Note2)

Market Prices per Share Highest Lowest Average Net Worth per Share Before Distribution After Distribution Earnings per Share Weighted Average Shares	16.30 13.55 14.56 16.89 (Note1) 562,275,000	18.00 13.65 16.45 16.63 15.93 562,275,000	15.55 14.40 15.06 NA NA NA
Diluted Earnings per Share	1.36	1.36	NA
Adjusted Diluted Earnings per Share Dividends per Share Cash Dividends Stock Dividends Dividends from Retained Earnings	(Note1) (Note1) (Note1)	1.36 0.70 -	NA NA NA

73 Central Reinsurance Corporation Annual Report 2016

			01/01/2017~
Year
	2016	2015	04/02/2017
Items
			(Note2)

Dividends from Capital Surplus Accumulated Undistributed Dividends Return on Investment Price/Earnings Ratio Price/Dividend Ratio Cash Dividend Yield Rate	(Note1) (Note1) 10.50 (Note1) (Note1)	- - 11.84 23.00 4.35%	NA NA NA NA NA

Note:

Earnings distribution for 2016 has not yet been ratified at the stockholders’ meeting as of the reporting date.
As of the reporting date, the Company did not have the latest financial information audited or reviewed by CPA in the current year.

E. Dividend Policy and Earnings Distribution Implementation Status

(I) 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. Afterwards, the Company shall recognize or reverse special reserve in accordance with regulations, and accumulated unappropriated earnings of the prior period. Appropriation of the remainder shall be proposed by the Board of Directors and resolved by the stockholders.

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.

(II) Earnings Distribution Implementation Status

On March 22, 2017, the Board of Directors proposed that total dividends for the distribution of earnings for 2016 was $281,138 thousand (cash dividend of $0.50 (in dollars) per share). Earnings distribution for 2016 has not yet been ratified at the stockholders’ meeting as of the reporting date.

Central Reinsurance Corporation Annual Report 2016 74

FIVE. BUSINESS OPERATIONS OVERVIEW

A. Business Activities

(I) Business Scope

1. Breakdown by Source

							NT$ thousands
		Gross Premium		Written
	Year		2016			2015
Item			Amount	Percentage (%)	Amount		Percentage (%)

1. Breakdown by Source	1. Breakdown by Source	1. Breakdown by Source	1. Breakdown by Source	1. Breakdown by Source
NT$ thousands
Gross Premium Written
	2016		2015
Year
Item	Amount	Percentage	Amount	Percentage
		(%)		(%)

Domestic Non-Life Business	8,751,585	62.33	8,315,563	58.58
Domestic Life Business	3,884,165	27.66	4,361,695	30.73
Subtotal	12,635,750	89.99	12,677,258	89.31
International Non-Life Business	1,320,010	9.40	1,444,541	10.18
International Life Business	85,991	0.61	72,491	0.51
Subtotal	1,406,001	10.01	1,517,032	10.69
Total	14,041,751	100.00	14,194,290	100.00

2. Breakdown by Line

2. Breakdown by Line	2. Breakdown by Line	2. Breakdown by Line	2. Breakdown by Line	2. Breakdown by Line
NT$thousands
Gross Premium Written
	2016		2015
Year
Line	Amount	Percentage	Amount	Percentage
		(%)		(%)

Fire	1,628,941	11.60	1,688,744	11.90
Marine Hull	295,891	2.11	330,286	2.33
Marine Cargo	336,780	2.40	393,372	2.77
Automobile	3,603,033	25.65	3,319,786	23.39
Aviation	8,240	0.06	3,425	0.02
Engineering	280,200	2.00	261,745	1.84
Miscellaneous Casualty	1,404,796	10.00	1,361,784	9.59
Fish Vessel	49,750	0.35	23,230	0.16
CompulsoryAutomobile Liability	1,453,627	10.35	1,414,125	9.96
Compulsory Motorcycle liability	958,367	6.83	912,379	6.43
Residential Earthquake	51,970	0.37	51,228	0.36
Life	2,285,907	16.28	2,325,930	16.39
Personal Accident	644,091	4.59	763,239	5.38
Health	1,040,158	7.41	1,345,017	9.48
Total	14,041,751	100.00	14,194,290	100.00

75 Central Reinsurance Corporation Annual Report 2016

3. New Products, Potential Customers and Markets

(1) Domestic Non-Life Business

In respect of domestic non-life insurance business, the government is now actively developing the "Agricultural Insurance Act". Insurance Companies are encouraged to develop and underwrite new products on agricultural insurance. The government also endeavors to incorporate public bikes, which are very popular in recent years, into the coverage of casualty insurance and liability insurance policies to cover the potential loss of bicycle rider or any third parties. To facilitate its business development, the Company will also provide timely services to its customers in various aspects including new product design, underwriting techniques training and claim consultancy services.

(2) Domestic Life Business

As for domestic life insurance business, the competent authority has implemented various initiatives to keep pace with the rapid prevalence of Internet. These measures include: further expanding the scope of online insurance business, encouraging financing technology innovation, as well as R&D efforts on innovative insurance products and services such as health management insurance products with spillover effect. Also, the aging society and the low birth rate have both led to increased demand for long-term care and health related insurance products such as disability support insurance and specific disease insurance. To pursue business diversification, the Company will also, on a timely basis, offer varieties of new services such as professional consultancy on new products, building up and providing information on incidence rates or experience rates, etc.

(3) International Non-life Business

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

Central Reinsurance Corporation Annual Report 2016 76

(II) Industry Overview

1. Market Player

According to statistics released by the Insurance Bureau at the end of 2016, there were 54 insurance companies in Taiwan, of which 28 were life insurance companies, 23 were non-life insurance companies and 3 were reinsurance companies. Out of the 28 life insurance companies, 23 were domestic companies while 5 were branches of foreign companies. The 23 non-life insurance companies include 17 domestic and 6 foreign companies.

			Number of Insurance Companies in Taiwan over	Number of Insurance Companies in Taiwan over	Number of Insurance Companies in Taiwan over	Number of Insurance Companies in Taiwan over	Number of Insurance Companies in Taiwan over	the Past Five Years	the Past Five Years	the Past Five Years	the Past Five Years	the Past Five Years
				Non-Life Insurance				Life Insurance
				Local		Foreign		Local			Foreign
Year	Total	Reinsurance										Liaison
						Branch	Liaison				Branch
					Offshore					Offshore		Office
			Headquarter	Branch		in	Office in	Headquarter	Branch		in
					Branch					Branch		in
						Taiwan	Taiwan				Taiwan
												Taiwan

2012 2013 2014 2015 2016	57 56 54 54 54	3 3 3 3 3	17 17 17 17 17	164 164 165 165 164	11 12 10 10 9	6 6 5 5 6	9 9 8 8 8	24 24 24 24 23	129 123 123 123 125	13 13 13 13 14	7 6 5 5 5	3 3 2 2 1

Source�Insurance Bureau, Financial Supervisory Commission

2. Gross Premium Written

The gross premium written of the domestic insurance industry during 2016 was NT$3,279,319 million, a rise of 7.07% over the previous year. Non-life insurance gross premium written accounted for NT$145,962 million, a rise of 7.23% over the previous year. Total life insurance gross premium written was NT$3,133,357 million, a rise of 7.06% over 2015.

							NT$millions
	Gross		Premium Written over the Past Five Years
Yar			Non-Life		Life
	Insurance Industry		Insurance		Insurance		Premium Income: NnLif Lif
e	Amount	Growth Rate	Amount	Growth Rate	Amount	Growth Rate	o-e vs. e Insurance
		(%)		(%)		(%)
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
2015	3,062,796	5.49	136,119	2.95	2,926,677	5.61	1:21.5
2016	3,279,319	7.07	145,962	7.23	3,133,357	7.06	1:21.5

Source: Taiwan Insurance Institute

77 Central Reinsurance Corporation Annual Report 2016

Long-Term and Short-Term Business Plans
(1) Long-Term Plan

The vision is to become the best professional reinsurer in Asia. To achieve this purpose, the Company has established its long term business development plan as follows:

a. Continue cultivating domestic market; achieve good business performance on a long-term basis by optimizing the domestic resources.
b. Steadily expand international business; optimize the business portfolio; consolidate resources for developing international facultative reinsurance business; strengthen quality control to grow overseas business, both in terms of quality and quantity.
c. Provide customer-oriented services to increase service effectiveness and customer satisfaction.
d. Steadily improve the efficiency of fund utilization; enhance fund structure management to ensure the sustainable management of the Company.
e. Enhance compliance and internal audit/control procedures; strengthen risk management; implement good corporate governance.
f. Fulfill corporate social responsibilities; achieve sound ethical corporate management to facilitate the continuous development of the insurance market.
g. Devote to talent development to create motivating visions for employees.
(2) Short-Term Plan
Domestic Reinsurance Business
a. Identify customer needs and actively take high-quality business through our market advantages in the local market and tailored service. The objective is continued expand our local market.

Central Reinsurance Corporation Annual Report 2016 78

b. Keep up with the opportunity for pools or coinsurance to expand our business scope and underwriting profit.
c. Continue with our prudent underwriting standards and ensure proper control over catastrophe risks to maintain stable underwriting profit.
d. Provide various professional services to tighten customer relationship and build up the professional image of the company.
International Reinsurance Business
a. Prudently expand international business and diversify the risk of geographical concentration; achieve cost reduction on international insurance business through international business branch.
b. Build up a profit-oriented culture; ensure proper control on accumulated risks; continuously monitor the quality of business and ensure there is sufficient consideration to support the risk/return of the business. The purpose is to establish the best business portfolio in both quality and quantity.
c. Design suitable retrocession programs on areas or portfolios with higher catastrophe risks to reduce the fluctuation in business performance.
d. Gradually increase direct business; in the meantime develop the small and medium size clients’ market. The purpose is to improve the business quality and the transparency of underwriting information.
e. Develop high-quality facultative insurance business through strengthening employees' professional expertise in underwriting to enhance profitability
Fund utilization

The Company shall continue adopting a prudent strategy for fund utilization, supported by strict risk control. The purpose is to improve asset quality and the efficiency of fund utilization. The Company pursues safe and stable profits, thereby supporting the sustainable development of the reinsurance industry.

79 Central Reinsurance Corporation Annual Report 2016

B. Market Overview

(I) Breakdown by Region

Breakdown by Region
	TN$thousands
Year	2016		2015
Region		Percentage		Percentage
	Amount		Amount
		(%)		(%)

Domestic Inward Business	12,635,750	89.99	12,677,258	89.31
Overseas Inward Business	1,406,001	10.01	1,517,032	10.69
Total	14,041,751	100.00	14,194,290	100.00

(II) Market Share

In Taiwan market, our market share at the end of 2016 is as follows.

		NT$millions
Year
	Non-Life	Life
Item	Insurance	Insurance

Written Premium	145,962	3,133,357
Outward Premium	46,611	18,717
Cession Rate(%)	31.93	0.6
Central Re's Inward	8,752	3,884
Our Market Share(%)	18.78	20.75

(III) Market Development

1. Domestic Non-Life Business

The government has amended various insurance-related regulations. This fact, along with the launch of products initiated by the government and the steady growth in the automobile sales in recent years, are believed to have positive influence on the gross premium written of the non-life insurance industry.

Looking forward to 2017, gross premium written in the non-life insurance company is expected to continue growing. Reasonable underwriting profit is predicted subject to that there is no major large loss in the market.

2. Domestic Life Business

The gradual warm-up of global economy and the expected interest rate rise will both lead to the back flow of funds to the investment market. The key

Central Reinsurance Corporation Annual Report 2016 80

products in the life insurance industry, therefore, is expected to be shifted to the USD-denominated foreign currency policies and investment-linked products. The competent authority, furthermore, has launched the Phase 5 deregulation for online insurance, including relaxing the identity verification mechanism, expanding the product types for online insurance, allowing life insurance companies to operate e-policies and accepting premium payments through the mobile-payment or e-payment mechanisms etc. These initiatives are implemented to expand the e-commerce scope for the insurance industry. Because of the diversification of protection insurance products and convenient application of sales channels, further growth of the reinsurance business is anticipated.

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.

81 Central Reinsurance Corporation Annual Report 2016

C. Human Resources

Employee data and shares of education degrees are shown as follows:

Year	Year	2016	2015	Data as of April 2,2017
Number of Employees		129	132	129
Average Age		40.71	40.42	41.31
Average Years of Service		10.40	10.28	10.50
Education (%)	Masters	43.41	43.94	42.63
	University or College	55.81	55.30	56.59
	Others	0.78	0.76	0.78

Note: The number of full-time employees includes 1 person, who applied the parental leave without pay till April, 2017.

D. Labor Relations

The Company’s implementation status of employee benefit plans, on-job training, continuing education and retirement systems; the status of labor-management agreements and measures for preserving employees' rights and interests are listed in the following.
Employee benefit plans:
- (1) Leave Policies: According to the Labor Standards Act, employees are entitled to annual leave.
- (2) Employee Insurances: Employees are covered by labor insurance, national health insurance and travel insurance on overseas business trips.
- (3) Health Care: The Company offers employee physical examination programs on a regular basis to ensure the physical health of its employees (including physical examination for new employees).
- (4) On-job training and Continuing education: The Company encourages its employees to elevate their professional abilities. In 2016, it totals 368 attendances to attend various domestic reinsurance, finance, or risk management courses. The Company also holds internal professional trainings, and inspires employees to acquire professional certifications and licenses in order to self-improvement. Please refer to page 7 for details.

Central Reinsurance Corporation Annual Report 2016 82

(5) Bonus: The Company distributes year-end bonus.
(6) Employee Rewards: The Company distributes employee rewards based on the profit earned during the year and in accordance with the percentage stipulated in the Company's articles of incorporation. The proposed employee reward scheme shall be approved by the board of directors and reported to the shareholders at annual general meeting.
(7) The Company has instituted the employee welfare committee to facilitate the promotion of employee welfare. The Company allocates employee welfare funds on a monthly basis, being a fixed percentage of its sales amount and employee payroll. The welfare funds are used to administer various employee welfare projects.
(8) Varieties of cash gifts and subsidies: The Company provides cash gifts and subsidies in various occasions, including monetary payments and subsidies for wedding and funerals, as well as sympathy money for illness or injuries.

2. Retirement system:

In accordance with the Labor Standards Law and the Regulations Governing Retirement, Indemnity and Severance of Employees, the Company continuously appropriates labor retirement reserve fund each month and deposits it in the Bank of Taiwan. At the same time, the Company also instituted the pension fund monitoring committee to administer this retirement fund.

After enforcing of Labor Pension Act on July 1, 2005, the amount of labor pension borne by the Company for employees who choose to be applicable to the pension system in the Act is six percent of the monthly wage. The pension fund is submitted to the Bureau of Labor Insurance and deposited into the respective pension fund account of employees.

3. Labor-management agreement:

The Company regularly holds the labor-management meetings to ensure efficient communication between the employees and the employer. Up to now, the communication runs smoothly.

83 Central Reinsurance Corporation Annual Report 2016

Measures for preserving employees' rights and interests:

The Company sets forth the human resource regulations in accordance with the Labor Standards Act and Act of Gender Equality in Employment and so on. In addition, the Company establishes dedicated mailbox and telephone line to receive employee grievance for company’s policies, operational opinions or any loss of employee’s rights and interests. The purposes are to increase two-way communication, solve problem quickly and prevent problem from occurring.

The loss suffered due to labor conflicts during the recent one year as at the date the annual report is printed, and the estimated amount for current and potential conflicts as well as the measures to deal with these issues:
As at the date the latest annual report is printed, the Company does not have any loss caused by labor conflicts during the recent year.
Estimated amount for current and potential conflicts as well as the measures to deal with these issues:
- The Company has well-established management and welfare systems, and has been actively promoting employer/employee cooperation. It has maintained a harmonious employer/employee relationship. So far, the Company has not suffered from any loss caused by labor conflicts. It is very unlikely that the Company would suffer from any loss caused by labor conflicts in future.
Employee code of conduct or ethical principles, as well as the protective measures on environmental and personal safety.
Employee code of conduct or ethical principles:
- The Company has established the code of ethical conducts, which shall be followed by all directors and employees. According to the work rules of the Company, employees are required to observe the following service guidelines:
- (1) Obey the policies and rules of the Company and follow the reasonable guidance of the supervisors at different management levels.
- (2) Be dedicated to individual job responsibilities, maintain good order at work, and demonstrate team spirit to improve work efficiency.

Central Reinsurance Corporation Annual Report 2016 84

(3) Preserve the good reputation of the Company. The employee should report to the direct supervisor immediately on discovering any matters which may adversely impact the reputation of the Company. Concealment of facts is prohibited.
(4) Any job reports should be made in accordance with the hierarchy of authority and responsibility. Bypassing the direct supervisor to report is prohibited. This shall not apply, however, in special cases or emergencies.
(5) Supervisors should show respect and care to their subordinates and provide suitable guidance thereto.
(6) Employees should cherish the public facilities and avoid waste of money.
(7) Employees are not allowed to work for other employers unless required by law or approved by the Company.
Personal and Environmental Safety:
(1) The main workplace of the Company is located in the Central Reinsurance Building, Nanjing East Road of Taipei City. The office building is featured by convenient transportation and high-quality work environment.
(2) To provide a safe working environment and ensure the personal security of its employees, the users of the office building has organized building management committee. The committee conducts regular fire safety and public utility inspections. Security systems and access control which the Company has also installed these are available in the office areas.
(3) The Company has organized a Self-Defense Fire Protection Team based on its "Fire Protection Plan", responsible to handle relevant issues in the building. The Company also organized internal labor safety training and fire-drill on a yearly basis. A disaster reporting system has been established to minimize the loss.
(4) The Company has established the “Regulations for Prevention,

85 Central Reinsurance Corporation Annual Report 2016

Correction, Complaint and Punishment of Sexual Harassment at Workplace”. Dedicated grievance instruments (including hotlines, dedicated fax lines and e-mail box) are available. The Company has disclosed relevant information on both its intranet and external website.

(5) In terms of health care, the Company has arranged labor insurance and national health insurance for its employees. For employees taking overseas business trips, the company also arranges travel insurances and additional medical insurances. The Company also provides employee physical examination programs and medical consulting services.
(6) The Company has established its Regulations for Energy Saving and Carbon Reduction to fulfill its environmental protection objectives. Regular inspections are conducted to monitor the carbon dioxide concentration in the offices. Water quality test on drinking machines are also carried out in respective floors of the office building.
(7) The Company has established its "Labor Safety and Health Work Rules" and the annual occupational safety and health management plan as the guidelines for administering relevant employee health and safety matters.

E. Important Contracts

(I) Non-Life Business

Type of Contract	Counterparty	Period	Major Contents	Restrictions
Reinsurance Contracts	Domestic and overseas non-life insurance companies	2016.1.1-2016.12.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
	Overseas non-life insurance companies	2016.4.1-2017.3.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
Retrocession Contracts	Domestic and overseas non-life insurance companies	2016.1.1-2016.12.31	Non-life reinsurance outward businesses	Some contracts include exclusion clauses

Central Reinsurance Corporation Annual Report 2016 86

Type of Contract	Counterparty	Period	Major Contents	Restrictions
	Overseas non-life reinsurance companies	2016.1.1-2016.12.31	Non-life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas non-life reinsurance companies	2016.1.1-2016.12.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
	Overseas non-life reinsurance companies	2016.4.1-2017.3.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
Catastrophe Reinsurance Contracts	Overseas non-life reinsurance companies	2016.2.1-2017.1.31	To protect our domestic net retention excess catastrophelosses	The contracts include exclusion clauses
	Overseas non-life reinsurance companies	2016.12.1-2017.11.30	To protect our overseas net retention excess catastrophe losses	The contracts include exclusion clauses

(II) Life Business


Type of
	Counterparty	Period	Major Contents	Restrictions
Contract

Reinsurance Contracts Retrocession Contracts (Non-Cat) Catastrophe Reinsurance Contracts (Cat)
	Domestic and overseas life insurance companies Domestic life insurance companies	2016.1.1-2016.12.31 2016.1.1-2016.12.31	Life reinsurance inward businesses Life reinsurance outward businesses	Some contracts include exclusion clauses Some contracts include exclusion clauses
	Overseas life reinsurance companies	2016.1.1-2016.12.31	Life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas life reinsurance companies Overseas life reinsurance companies	2016.4.1-2017.3.31 2016.2.1-2017.1.31	Life retrocession inward businesses To protect our domestic net retention excess catastrophe losses	Some contracts include exclusion clauses The contracts include exclusion clauses

87 Central Reinsurance Corporation Annual Report 2016

SIX. FINANCIAL INFORMATION

A.Financial Statement for Recent Five Years

(I) Condensed balance sheets and statements of comprehensive income for the past five fiscal years
Condensed Balance Sheets: Adoption of IFRSs

						NT$thousands	NT$thousands
Year Items			From 2012 To 2016 (Note 1)				01/01/2017 ~04/02/2017 (Note3)
		2016	2015	2014	2013	2012
Cash and Cash Equivalents		15,588,709	16,461,567	18,430,910	17,673,887	17,008,182	NA
Account Receivable		116,044	248,065	399,901	183,877	310,154	NA
Financial Assets		12,908,694	11,698,239	9,909,822	9,814,286	9,617,139	NA
Reinsurance Contract Assets		3,624,254	3,455,783	3,859,592	3,877,374	3,490,724	NA
Property and Equipment		208,193	213,444	214,772	203,973	207,133	NA
Intangible Assets		2,480	3,786	1,531	2,142	3,438	NA
Other Assets		1,139,858	1,184,187	1,192,639	1,181,693	1,463,858	NA
Total Assets		33,588,232	33,265,071	34,009,167	32,937,232	32,100,628	NA
Account Payable		317,140	425,192	577,906	393,767	852,881	NA
Financial Liabilities		25,879	31,549	66,470	11,785	1,266	NA
Insurance Liabilities		23,594,638	23,279,625	23,664,460	23,382,630	23,090,610	NA
Provisions		3,142	8,015	5,778	772	0	NA
Other Liabilities Total Liabilities Capital	Before Distribution	148,224 24,089,023	171,209 23,915,590	237,637 24,552,251	114,730 23,903,684	161,950 24,106,707	NA NA
	After Distribution	(Note 2) 5,622,750	24,309,183 5,622,750	25,226,981 5,622,750	24,578,414 5,622,750	24,382,332 5,512,500	NA NA
Capital Reserve Retained Earnings Other Equity Total Equity	Before Distribution	300,000 3,834,455	300,000 3,459,020	300,000 3,369,901	300,000 3,178,535	300,000 2,833,627	NA NA
	After Distribution Before Distribution	(Note 2) (257,996) 9,499,209	3,065,427 (32,289) 9,349,481	2,695,171 164,265 9,456,916	2,503,805 (67,737) 9,033,548	2,447,752 (652,206) 7,993,921	NA NA NA
	After Distribution	(Note 2)	8,955,888	8,782,186	8,358,818	7,718,296	NA

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.

Central Reinsurance Corporation Annual Report 2016 88

Earnings distribution for 2016 has not yet been ratified at the stockholders’ meeting as of the reporting date.
As of the reporting date, the Company did not have the latest financial information audited or reviewed by CPA in the current year.

2. Condensed Statement of Comprehensive Income: Adoption of IFRSs

NT$ thousands

Year Items Operating Revenue Gross Profit Net Operating Income Non-Operating Income and Expenses Income from Continuing Operations before Tax Income from Continuing Operations after Tax Net Income Total Other Comprehensive Income for The Year (after tax) Total Comprehensive Income for The Year Earnings per Share(after tax) (NT$)(Note 2)		From 2012 To 2016 (Note 1)	From 2012 To 2016 (Note 1)	From 2012 To 2016 (Note 1)		01/01/2017 ~04/02/2017 (Note3) NA NA NA NA NA NA NA NA NA NA
	2016 13,444,095 1,223,947 913,911 (1,190) 912,721 765,790 765,790 (222,469) 543,321 1.36	2015 14,068,010 1,319,034 983,606 (1,790) 981,816 765,865 765,865 (198,570) 567,295 1.36	2014 16,283,563 1,376,146 1,001,012 (1) 1,001,011 870,874 870,874 227,224 1,098,098 1.55	2013 15,384,494 1,322,146 944,214 586 944,800 732,090 732,090 583,162 1,315,252 1.30	2012 14,350,515 1,134,404 773,699 19,947 793,646 678,934 678,934 194,415 873,349 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 per share were adjusted retroactively based on the number of shares after distribution for the past years.
As of the reporting date, the Company did not have the latest financial information audited or reviewed by CPA in the current year.

89 Central Reinsurance Corporation Annual Report 2016

(II) 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
Year Items		2012(Note)
Cash and Cash Equivalents		17,008,182
Account Receivable		2,388,138
Investments		9,617,139
Reinsurance Reserve Assets		1,475,820
Fixed Assets		207,133
Intangible Assets		3,438
Other Assets		1,399,128
Total Assets		32,098,978
Account Payable		926,767
Financial Liabilities		1,266
Liabilities Reserves		23,090,610
Other Liabilities		86,954
Total Liabilities	Before Distribution	24,105,597
	After Distribution	24,381,222
Capital		5,512,500
Capital Reserve		300,000
Retained Earnings	Before Distribution	2,700,597
	After Distribution	2,314,722
Other Adjustments to Stockholders’ Equity		(519,716)
Total Stockholders’ Equity	Before Distribution	7,993,381
	After Distribution	7,717,756

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

Central Reinsurance Corporation Annual Report 2016 90

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

	NT$ thousands

Year	2012(Note1)
Item

Operating Revenue	14,350,515
Gross Profit	1,134,404
Net Operating Income	774,222
Non-Operating Income and Gains	19,979
Non-Operating Expenses and Losses	(32)
Income from Continuing Operations before Tax	794,169
Income from Continuing Operations after Tax	679,368
Extraordinary Gain /Loss	0
Cumulative Effect of Changes in Accounting Principles	0
Net Income	679,368
Earnings per Share(after tax)(NT$)(Note 2)	1.21

Note�

The above financial statement is 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.

(III) Independent Auditors’ Name and Audit Opinion

Year 2016 2015 2014 2013 2012	CPA Firm PricewaterhouseCoopers, Taiwan PricewaterhouseCoopers, Taiwan PricewaterhouseCoopers, Taiwan PricewaterhouseCoopers, Taiwan PricewaterhouseCoopers, Taiwan	CPA’s Name Chen, Hsien-I Lai, Chung-Hsi Kuo, Puo-Ju Lai, Chung-Hsi Kuo, Puo-Ju Lai, Chung-Hsi Chen, Hsien-I Lee, Hsiu-Ling Chen, Hsien-I Lee, Hsiu-Ling	Audit Opinion Unqualified Opinion Unqualified Opinion Unqualified Opinion Unqualified Opinion Modified Unqualified Opinion

91 Central Reinsurance Corporation Annual Report 2016

B. Financial Analyses for Recent Five Years

(I) Financial Analyses: Adoption of IFRSs

Year Items From 2012 To 2016 (Note 1) 2016 2015 2014 2013 2012 Operating Ability Changes in Gross Premiums (1.07%) (13.18%) 4.47% 8.92% 4.18% Changes in Reinsurance Claims Paid (9.46%) (8.70%) 7.45% 0.85% 8.48% Changes in Retention Premiums (1.11%) (13.00%) 3.55% 9.99% 4.19% Profitability Return on Total Assets 2.29% 2.28% 2.60% 2.25% 2.16% Return on Equity 8.13% 8.14% 9.42% 8.60% 8.98% Net Investment Gain on Available Fund 0.52% 1.27% 1.40% 1.59% 2.28% Return on Investments 0.51% 1.24% 1.37% 1.55% 2.22% Retention Combined Ratio(Note 2) 95.28% 97.75% 106.04% 98.69% 102.62% Retention Expenses Ratio(Note 2) 32.44% 32.81% 31.70% 33.94% 32.39% Retention Loss Ratio(Note 2) 62.84% 64.94% 74.34% 64.75% 70.23% Operating Structure Retention Premiums on Equity 138.25% 142.04% 161.41% 163.18% 167.66% Gross Premiums on Equity 147.82% 151.82% 172.89% 173.24% 179.74% Net Reinsurance Commission on Equity 1.10% 1.15% 1.06% 1.08% 1.38% Insurance Liabilities on Equity 248.39% 248.99% 250.23% 258.84% 288.85% Changes in Equity 1.60% (1.14%) 4.69% 13.01% 12.27% Expenses Ratio 32.34% 32.81% 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 change in gross premiums decreased in 2016 less than 2015. 2. Changes in net investment gain on available fund and Changes in return on investments less than late year�Mainly due to net investment gain decreased in 2016. 3. Changes in equitymore than lastyear�Mainlydue to retained earnings increased in 2016.	From 2012 To 2016 (Note 1)	01/01/2017 ~04/02/2017 (Note3) NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA

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.

Central Reinsurance Corporation Annual Report 2016 92

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 are set aside based on past claim experience and expense using the loss development triangle method, of these fix percentages 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.(2014:60%, 45%; 2015: 60%,45%; 2016:63%,48%)
As of the reporting date, the Company did not have the latest financial information audited or reviewed by CPA in the current year.

(II) Financial Analyses: Adoption the GAAP of R.O.C.

Year Items	Year Items	2012(Note)
Operating Ability
Changes in Gross Premiums		4.18%
Changes in Reinsurance Claim Paid		8.48%
Changes in Retention Premiums		4.19%
Profitability
Return on Total Assets		2.16%
Return on Equity		8.99%
Net Investment Gain on Available Fund		2.65%
Return on Investments		2.58%
Retention Combined Ratio(Note)		102.62%
Retention Expenses Ratio(Note)		32.39%
Retention Loss Ratio(Note)		70.23%
OperatingStructure
	Retention Premiums on Equity	167.67%
	Gross Premiums on Equity	179.76%
	Net Reinsurance Commission on Equity	1.38%
	Insurance Liabilities on Equity	288.87%
	Changes in Equity	12.29%
	Expenses Ratio	32.29%

Note: The financial analyses of the fiscal year of 2012 is prepared in accordance with “Rules for the Preparation of Financial Reports by Insurance Institutions” effective at January 1, 2011. These ratios are the key performance indicators of the company.

AI assistant

Central Re — Annual Report 2016

52207_rns_2017-06-20_8681f362-9c21-4bf3-a215-31a040056ba1.pdf

2016

CONTENTS

ONE. LETTER TO SHAREHOLDERS

Chairman

A. 2016 Operating Report

(I) Implementation of the Operating Plan

1. Business Performance:

(1) Non-life Reinsurance:

(2) Life Reinsurance:

2. Financial Management:

(1) Capital Management:

(2) Reserve Adequacy:

(3) Fund Investment:

3. Credit Ratings:

(II) Budget Implementation and Financial Status

(III) Profitability Analysis

(IV) Research & Development

B. Summary of the 2017 Business Plan

(I) Business Strategies

(II)Sales Forecast and Basis

(III)Important Production and Sales Policies

C. Future Development Strategies

D. Influences of the External Competition, Regulatory Environment and Macro Environment

(I) External Competition

(II) Regulatory Environment

1. The Insurance Act

4. Money Laundering Control Act

(III) Macro Environment

TWO. COMPANY PROFILE

A. Date of Incorporation

B. Company History

THREE. CORPORATE GOVERNANCE REPORT

A. Organization

1. Major Shareholders of Institutional Shareholders

C. Implementation of Corporate Governance

(I) The Composition and Operations of the Board of Directors

(II) The Composition and Operations of the Audit Committee

(IV) The Composition and Operations of the Remuneration Committee

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

(I) Material Resolutions of Shareholders Meeting

(II) Material Resolutions of Board of Directors Meeting

G. Information on CPA Professional Fees and Replacement of Certified Public Accountant

(I) Audit Fee

(II)Replacement of CPA

H. Changes in Shareholdings and Shares Pledged by Directors, Managers and Major Shareholders

FOUR. CAPITAL OVERVIEW

A. Source of Capital Stock

(I) Issued Share

(II) Type of Stock

B.Shareholders Structure

C.Diffusion of Ownership and List of Principal Shareholders

(I) Diffusion of Ownership (Common Shares)

(II) 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

(I) Dividend Policy

(II) Earnings Distribution Implementation Status

FIVE. BUSINESS OPERATIONS OVERVIEW

A. Business Activities

(I) Business Scope

1. Breakdown by Source

2. Breakdown by Line

3. New Products, Potential Customers and Markets

(1) Domestic Non-Life Business

(2) Domestic Life Business

(3) International Non-life Business

(II) Industry Overview

1. Market Player

2. Gross Premium Written

B. Market Overview

(I) Breakdown by Region

(II) Market Share

(III) Market Development

1. Domestic Non-Life Business

2. Domestic Life Business

3. International Non-life Business

Central Re Annual Report 2016