CENTRAL REINSURANCE CORPORATION FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2018 AND 2017

------------------------------------------------------------------------------------------------------------------------------------ For the convenience of readers and for information purpose only, the auditors' report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors' report and financial statements shall prevail.

CENTRAL REINSURANCE CORPORATION BALANCE SHEETS (Expressed in thousands of New Taiwan dollars)

				December 31, 2018		December 31, 2017
	ASSETS	Notes		AMOUNT	%	AMOUNT	%
11000	Cash and cash equivalents	6(1)	\$	17,745,305	48	\$ 16,772,180	46
12000	Accounts receivable	6(2)		280,768	1	281,681	1
14110	Financial assets at fair value	6(3) and 12(7)
	through profit or loss			1,708,183	5	872,011	2
14120	Available-for-sale financial assets	12(7)		-	-	5,419,337	15
14145	Financial assets at amortized cost	6(4)		11,012,551	29	-	-
14160	Investments in debt instrument	12(7)
	without active market			-	-	4,532,786	12
14170	Held-to-maturity financial assets	12(7)		-	-	2,456,248	7
14180	Other financial assets	6(5)		237,199	1	684,362	2
14200	Investment property, net	6(7)		450,678	1	452,411	1
15000	Reinsurance contract assets	6(8)		4,216,071	11	3,726,066	10
16000	Property and equipment, net	6(11)		204,778	-	206,745	1
17000	Intangible assets			5,186	-	922	-
17800	Deferred income tax assets	6(17)		27,917	-	70,832	-
18000	Other assets			1,401,514	4	1,034,840	3
	TOTAL ASSETS		\$	37,290,150	100	\$ 36,510,421	100
	LIABILITIES AND EQUITY
21000	Accounts payable	6(12)	\$	309,813	1	\$ 409,870	1
21700	Current income tax liabilities			102,276	-	217,574	1
23200	Financial liabilities at fair value	6(3) and 12(7)
	through profit or loss			3,655	-	13,290	-
24000	Insurance liabilities	6(8)		25,565,926	69	24,430,514	67
27000	Provisions			18,789	-	21,013	-
28000	Deferred income tax liabilities	6(17)		44,639	-	130,378	-
25000	Other liabilities			46,816	-	36,310	-
	TOTAL LIABILITIES			26,091,914	70	25,258,949	69
30000	EQUITY
31000	Capital
31100	Common stock	6(14)		5,903,888	16	5,622,750	15
32000	Capital reserve			300,000	1	300,000	1
33000	Retained earnings
33100	Legal reserve			2,032,633	5	1,754,742	5
33200	Special reserve	6(16)		2,002,340	5	1,827,712	5
33300	Undistributed earnings			1,046,216	3	1,360,777	4
34000	Other equity interest		(	86,841)	-	385,491	1
	TOTAL EQUITY			11,198,236	30	11,251,472	31
	TOTAL LIABILITIES AND
	EQUITY		\$	37,290,150	100	\$ 36,510,421	100

CENTRAL REINSURANCE CORPORATION STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

					Years ended December 31				Changes
				2018			2017		Percentage
	Items	Notes		AMOUNT	%		AMOUNT	%	(%)
41000	Operating revenues
41100	Gross premiums written		\$	15,391,462	103	\$	14,564,046	99	6
51100	Less: Reinsurance premiums
	ceded		(	1,053,030) (	7) (		907,604) (	6)	16
51310	Net change in unearned	6(8)
	premium reserve		(	363,322) (	2) (		180,169) (	1)	102
41130	Retention earned premiums			13,975,110	94		13,476,273	92	4
41300	Reinsurance commission revenue			277,753	2		263,609	2	5
41400	Overriding commission revenue			12,828	-		12,550	-	2
41500	Net gain from investment
41510	Interest income			385,555	3		293,074	2	32
41521	Gain or loss on valuation of	12(7)
	financial assets or financial
	liabilities at fair value through
	profit or loss		(	865,776) (	6)		606,291	4 (	243)
41522	Realized gain or loss on	12(7)
	available-for-sale financial
	assets			-	-		217,019	2 (	100)
41524	Realized gain or loss on
	investments in debt instrument
	without active market			-	-		12,166	- (	100)
41550	Foreign exchange gain (loss)			162,912	1	(	300,407) (	2) (	154)
41570	Gain (loss) on investment	6(7)
	property			19,723	-		17,211	-	15

41585	Expected credit impairment and	6(4)
	reversal profit from investments		(	782)	-		-	-	-
41600	Gain (loss) upon reclassification	6(3)
	of applying overlay approach			694,167	5		-	-	-
	Total net gain from investment			395,799	3		845,354	6 (	53)
41800	Other operating revenues			210,045	1		2,163	-	9611

	Total operating revenues			14,871,535	100		14,599,949	100	2
51000	Operating costs
51200	Reinsurance claims paid		(	8,505,936) (	57) (		8,109,968) (	56)	5
41200	Less: Reinsurance claims
	recovery			493,982	3		541,161	4 (	9)
51260	Retention reinsurance claims
	paid		(	8,011,954) (	54) (		7,568,807) (	52)	6
51300	Net changes in other insurance	6(8)
	liabilities		(	673,093) (	4) (		753,552) (	5) (	11)
51500	Reinsurance commission
	expenses		(	4,424,007) (	30) (		4,210,496) (	29)	5
51800	Other operating costs		(	14,745)	-	(	256)	-	5660
	Total operating costs		(	13,123,799) (	88) (		12,533,111) (	86)	5
58000	Operating expenses
58100	Selling expenses		(	235,320) (	2) (		214,173) (	1)	10
58200	Administration expenses		(	133,945) (	1) (		158,121) (	1) (	15)
58300	Training expenses		(	1,421)	-	(	1,327)	-	7
58400	Expected credit impairment	13
	reversal from non-investments			5	-		-	-	-
	Total operating expenses		(	370,681) (	3) (		373,621) (	2) (	1)
	Net operating income			1,377,055	9		1,693,217	12 (	19)
59000	Non-operating income and expenses			42	-		940	- (	96)
62000	Income from continuing
	operations before tax			1,377,097	9		1,694,157	12 (	19)
63000	Income tax expense	6(17)	(	327,026) (	2) (		304,698) (	2)	7
64000	Income from continuing
	operations after tax			1,050,071	7		1,389,459	10 (	24)
66000	Net income		\$	1,050,071	7	\$	1,389,459	10 (	24)

(Continued)

CENTRAL REINSURANCE CORPORATION STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

					Years ended December 31				Changes
	Items	Notes		2018 AMOUNT	%		2017 AMOUNT	%	Percentage (%)
83000	Other comprehensive income
83100	Items may not be reclassified to
	profit or loss subsequently
83110	Remeasurements of defined
	benefit plans		\$	308	-	\$	548	- (	44)
83180	Income tax relating to the items
	may not be reclassified to profit
	or loss subsequently		(	62)	-	(	93)	- (	33)
83200	Items may be reclassified to
	profit or loss subsequently
83210	Exchange differences on
	translation of foreign financial
	statements			57,742	-	(	90,152) (	1) (	164)
83220	Unrealized gain or loss on	12(7)
	available-for-sale financial
	assets			-	-		839,410	6 (	100)
83295	Other comprehensive income	6(3)
	(loss) upon reclassification of
	applying overlay approach		(	694,167) (	5)		-	-	-
83280	Income tax relating to items that	6(17)
	may be reclassified			88,740	1	(	105,771) (	1) (	184)
	Total other comprehensive income
	(loss) for the year (after tax)		(	547,439) (	4)		643,942	4 (	185)
85000	Total comprehensive income for
	the year		\$	502,632	3	\$	2,033,401	14 (	75)

97500	Earnings per share Basic and Diluted (in NT	6(16)
	dollars)		\$		1.78	\$		2.35

CENTRAL REINSURANCE CORPORATION STATEMENTS OF CHANGES IN EQUITY (Expressed in thousands of New Taiwan dollars)

				Retained Earnings
	Notes	Common Stock	Capital Reserve	Legal Reserve	Special Reserve	Undistributed Earnings	Exchange Differences on Transaction of Foreign Financial Statements	Other Equity Interest Unrealized Gains or Losses on Available-for Sale Financial Assets	Other Comprehensive Income (Loss) Upon Reclassification of Applying Overlay Approach	Total Equity
2017
Balance at January 1, 2017		\$ 5,622,750	\$ 300,000	\$ 1,601,584	\$ 1,434,161	\$ 798,710	(\$ 9,158 ) (\$	248,838 )	\$ -	\$ 9,499,209
Net income for the year		-	-	-	-	1,389,459	-	-	-	1,389,459
Other comprehensive income (loss) for the year		-	-	-	-	455	( 74,826 )	718,313	-	643,942
Total comprehensive income (loss)		-	-	-	-	1,389,914	( 74,826 )	718,313	-	2,033,401
Distributions of 2016 earnings
Legal reserve		-	-	153,158	-	( 153,158 )	-	-	-	-
Special reserve	6(16)	-	-	-	135,268	( 135,268 )	-	-	-	-
Cash dividends	6(16)	-	-	-	-	( 281,138 )	-	-	-	( 281,138 )
Appropriation for equalization reserve for the year		-	-	-	258,283	( 258,283 )	-	-	-	-
Balance at December 31, 2017		\$ 5,622,750	\$ 300,000	\$ 1,754,742	\$ 1,827,712	\$ 1,360,777	(\$ 83,984 )	\$ 469,475	\$ -	\$ 11,251,472
2018
Balance at January 1, 2018		\$ 5,622,750	\$ 300,000	\$ 1,754,742	\$ 1,827,712	\$ 1,360,777	(\$ 83,984 )	\$ 469,475	\$ -	\$ 11,251,472
Effect of adopting IFRS 9 retrospectively		-	-	-	-	( 68,946 )	-	( 469,475 )	544,828	6,407
Balance, January 1, 2018 after adjustments		5,622,750	300,000	1,754,742	1,827,712	1,291,831	( 83,984 )	-	544,828	11,257,879
Net income for the year		-	-	-	-	1,050,071	-	-	-	1,050,071
Other comprehensive income (loss) for the year		-	-	-	-	246	49,229	-	( 596,914 ) (	547,439 )
Total comprehensive income (loss)		-	-	-	-	1,050,317	49,229	-	( 596,914 )	502,632
Distributions of 2017 earnings
Legal reserve		-	-	277,891	-	( 277,891 )	-	-	-	-
Special reserve	6(16)	-	-	-	6,948	( 6,948 )	-	-	-	-
Cash dividends	6(16)	-	-	-	-	( 562,275 )	-	-	-	( 562,275 )
Stock dividends	6(16)	281,138	-	-	-	( 281,138 )	-	-	-	-
Recovery of special reserve	6(16)	-	-	-	( 131,439 )	131,439	-	-	-	-
Appropriation for equalization reserve for the year		-	-	-	299,119	( 299,119 )	-	-	-	-
Balance at December 31, 2018		\$ 5,903,888	\$ 300,000	\$ 2,032,633	\$ 2,002,340	\$ 1,046,216	(\$ 34,755 )	\$ -	(\$ 52,086 )	\$ 11,198,236

CENTRAL REINSURANCE CORPORATION STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

	Years ended December 31
		2018		2017

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax	\$	1,377,097	\$	1,694,157
Adjustments
Adjustments to reconcile profit (loss) Depreciation		9,013		9,043
Amortization		1,726		1,558
Provision for loss allowance of reinsurance contract assets		9,757		-
Loss (gain) on valuation of financial assets and liabilities at
fair value through profit or loss		681,491		38,829
Interest income	(	412,432 )	(	308,508 )
Dividend income	(	111,926 )	(	118,975 )
Net change in reserves		1,036,415		933,721
Expected credit impairment on investments		782		-
Expected credit impairment reversal from non-investments	(	5 )		-
Gain upon reclassification of applying overlay approach	(	694,167 )		-
Unrealized foreign exchange (gain) loss	(	196,375 )		143,033
Changes in operating assets and liabilities
Changes in operating assets
Accounts receivable		32,981	(	139,537 )
Financial assets at fair value through profit or loss		3,440,100	(	149,872 )
Proceeds from repayments of held-to-maturity financial
assets		-		1,386,184
Financial assets at amortized cost	(	3,351,251 )		-
Investments in debt instrument without active market		-		12,000
Held-to-maturity financial assets		-	(	1,764,826 )
Other financial assets		447,163	(	478,103 )
Reinsurance contract assets	(	406,874 )	(	194,292 )
Other assets	(	336,149 )		32,886
Changes in operating liabilities
Accounts payable	(	100,057 )		92,730
Provisions	(	1,916 )		18,419
Other liabilities		10,506		10,968
Cash inflow generated from operations		1,435,879		1,219,415
Interest received		410,927		320,893
Dividend received		111,854		119,039
Income tax paid	(	400,211 )	(	195,184 )
Net cash flows from operating activities		1,558,449		1,464,163
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment	(	5,240 )	(	5,070 )
Acquisition of intangible assets	(	5,990 )		-
Acquisition of investment property	(	73 )	(	298 )
Net cash flows used in investing activities	(	11,303 )	(	5,368 )
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of cash dividends	(	562,275 )	(	281,138 )
Net cash flows used in financing activities	(	562,275 )	(	281,138 )
Effects of exchange rate changes	(	11,746 )		5,814
Net increase in cash and cash equivalents		973,125		1,183,471
Cash and cash equivalents at beginning of year		16,772,180		15,588,709
Cash and cash equivalents at end of year	\$	17,745,305	\$	16,772,180

CENTRAL REINSURANCE CORPORATION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

1. HISTORY AND ORGANISATION

Central Reinsurance Corporation (the "Company") was originally a state-owned enterprise, incorporated on October 31, 1968, and provides a broad range of property and life inward and outward reinsurance services. The Company's shares of stock have been traded on the Taiwan Stock Exchange since July 6, 2000. On July 9, 2002, the Ministry of Finance (MOF), the major shareholder of the Company, privatized the Company in accordance with rules of privatization of government-owned enterprises, effective on July 11, 2002. In addition, the Company has obtained the certificate for establishment and business license for its offshore insurance branch, and commenced its operation on January 1, 2016. Evergreen International Corporation holds 35.13% equity interest in the Company and has the ability to control the Company. Evergreen International Corporation is the Company's parent company.

THE DATE OF AUTHORISATION FOR ISSUANCE OF THE FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These financial statements were authorized for issuance by the Board of Directors on March 20, 2019. 3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards ("IFRS") as endorsed by the Financial Supervisory Commission ("FSC") New standards, interpretations and amendments endorsed by the FSC effective from 2018 are as follows:

	Effective Date by
	International Accounting
New Standards, Interpretations and Amendments	Standards Board
Amendments to IFRS 2, 'Classification and measurement of share	January 1, 2018
based payment transactions'
Amendments to IFRS 4, 'Applying IFRS 9, Financial instruments	January 1, 2018
with IFRS 4, Insurance contracts'
IFRS 9, 'Financial instruments'	January 1, 2018
IFRS 15, 'Revenue from contracts with customers'	January 1, 2018
Amendments to IFRS 15, 'Clarifications to IFRS 15, Revenue from	January 1, 2018
contracts with customers'
Amendments to IAS 7, 'Disclosure initiative'	January 1, 2017
Amendments to IAS 12, 'Recognition of deferred tax assets for	January 1, 2017
unrealised losses'
Amendments to IAS 40, 'Transfers of investment property'	January 1, 2018

	Effective Date by
	International Accounting
New Standards, Interpretations and Amendments	Standards Board
IFRIC 22, 'Foreign currency transactions and advance consideration'	January 1, 2018
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS	January 1, 2018
1, 'First-time adoption of International Financial Reporting Standards'
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS	January 1, 2017
12, 'Disclosure of interests in other entities'
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS	January 1, 2018
28, 'Investments in associates and joint ventures'

Except for the following, the above standards and interpretations have no significant impact to the Company's financial condition and financial performance based on the Company's assessment.

A. Amendments to IFRS 4, 'Applying IFRS 9, Financial instruments with IFRS 4, Insurance contracts' To address concerns regarding the different effective dates of IFRS 9, 'Financial instruments', and IFRS 17, 'Insurance contract', which may result in different bases for measuring assets and liabilities, this amendment allows insurers who meet specific requirements as set out in IFRS 4, 'Insurance contract' to adopt temporary exemption from IFRS 9, 'Financial instruments', or to use overlay approach under IFRS 9, 'Financial instruments' alternatively.
B. IFRS 9, 'Financial instruments'
(a) Classification of debt instruments is driven by the entity's business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset at amortized cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present subsequent changes in the fair value of an investment in an equity instrument that is not held for trading in other comprehensive income.
(b) The impairment losses of debt instruments are assessed using an 'expected credit loss' approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognize 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of loss allowance). The Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses for accounts receivable that do not contain a significant financing component.
(c) The amended general hedge accounting requirements align hedge accounting more closely with an entity's risk management strategy. Risk components and a group of items of nonfinancial items can be designated as hedged items. The standard relaxes the requirements for hedge effectiveness, removing the 80-125% bright line, while its risk management objective

remains unchanged, an entity shall rebalance the hedged item or the hedging instrument for the purpose of maintaining the hedge ratio.

(d) The Company has elected not to restate prior period financial statements (collectively referred herein as the "modified retrospective approach") under IFRS 9 retrospectively from January 1, 2018. Details of the significant effects as of January 1, 2018 are provided in Note 12 (7).
(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Company

New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as follows:

	Effective date by
	International Accounting
New Standards, Interpretations and Amendments	Standards Board
Amendments to IFRS 9, 'Prepayment features with negative	January 1, 2019
compensation'
IFRS 16, 'Leases'	January 1, 2019
Amendments to IAS 19, 'Plan amendment, curtailment or settlement'	January 1, 2019
Amendments to IAS 28, 'Long-term interests in associates and joint	January 1, 2019
ventures'
IFRIC 23, 'Uncertainty over income tax treatments'	January 1, 2019
Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019

The impact to the Company's financial condition and financial performance of above standards and interpretations based on the Company's assessment were as follows:

IFRS 16, 'Leases', replaces IAS 17, 'Leases' and related interpretations and SICs. The standard requires lessees to recognize a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

The Company expects to recognize the lease contract of lessees in line with IFRS 16, and the impact is not material. The Company has elected to apply modified retrospective approach and the effects will be adjusted on January 1, 2019.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

	Effective date by
	International Accounting
New Standards, Interpretations and Amendments	Standards Board
Amendment to IAS 1 and IAS 8, 'Disclosure Initiative-Definition of	January 1, 2020
Material'
Amendments to IFRS 3, 'Definition of a business'	January 1, 2020
Amendments to IFRS 10 and IAS 28, 'Sale or contribution of assets	To be determined by
between an investor and its associate or joint venture'	International Accounting
	Standards Board
IFRS 17, 'Insurance contracts'	January 1, 2021

Except for the following, the above standards and interpretations have no significant impact to the Company's financial condition and financial performance based on the Company's assessment.

A. Amendment to IAS 1 and IAS 8, 'Disclosure Initiative-Definition of Material'

The amendments clarify the definition of material that information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

B. IFRS 17, 'Insurance Contracts'

IFRS 17, 'Insurance Contracts' replaces IFRS 4 and establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts issued. The standard applies to insurance contracts (including reinsurance contracts) issued, to reinsurance contracts held and to investment contracts with discretionary participation features issued, provided the entity also issues insurance contracts. Embedded derivatives, distinct investment components and distinct performance obligations shall be separated from the insurance contracts. An entity shall, at initial recognition, disaggregate a portfolio into three groups of contracts: onerous, no significant risk of becoming onerous, and remaining contracts. IFRS 17 requires a current measurement model, where estimates are remeasured in each reporting period. The measurement is based on the building blocks of discounted, probability-weighted cash flows, a risk adjustment and a contractual service margin ('CSM') representing the unearned profit of the contract. An entity may apply a simplified measurement approach (the premium allocation approach) to some insurance contracts. An entity recognizes the profit from a group of insurance contracts over the period the entity provides insurance coverage, and as the entity is released from risk. If a group of contracts is or becomes loss-making, an entity recognizes the loss immediately. Entities are required to present separately insurance revenue, insurance service expenses and insurance finance income or expenses and to disclose information about amounts, judgements and risks arising from insurance contracts.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

These financial statements have been prepared in accordance with the "Regulations Governing the Preparation of Financial Reports by Insurance Enterprises" and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission (collectively referred to herein as "IFRSs").

(2) Basis of preparation
A. The Company does not have a subsidiary, and the Company's financial statements are separate financial statements composed of balance sheet, statement of comprehensive income, statement of changes in equity, statement of cash flows, and relevant notes.
B. Except for the following items, these financial statements have been prepared under the historical cost convention:
- (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- (b) Financial assets at fair value through other comprehensive income/available-for-sale financial assets measured at fair value.
- (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
- (d) Various insurance liabilities and reinsurance reserve assets recognized in accordance with specific statutory requirements and regulations relevant to insurance enterprises.
C. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 5.
D. In adopting IFRS 9 effective January 1, 2018, the Company has elected to apply overlay modified retrospective approach whereby the cumulative impact of the adoption was recognized as retained earnings or other equity as of January 1, 2018 and the financial statements and notes for the year ended December 31, 2017 were not restated. The financial statements for the year ended December 31, 2017 were prepared in compliance with IAS 39 and related financial reporting interpretations. Please refer to Note 12 (7) for details of significant accounting policies.
(3) Foreign currency translation
A. Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the "functional currency"). The financial statements are presented in New Taiwan Dollars ("NTD"), which is the Company's functional and presentation currency.
(a) Transactions denominated in foreign currencies are translated into functional currency at the spot exchange rates prevailing at the transaction date. The translation differences upon actual payment are recognized in current profit or loss.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the reporting date. Exchange differences arising upon re-translation at the reporting date are recognized in current profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) Except for aforementioned non-monetary assets denominated in foreign currencies held at fair value through profit or loss, foreign exchange gains or losses that arise from investing activities are recognized under net gain (loss) from investment in the statement of comprehensive income. Other foreign exchange gains or losses that do not arise from investing activities are recognized under other operating revenues or other operating costs.
B. The financial position and financial performance of offshore insurance branch that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
(a) Assets and liabilities for each balance sheet presented are translated at the spot exchange rate at the date of that balance sheet;
(b) Income and expenses for each statement of comprehensive income are translated at spot exchange rates of the trade date; and
(c) All resulting exchange differences are recognized in other comprehensive income.

(4) Cash equivalents

A. The statement of cash flows is prepared on the basis of cash and cash equivalents.
B. Cash equivalents refer to short-term, highly liquid investments that are:
(a)Readily convertible to known amount of cash; and
(b)Subject to an insignificant risk of changes in value.
C. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.
(5) Financial assets at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortized cost or fair value through other comprehensive income. A financial asset is eligible for designation for the overlay approach if, and only if, the following criteria are met:
(a) It is measured at fair value through profit or loss applying IFRS 9 but would not have been measured at fair value through profit or loss in its entirety applying IAS 39; and
(b) It is not held in respect of an activity that is unconnected with contracts within the scope of IFRS 4.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. The Company subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.
D. The Company recognizes the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.
E. The Company values the difference of reclassification amounts of financial assets at fair value through profit or loss and fair value through other comprehensive income for the financial assets applying overlay approach, using:
(a) The amount reported in profit or loss for the designated financial assets applying overlay approach under IFRS 9; and
(b) The amount that would have been reported in profit or loss for the designated financial assets if IAS 39 had been applied.
(6) Financial assets at amortized cost
A. Financial assets at amortized cost are those that meet all of the following criteria:
- (a) The objective of the Company's business model is achieved by collecting contractual cash flows.
- (b) The assets' contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at amortized cost are recognized and derecognized using trade date accounting.
C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognized in profit or loss when the asset is derecognized or impaired.
(7) Non-hedging and embedded derivatives
A. Non-hedging derivatives are initially recognized at fair value on the date a derivative contract is entered into and recorded as financial assets or financial liabilities at fair value through profit or loss. They are subsequently remeasured at fair value and the gains or losses are recognized in profit or loss.
B. Under the financial assets, the hybrid contracts embedded with derivatives are initially recognized as financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and financial assets at amortized cost based on the contract terms.

(8) Impairment of financial assets

For financial assets at amortized cost such as accounts receivable, other financial assets and refundable deposits under other assets, etc., at each reporting date, the Company recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased or credit impaired since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts.

(9) Investment property
A. An investment property is stated initially at its cost including related transaction costs; measured subsequently using the cost model and stated at cost less accumulated depreciation and accumulated impairment loss. Subsequent costs of major renewals and betterments are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. Repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
B. The Company uses a portion of the property for its own use and another portion to earn rentals or for capital appreciation. When these portions can be sold separately, the own-use portion is accounted for in accordance with IAS 16, "Property, Plant and Equipment". However, property held either to earn rental income or for capital appreciation or for both is subject to IAS 40, "Investment Property". If part of property cannot be individually sold, and owner-occupied property is insignificant, it is accounted for as investment property.
C. An investment property shall be derecognized on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. When assets are derecognized, the cost and the accumulated depreciation at the time of sale or retirement are written off. Gain or loss on sale of the investment property, rental income, and relevant payment shall be recognized in gain or loss on investment property under net gain from investment. Except for land, property is depreciated on a straight-line basis over its estimated useful life of 3 to 60 years. The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets' residual values and useful lives differ from previous estimates or the patterns of consumption of the assets' future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8,"Accounting Policies, Changes in Accounting Estimates and Errors", from the date of the change.
(10) Lease

The Company's lease contracts are all operating leases, where substantially all risks and rewards of ownership of the assets remain with the lessor. If the Company is a lessor, assets involved in operating lease are recognized under "investment property". If the Company is a lessee, leased assets will not be recognized in the balance sheet. Payments that the Company receives or charges under the operating lease are recognized as "gain or loss on investment property" and "operating expenses".

(11) Reinsurance contract assets

Reinsurance contract assets include due from reinsurers and ceding companies, ceded unearned premium reserve, ceded claims reserve, ceded premium deficiency reserve, ceded liability reserve and ceded liability adequacy reserve. Each of the reinsurance contract assets should be in compliance with relevant regulation and policy of "Regulation Governing Financial and Business Operations of Professional Reinsurance Enterprises" and "Regulations Governing the Preparation of Financial Reports by Insurance Enterprises".

(12) Impairment on reinsurance contract assets

Regular evaluation on reinsurance assets should be made to evaluate if there is any impairment. When there is objective evidence, as a result of an event that occurred after initial recognition of the reinsurance asset, that the Company may not receive all amounts due to it under the terms of the contract; and that event has a reliably measurable impact on the amounts that the Company will receive from the reinsurer, the Company should reduce its carrying amount accordingly and recognize impairment loss.

(13) Property and equipment

A. Property and equipment are stated initially at its cost including related transaction costs, measured subsequently using the cost model and stated at cost less accumulated depreciation and accumulated impairment loss. Reserve for land revaluation increment tax set aside for revaluation over the current land value is recognized as deferred income tax liabilities. Subsequent costs of major renewals and betterments are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. Repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
B. Depreciation is computed using straight-line method over the estimated service lives as follows: buildings and equipment, 3 to 60 years; computer equipment, 3 to 6 years; transportation equipment, 3 to 10 years; and miscellaneous equipment, 3 to 10 years.
C. The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets' residual values and useful lives differ from previous estimates or the patterns of consumption of the assets' future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, "Accounting Policies, Changes in Accounting Estimates and Errors", from the date of the change.
D. When an asset is retired or disposed, the cost plus revaluation increment, if any, and related accumulated depreciation are removed from the accounts, and the resulting gain or loss is

credited or charged to non-operating income and expenses during the financial period in which they are incurred.

(14) Impairment of non-financial assets

The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized. Impairment loss and gain on reversal of impairment loss for investment property are recognized under operating revenue. Impairment loss and gain on reversal of impairment loss for property and equipment are recognized in non-operating income and expenses.

(15) Loss allowance
A. Loss allowance for accounts receivable, other financial assets and refundable deposits under other assets should be assessed and recognized in accordance with IFRS 9 and the "Guidelines for Handling Assessment of Assets, Loans Overdue, Delinquent Accounts Receivable on Demand by Insurance Enterprises".
B. Loss allowance for reinsurance contract assets should be assessed and recognized in accordance with IFRS 4 and the "Guidelines for Handling Assessment of Assets, Loans Overdue, Delinquent Accounts Receivable on Demand by Insurance Enterprises".
(16) Financial liabilities at fair value through profit or loss
A. Financial liabilities at fair value through profit or loss are financial liabilities held for trading. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges.
B. At initial recognition, financial liabilities at fair value through profit or loss are measured at fair value plus transaction costs. The Company subsequently measures the financial liabilities at fair value, and recognizes the gain or loss in profit or loss.
(17) Derecognition of financial assets and financial liabilities

The Company derecognizes a financial asset when one of the following conditions is met:

A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Company has not retained control of the financial asset.

A financial liability is derecognized when the obligation specified in the contract is either discharged or cancelled or expires.

(18) Offsetting financial assets and financial liabilities

Financial assets and financial liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

(19) Classification of reinsurance contracts

Classification of reinsurance contracts should be made in compliance with IFRS 4, "Insurance Contracts".

An insurance contract is a contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. A contract with no significant insurance risk being transferred is not classified as an insurance contract and is recognized by deposit accounting.

A contract that falls within the definition of insurance contract on the initial recognition will still be deemed as insurance contract before its maturity.

(20) Insurance liabilities

The reserves related to Compulsory Automobile Liability Insurance are determined in accordance with "Regulations for Management of the Reserve of Compulsory Automobile Liability Insurance". The equalization reserve related to residential earthquake insurance is determined in accordance with "Regulations Governing Implementation of the Residential Earthquake Risk Spreading Mechanism".

The reserve related to nuclear insurance is determined in accordance with "Regulations Governing the Setting Aside of Nuclear Insurance Liability Reserves".

The reserves excluding the reserve listed above were determined in accordance with "Regulations Governing Financial and Business Operations of Professional Reinsurance Enterprises " and "Regulations Governing the Preparation of Financial Reports by Insurance Enterprises" to calculate unearned premium reserve, claims reserve, premium deficiency reserve, liability reserve, liability adequacy reserve and other reserve of inward reinsurance business.

According to "Directions for Strengthening Special Reserve by Reinsurance Enterprises", "Directions for Strengthening Co-insurance Reserve of Residential Earthquake Insurance" and "Regulations for Reserving Nuclear Energy Insurance Reserve by Non-Life Insurance Enterprises" dated December 28, 2012, subsequent equalization reserve recognized under liabilities by December 31, 2012 should still be recognized under liabilities. Starting from January 1, 2013, the additional provision for equalization reserve less income tax should be recognized as special reserve under equity after annual closing and should not be distributed without approval. The release of the equalization reserve shall be made through equalization reserve under liabilities first. If such reserves are insufficient for release, then the deficiency shall be released through special reserves under equity based on its net amount after tax in accordance with IAS 12.

Among the reserves above, except for unearned premium reserve for long-term fire insurance which

was calculated at a rate of 7.8% based on the coefficient table of unearned premium reserve for longterm fire insurance, the other reserves were not calculated by discounting.

(21) Liability adequacy test

When the estimated future cash flow of insurance contracts recognized as insurance liability at book value is insufficient, the entire deficiency is recognized in current loss in accordance with the requirement of the Actuarial Institution of Republic of China.

(22) Employee benefits
A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognized as expenses in that period when the employees render service.

B. Pensions

(a) Defined contribution plan

For defined contribution plan, the contributions are recognized as pension expenses when they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments.

(b) Defined benefit plan
i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plan is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of highquality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Company uses interest rates of government bonds (at the balance sheet date) instead.
ii. Remeasurement arising on defined benefit plan are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.
C. Employees' compensation and directors' remuneration

Employees' compensation and directors' remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts should be recognized in profit or loss of the following year.

(23) Income tax

A. The income tax expense (benefit) for the period comprises current and deferred income tax.

Income tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.

B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. Income tax on undistributed earnings is recorded as expense in the year when the stockholders approve to retain the earnings.
C. Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
D. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each reporting period, unrecognized and recognized deferred income tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current income tax assets against current income tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.
(24) Dividends

Dividends are recorded in the Company's financial statements in the period in which they are approved by the Company's shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to common stock on the effective date of new shares issuance.

(25) Reinsurance revenues

Income from reinsurance business refers to various premiums earned from reinsurance operations, including those that meet the requirements in IFRS 4 and can be recognized as income. The Company's estimates for reinsurance premium income are assessed based on estimated premiums of reinsurance contracts, information provided by ceding companies, and historical trends. Reinsurance related revenues are recognized on the accrual basis.

(26) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker, who is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these financial statements requires management to make critical judgements in applying the Company's accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. The related information is addressed below:

(1) Critical judgements in applying the Company's accounting policies

None.

(2) Critical accounting estimates and assumptions

A. Reinsurance premiums

The Company's estimated reinsurance revenue is based on the ceding company's annual forecasted reinsurance information and then the Company calculates the revenue proportion to be recognized in each quarter based on previous experience of actual statements. Thereafter, when actual statements are received each quarter, original estimates are reversed and actual statements are accrued. The reason for differences between actual statements and estimated amounts is evaluated to adjust the estimated revenues of remaining period, accordingly.

B. Claims reserve (under insurance liabilities)

Aside from statutorily required insurances, the Company estimates the ultimate loss ratio and provisions claims reserve based on assessment factors such as information provided by the ceding company, claim development factors, contract type, insurance risk characteristics, market information, and judgement for the experience of claims and underwriting. Any change in the methodology and assumptions used in calculating the ultimate loss ratio would significantly affect the amount of claims reserve. A part of claims reserve is recognized using the case-by-case estimation method for Reported-But-Not-Paid cases while the remaining is provisioned for Incurred-But-Not-Reported claims.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

	December 31, 2018
Cash:
Petty cash	\$ 124	\$	123
Checking accounts	41,960		13,197
Demand deposits	5,347,309		5,344,122
Cash equivalents:
Time deposits	12,355,912		11,414,738
	\$ 17,745,305	\$	16,772,180

A. The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

B. The Company has no cash and cash equivalents pledged to others.

C. Certain time deposits of the Company did not meet the definition of cash equivalents and are presented in other financial assets. Please see Note 6 (5).

(2) Accounts receivable

		December 31, 2018
Notes receivable	\$	1,257	\$	3,361
Other receivables		279,568		278,320
Total		280,825		281,681
Less: Loss allowance	(	57)		-
Net amount	\$	280,768	\$	281,681

A. As of December 31, 2018, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the accounts receivable was \$280,768. Information relating to credit risk and movements of loss allowance is provided in Note 13 (1).

B. As of December 31, 2017, the credit quality and aging analysis information:

(a) The credit quality information of accounts receivable that are neither past due nor impaired was in the following categories based on the payment records:

	December 31, 2017
Good	\$ 281,681
Delayed previously	-
	\$ 281,681

Accounts receivable that are neither past due nor impaired are accounted for in accordance with the "Guidelines for Handling Assessment of Assets, Loans Overdue, and Delinquent Accounts Receivable on Demand by Insurance Enterprises". The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

(b) The Company does not have any accounts receivable that were past due but not impaired.

(c) The Company does not have any accounts receivable that were impaired.
(d) The Company does not hold any collateral as security.
(3) Financial assets and financial liabilities at fair value through profit or loss

	December 31, 2018
Financial assets mandatorily measured at fair value through profit or loss
Domestic items:
Listed and over-the-counter common stocks	\$ 525,813
Listed and over-the-counter preferred stocks	14,232
Securities real estate products	170,894
Open-end funds	100,000
Mandatory convertible corporate bonds	500,000
Derivatives	25,114
Foreign items:
Listed and over-the-counter common stocks	483,079
Open-end funds	120,384
Index funds	34,788
	1,974,304
Valuation adjustment	(266,121)
	\$ 1,708,183
	December 31, 2018
Financial liabilities held for trading
Non-hedging derivatives	\$ 3,655

		December 31, 2018
	Contract amount
	(Notional Contract
Derivative instruments		principal)	period
FX swap contracts	\$	7,295,302	2018.10.04~2019.03.27
Forward foreign exchange contracts		827,961	2018.07.27~2019.06.27

A. The non-hedging derivative instruments transaction and contract information are as follows:

Note: Contract amount is translated into thousands of New Taiwan dollars using the exchange rates prevailing at the end of the period.

(a) FX swap contracts

The Company entered into FX swap contracts with financial institutions to hedge risk on its foreign investments arising from variations in the exchange rate. However, these FX swap contracts are not accounted for under hedge accounting.

(b) Forward foreign exchange contracts

The Company entered into forward foreign exchange contracts with financial institutions to hedge risk on its foreign investments arising from variations in the exchange rate. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

The Company holds Taiwan stock index futures, Mini S&P500 index futures and Hang Seng index futures. As of December 31, 2018, the related margins were \$318,919.

B. The Company has no financial assets at fair value through profit or loss pledged to others.
C. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 13 (1).
D. Information on December 31, 2017 is provided in Note 12 (7).
E. In adopting IFRS 9 effective January 1, 2018, the Company has elected to apply overlay approach and recognized gain or loss for designated financial assets in accordance with IFRS 4.

(a) The designated financial assets applying overlay approach that are connected with insurance contracts are as follows:

		December 31, 2018
Financial assets mandatorily measured at fair value through profit or
loss
Domestic items:
Listed and over-the-counter common stocks	\$	377,393
Listed and over-the-counter preferred stocks		14,232
Open-end funds		100,000
Foreign items:
Listed and over-the-counter common stocks		431,757
Open-end funds		120,384
Index funds		34,788
		1,078,554
Valuation adjustment	(	62,622)
	\$	1,015,932

(b) Reclassified amounts of the designated financial assets applying overlay approach at fair value through profit and loss and fair value through comprehensive income are listed below:

		2018
Loss under IFRS 9	(\$	378,477)
Less: Gain under IAS 39		315,690
Amount of reclassification applying
overlay approach	(\$	694,167)
Effect of deferred income tax on other
comprehensive income	\$	97,253
(4) Financial assets at amortized cost
		December 31, 2018
Domestic items:
Securitized financial asset products	\$	300,000
Corporate bonds		1,052,555
Government bonds		937,994
Foreign items:
Securitized financial asset products		781,137
Corporate bonds		4,979,690
Financial bonds		3,538,602
Government bonds		364,132
		11,954,110
Less: Loss allowance	(	3,565)
Less: Statutory deposits	(	937,994)
	\$	11,012,551

A. Amounts recognized in profit or loss in relation to financial assets at amortized cost are listed below:

	2018
Interest income	260,282
Impairment loss	( 782)
	\$ 259,500

B. As of December 31, 2018, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortized cost held by the Company was \$11,950,545.
C. Under the Insurance Act, the Company is required to deposit an amount equal to 15% of its paidin capital. As of December 31, 2018, the Company provided government bonds with a par value of \$900,000 as statutory deposit.
D. Information relating to credit risk of financial assets at amortized cost is provided in Note 13 (1).
E. Information on December 31, 2017 is provided in Note 12 (7).
(5) Other financial assets

	December 31, 2018		December 31, 2017
Time deposits	\$	237,199	\$ 684,362

A. As of December 31, 2018, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the other financial assets was \$237,199.
B. The Company transacts with financial institutions all with high credit quality, so it expects that the probability of counterparty default is remote.
C. The Company has no other financial assets pledged to others.
D. Information relating to credit risk of other financial assets is provided in Note 13 (1).
(6) Structured entities
A. In accordance with the regulations of IFRS 12, 'Disclosure of interests in other entities', information about the interests in structured entities that are not controlled by the Company is as follows:

December 31, 2018
Type of structured entities		Book value	Nature
Securitized real estate products	\$	241,544	The beneficial securities were issued by trustee to provide investor gain on transaction, rent and value increment of real estate market.
Securitized financial asset products		1,081,062	The risks and rewards associated with the assets of the structured entity were passed on to investors through issuing bonds.
Total	\$	1,322,606

December 31, 2017
Type of structured entities	Book value	Nature
Securitized real estate products	\$ 524,734	The beneficial securities were issued by trustee to provide investor gain on transaction, rent and value increment of real estate market.
Securitized financial asset products	1,043,642	The risks and rewards associated with the assets of the structured entity were passed on to investors through issuing bonds.
Total	\$ 1,568,376

The structured entities that are not controlled by the Company are held for the purpose of generating investment income.

B. As of December 31, 2018, the structured entities that are not controlled by the Company are accounted for as financial assets at fair value through profit or loss and financial assets at amortized cost. As of December 31, 2017, the structured entities that are not controlled by the Company are accounted for as available-for-sale financial assets and investments in debt instrument without active market. The entity's maximum exposure is the carrying amount of assets held. The investment position is restricted by contract terms and conditions of issue and exposes the corresponding market risk. The Company has considered risk management approach of relevant market. Please see Notes 12 (7) F and 13 (1).
(7) Investment property

	Land		Building		Total
At January 1, 2018
Cost	\$ 411,606	\$	85,888	\$	497,494
Accumulated depreciation	-	(	45,083)	(	45,083)
	\$ 411,606	\$	40,805	\$	452,411
2018
At January 1	\$ 411,606	\$	40,805	\$	452,411
Additons-from subsequent expenditure	-		73		73
Transferred from prepayments for
business facilities	-		664		664
Depreciation	-	(	2,470)	(	2,470)
At December 31	\$ 411,606	\$	39,072	\$	450,678
At December 31, 2018
Cost	\$ 411,606	\$	86,625	\$	498,231
Accumulated depreciation	-	(	47,553)	(	47,553)
	\$ 411,606	\$	39,072	\$	450,678

	Land		Building		Total
At January 1, 2017
Cost	\$ 411,606	\$	85,590	\$	497,196
Accumulated depreciation	-	(	42,558)	(	42,558)
	\$ 411,606	\$	43,032	\$	454,638
2017
At January 1	\$ 411,606	\$	43,032	\$	454,638
Additons-from subsequent
expenditure	-		298		298
Depreciation	-	(	2,525)	(	2,525)
At December 31	\$ 411,606	\$	40,805	\$	452,411
At December 31, 2017
Cost	\$ 411,606	\$	85,888	\$	497,494
Accumulated depreciation	-	(	45,083)	(	45,083)
	\$ 411,606	\$	40,805	\$	452,411

A. Rental income from the lease of the investment property and direct operating expenses arising from the investment property are as follows:

	Year ended		Year ended December 31, 2017
	December 31, 2018
Rental revenue from the lease of the
investment property	\$	25,565	\$	23,305
Direct operating expenses arising from the
investment property that generated rental
income in the period		5,842		6,094

B. The Company leases investment properties to others under non-cancellable operating lease agreements. The lease terms are between 1 and 3 years, and the lessees enjoy preferential right to lease at the end of the lease period. The future aggregate lease payments receivable under leases contracted but not yet due are as follows:

	December 31, 2018	December 31, 2017
Due in one year	\$ 22,817	\$ 20,081
Due after one year through three years	19,188	14,780
	\$ 42,005	\$ 34,861

C. The fair value of investment property held by the Company is estimated by an accredited external independent appraiser under "Regulations on Real Estate Appraisal" using valuation techniques of both the income approach and comparison approach, based on observable active market prices and the characteristics, locations and conditions of each asset on the measurement date – December 31, 2018 and 2017. The fair values of investment property for the aforementioned measurement dates were \$1,230,515 and \$1,215,163, respectively, which is categorized as Level 3 within the fair value hierarchy. Key assumptions of income approach are as follows:

		December 31, 2018		December 31, 2017
Capitalization rate		1.00%~1.48%		0.96%~1.60%
D. The above assets were not pledged to others as collateral.
(8) Reinsurance contract assets and insurance liabilities
A. Details of reinsurance contract assets are as follows:
		December 31, 2018		December 31, 2017
Due from reinsurers and
ceding companies	\$	2,797,238	\$	2,401,351
Due from reinsurers and
ceding companies-overdue		15,453		42,722
Reinsurance reserve assets
Ceded unearned premium		317,308
reserve				326,161
Ceded claims reserve		741,703		701,110
Ceded liability reserve		365,513		301,684
Ceded premium deficiency reserve		2,498		5,179
		4,239,713		3,778,207
Less: Loss allowance	(	23,642)		-
Less: Allowance for doubtful accounts		-	(	52,141)
	\$	4,216,071	\$	3,726,066

(a) The credit quality information of reinsurance contract assets that are neither past due nor impaired is as follows, and the evaluation of credit rating was conducted according to the ultimate reinsurers:

	December 31, 2018	December 31, 2017
Group 1	\$ 15,864	\$	16,451
Group 2	715,209		770,207
Group 3	2,892,760		2,496,966
Group 4	121,622		96,879
Group 5	8,849		5,700
Group 6	289,881		252,239
	\$ 4,044,185	\$	3,638,442

Group 1: S&P AAA or equivalents.

Group 2: Over S&P AA- or equivalents.

Group 3: Over S&P A- or equivalents.
Group 4: Over S&P BBB- or equivalents.
Group 5: Under S&P BBB- or equivalents.
Group 6: without credit rating etc.
Note: Reinsurances undertaken without a credit rating are primarily from domestic insurance companies.

(b) The balances and ageing analysis of reinsurance contract assets that were past due but not impaired and impaired are as follows:

	December 31, 2018		December 31, 2017
Over one month, under
three months	\$ 83,631	\$	92,139
Over three months, under
six months	84,268		11,821
Over six months, under
nine months	26,302		154
Over nine months	1,327		35,651
	\$ 195,528	\$	139,765

i. The ages of due from reinsurance and ceding companies, except for the estimated reinsurance receivables or payables on closing date, are classified by its booking date.

ii. The overdue due from reinsurance and ceding companies above indicate the ultimate reinsurers that were due but not paid and were transferred to overdue accounts in nine months after they were due.
(c) Movement analysis on the Company's provision for impairment of reinsurance contract assets is as follows:

	2018	2017
\$	52,079	\$ 52,141
(	38,194)	-
	9,757	-
\$	23,642	\$ 52,141

Note: The balance excludes accounts receivable of \$62 reclassified in initial application of IFRS 9. Please refer to Note 12 (7) C for details.

(d) The Company does not hold any collateral as security.
B. Details of insurance liabilities are as follows:

	December 31, 2018		December 31, 2017
Unearned premium reserve	\$	5,630,654	\$	5,270,076
Claims reserve		15,557,856		14,668,663
Liability reserve		365,513		301,684
Equalization reserve		3,956,919		4,150,282
Premium deficiency reserve		54,984		39,809
	\$	25,565,926	\$	24,430,514

		2018		2017
Ceded unearned premium reserve
At January 1	\$	326,161	\$	357,086
Provision		317,091		326,317
Recovery	(	326,317)	(	356,880)
Impairment loss	(	1,177)		-
Exchange differences on translation of foreign
financial statements		373	(	362)
At December 31	\$	316,131	\$	326,161
Unearned premium reserve		2018		2017
At January 1	\$	5,270,076	\$	5,126,197
Provision		5,627,994		5,273,898
Recovery	(	5,273,898)	(	5,124,292)
Exchange differences on translation of foreign
financial statements		6,482	(	5,727)
At December 31	\$	5,630,654	\$	5,270,076

D. Details and movements of ceded claims reserve and claims reserve are as follows:

		December 31, 2018		December 31, 2017
Ceded claims reserve
Outstanding losses	\$	316,873	\$	302,776
Incurred but not reported losses		424,830		398,334
Less: Loss allowance	(	286)		-
	\$	741,417	\$	701,110
		December 31, 2018		December 31, 2017
Claims reserve
Outstanding losses	\$	5,301,972	\$	4,891,209
Incurred but not reported losses		10,255,884		9,777,454
	\$	15,557,856	\$	14,668,663
		2018		2017
Ceded claims reserve
At January 1	\$	701,110	\$	837,442
Provision		741,703		701,110
Recovery	(	701,110)	(	837,442)
Impairment loss	(	286)		-
At December 31	\$	741,417	\$	701,110

		2018	2017
Claims reserve
At January 1	\$	14,668,663 \$	14,353,439
Provision		15,557,856	14,668,663
Recovery	(	14,668,663) (	14,353,439)
At December 31	\$	15,557,856 \$	14,668,663

E. Movements of ceded liability reserve and liability reserve are as follows:

				2018			2017
		Foreign currency						Foreign currency
		amount		Exchange		NTD		amount		Exchange		NTD
		(in thousands) Currency		rate				(in thousands) (in thousands) Currency		rate		(in thousands)
Ceded liability reserve
At January 1	\$	65,911	CNY	4.577	\$	301,684	\$	49,496	CNY	4.645	\$	229,893
Provision		17,182				70,264		17,352				76,000
Recovery	(	1,423)			(	6,435) (		937)			(	4,209)
At December 31	\$	81,670	CNY	4.475	\$	365,513	\$	65,911	CNY	4.577	\$	301,684
				2018						2017
		Foreign						Foreign
		currency						currency
		amount		Exchange		NTD		amount		Exchange		NTD
		(in thousands)Currency		rate				(in thousands) (in thousands)Currency		rate		(in thousands)
Liability reserve
At January 1	\$	65,911	CNY	4.577	\$	301,684	\$	49,496	CNY	4.645	\$	229,893
Provision		17,182				70,264		17,352				76,000
Recovery	(	1,423)			(	6,435) (		937)			(	4,209)
At December 31	\$	81,670	CNY	4.475	\$	365,513	\$	65,911	CNY	4.577	\$	301,684

The provisions above include the effects of foreign exchange gains and losses.

F. Equalization reserves

(a) Details of equalization reserves are as follows:

	December 31, 2018	December 31, 2017
Equalization reserve for statutory insurance	\$ 1,375,841	\$ 1,569,204
Reserve for fluctuation of risk	2,055,296	2,055,296
Reserve for extraordinary business losses	525,782	525,782
	\$ 3,956,919	\$ 4,150,282

(b) Movement of equalization reserves is as follows:

		2018
At January 1	\$	4,150,282	\$	3,855,222
Provision		-		295,060
Recovery	(	193,363)		-
At December 31	\$	3,956,919	\$	4,150,282

(c) According to Jin-Kuan-Bao-Tsai Order No. 10102517491, "Directions for Strengthening Special Reserve by Reinsurance Enterprises", Jin-Kuan-Bao-Chan Order No. 10102531541, "Directions for Strengthening Co-insurance Reserve of Residential Earthquake Insurance" and Jin-Kuan-Bao-Tsai Order No. 10102517091, "Regulations for Reserving Nuclear Energy Insurance Reserve by Non-Life Insurance Enterprises" dated December 28, 2012, the Company's accounts applicable or not applicable for the reserve for the years ended December 31, 2018 and 2017, are as follows:

				Year ended December 31, 2018
				Earnings per share
	Net income (in dollars) Total liabilities
Applicable	\$	1,050,071	\$	1.78	\$	26,091,914	\$	11,198,236
Not applicable		1,050,071		1.78		23,874,584		13,415,566
Effect (Note)	\$	-	\$	-	(\$	2,217,330)	\$	2,217,330

Note: Income tax rate is calculated at 20% since the equalization reserves are applicable.

	Year ended December 31, 2017
				Earnings per share
		Net income	Total liabilities		Total equity
Applicable	\$	1,389,459	\$	2.35	\$	25,258,949	\$	11,251,472
Not applicable		1,389,459		2.35		22,958,469		13,551,952
Effect	\$	-	2,300,480)	\$	2,300,480

G. Movements of ceded premium deficiency reserve and premium deficiency reserve are as follows:

		2018	2017
Ceded premium deficiency reserve
At January 1	\$	5,179 \$	2,193
Provision		2,498	5,179
Recovery	(	5,179) (	2,193)
At December 31	\$	2,498 \$	5,179

		2018	2017
Premium deficiency reserve
At January 1	\$	39,809 \$	29,887
Provision		54,984	39,809
Recovery	(	39,809) (	29,887)
At December 31	\$	54,984 \$	39,809

H. The Company's future cash flows of insurance liabilities (excluding equalization reserve) are as follows:

December 31, 2018	Due in one year		Due after one year	Total
Insurance liabilities
Unearned premium reserve	\$ 2,428,449	\$	1,685,474	\$ 4,113,923
Claims reserve	7,932,695		5,505,717	13,438,412
Liability reserve	-		365,513	365,513
Premium deficiency reserve	32,457		22,527	54,984

Note: Insurance liabilities exclude statutory insurance (total amount of compulsory automobile liability insurance, residential earthquake insurance and nuclear insurance is \$3,636,175).

December 31, 2017	Due in one year		Due after one year	Total
Insurance liabilities
Unearned premium reserve	\$ 2,247,556	\$	1,518,456	\$ 3,766,012
Claims reserve	7,482,088		5,054,923	12,537,011
Liability reserve	-		301,684	301,684
Premium deficiency reserve	23,758		16,051	39,809

Note: Insurance liabilities exclude statutory insurance (total amount of compulsory automobile liability insurance, residential earthquake insurance and nuclear insurance is \$3,635,716).

(9) Reserves for unqualified reinsurance

A. Summary of unqualified reinsurance contracts are set forth as follows:

The Company entered into contracts with insurance companies and insurance brokers as follows: The scope of reinsurance is the same as the Company's insurance contracts.

Insurance companies / Insurance brokers	Type of contract
WALSUN INSURANCE LTD.	Fire insurance, marine cargo insurance, inland marine insurance, marine hull insurance, automobile insurance, casualty insurance and engineering insurance
SOMPO JAPAN INSURANCE COMPANY (ASIA) PTE LTD	Aviation insurance
AXA REINSURANCE COMPANY-FRANCE	Aviation insurance
BEST RE (L) LIMITED	Fire insurance and casualty insurance
SWISS RE FRANKONA	Aviation insurance
RUCKVERSICHERUNGS-AG GERMANY
ALLIANZ MARINE & AVIATION	Aviation insurance
VERSICHERUNGS AG
GROUPAMA ASSURANCES & SERVICES	Aviation insurance
GROUPAMA TRANSPORT, LE HAVRE	Aviation insurance
LE CONTINENT IARD	Aviation insurance
MAPFRE INDUSTRIAL SOCIEDAD ANONIMA DE SEG SA	Aviation insurance
MILLI REASURANS T. A. S. SINGAPORE	Fire insurance, engineering insurance
BRANCH	and marine hull insurance
WILSON RE LIMITED	Casualty insurance
M.B. BODA REINSURANCE BROKERS PVT. LTD.	Fire insurance
COSMOS SERVICES CO., LTD.	Fire insurance
INTERLINK INSURANCE & REINSURANCE	Fire insurance
BROKERS PVT. LTD.
J B BODA INSURANCE SERVICES (L) BHD	Fire insurance
GUY CARPENTER & COMPANY LTD.	Fire insurance
TRUST INTERNATIONAL INSURANCE AND	Fire insurance, marine hull insurance
REINSURANCE COMPANY B. S. C. (C).	and engineering insurance
TRUST RE. LABUAN BRANCH

B. As of December 31, 2018 and, 2017, the Company's unqualified reinsurance premiums ceded were \$4,111 and \$0, respectively.
C. Reserve for unqualified reinsurance as of December 31, 2018 and 2017 are as follows:

	December 31, 2018	December 31, 2017
Ceded unearned premium reserve	\$ 504	\$ 4,593
Ceded claims reserve	316	974
	\$ 820	\$ 5,567

(10) Offsetting financial assets and financial liabilities

A. The Company has derivative assets that do not meet the offsetting criteria in paragraph 42 of IAS 32. However, the Company has transactions that are or are similar to net settled master netting arrangements. If one party breaches the contract (in the case of default and insolvency or bankruptcy), the counterparty can choose to use net settlement. The related amount of offsetting shall not exceed the gross amounts of recognized financial assets and liabilities.
B. The related information of financial assets and financial liabilities that can be settled under agreements of net settled master netting arrangements or similar arrangements are as follows: (a) Financial assets

	Gross amounts of recognized	Financial instruments not set off in the
Description	financial assets	balance sheet	Net amount
December 31, 2018
Derivatives	\$ 25,114	\$ 1,219	\$ 23,895
December 31, 2017
Derivatives	\$ 41,030	\$ 13,290	\$ 27,740

Note: The above-mentioned items are all accounted as financial assets at fair value through profit or loss.

(b) Financial liabilities

	Gross amounts	Financial instruments
	of recognized	not set off in the
Description	financial liabilities	balance sheet	Net amount
December 31, 2018
Derivatives	\$ 3,655	\$ 1,219	\$ 2,436
December 31, 2017
Derivatives	\$ 13,290	\$ 13,290	\$ -

Note: The above-mentioned items are all accounted as financial liabilities at fair value through profit or loss.

(11) Property and equipment

	Land		Building		Computer equipment		Transportation equipment		Miscellaneous equipment		Prepayments for equipment		Total
At January 1, 2018
Cost Accumulated depreciation	\$ 180,796 -	\$ (	90,105 72,224)	\$ (	19,770 13,957)	\$ (	4,861 4,053)	\$ (	3,656 2,873)	\$	664 -	\$ (	299,852 93,107)
	\$ 180,796	\$	17,881	\$	5,813	\$	808	\$	783	\$	664	\$	206,745
2018
At January 1	\$ 180,796	\$	17,881	\$	5,813	\$	808	\$	783	\$	664	\$	206,745
Additions	-		147		2,962		-		804		1,327		5,240
Disposals-cost	-		-	(	462)		-		-		-	(	462)
Disposals-accumulated
depreciation	-		-		462		-		-		-		462
Reclassification	-		1,327		-		-		-	(	1,327)		-
Transferred to investment
property	-		-		-		-		-	(	664)	(	664)
Depreciation	-	(	3,187)	(	2,751)	(	323)	(	282)		-	(	6,543)
At December 31	\$ 180,796	\$	16,168	\$	6,024	\$	485	\$	1,305	\$	-	\$	204,778
At December 31, 2018
Cost	\$ 180,796	\$	91,579	\$	22,270	\$	4,861	\$	4,460	\$	-	\$	303,966
Accumulated depreciation	-	(	75,411)	(	16,246)	(	4,376)	(	3,155)		-	(	99,188)
	\$ 180,796	\$	16,168	\$	6,024	\$	485	\$	1,305	\$	-	\$	204,778

	Land		Building		Computer equipment		Transportation equipment		Miscellaneous equipment	Prepayments for equipment		Total
At January 1, 2017
Cost	\$ 180,796	\$	89,414	\$	17,302	\$	4,923	\$	3,689	\$ -	\$	296,124
Accumulated depreciation	-	(	68,973)	(	12,224)	(	3,791)	(	2,943)	-	(	87,931)
	\$ 180,796	\$	20,441	\$	5,078	\$	1,132	\$	746	\$ -	\$	208,193
2017
At January 1	\$ 180,796	\$	20,441	\$	5,078	\$	1,132	\$	746	\$ -	\$	208,193
Additions	-		691		3,475		-		240	664		5,070
Disposals-cost	-		-	(	1,007)	(	62)	(	273)	-	(	1,342)
Disposals-accumulated
depreciation	-		-		1,007		62		273	-		1,342
Depreciation	-	(	3,251)	(	2,740)	(	324)	(	203)	-	(	6,518)
At December 31	\$ 180,796	\$	17,881	\$	5,813	\$	808	\$	783	\$ 664	\$	206,745
At December 31, 2017
Cost	\$ 180,796	\$	90,105	\$	19,770	\$	4,861	\$	3,656	\$ 664	\$	299,852
Accumulated depreciation	-	(	72,224)	(	13,957)	(	4,053)	(	2,873)	-	(	93,107)
	\$ 180,796	\$	17,881	\$	5,813	\$	808	\$	783	\$ 664	\$	206,745

The above assets were not pledged to others as collateral.

(12) Accounts payable

	December 31, 2018
Due to reinsurers and ceding
companies	\$ 177,465	\$	197,899
Other payables	132,348		211,971
	\$ 309,813	\$	409,870

(13) Employee benefits

A. Defined benefit obligation

(a)The Company has established a defined benefit pension plan in accordance with the Labor Standards Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 8% of the employees' monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method, to the employees expected to be qualified for retirement next year, the Company will make contributions to cover the deficit once or in installments.

(b)The amounts recognized in the balance sheet are as follows:

		December 31, 2018	December 31, 2017
Present value of defined benefit obligations	(\$	46,309)	(\$	57,768)
Fair value of plan assets		48,348		56,753
Net defined benefit asset (liability)	\$	2,039	(\$	1,015)

	Present value of defined benefit obligations		Fair value of plan assets			Net defined benefit asset (liability)
Year ended December 31, 2018
Balance at January 1	(\$	57,768)	\$	56,753	(\$	1,015)
Current service cost	(	1,255)		-	(	1,255)
Interest (expense) income	(	618)		607	(	11)
	(	59,641)		57,360	(	2,281)
Remeasurements:
Change in demographic assumptions		238		-		238
Change in financial assumptions	(	2,171)		-	(	2,171)
Experience adjustments		636		1,605		2,241
	(	1,297)		1,605		308
Pension fund contribution		-		4,012		4,012
Paid pension		14,629	(	14,629)		-
Balance at December 31	(\$	46,309)	\$	48,348	\$	2,039
	Present value of defined benefit obligations			Fair value of plan assets		Net defined benefit asset (liability)
Year ended December 31, 2017
Balance at January 1	(\$	55,257)	\$	52,115	(\$	3,142)
Current service cost	(	2,495)		-	(	2,495)
Interest (expense) income	(	663)		625	(	38)
	(	58,415)		52,740	(	5,675)
Remeasurements:

Change in demographic assumptions		15		-		15
Change in financial assumptions	(	502)		-	(	502)
Experience adjustments		1,134	(	99)		1,035
		647	(	99)		548
Pension fund contribution		-		4,112		4,112
Paid pension	(\$	- 57,768)	\$	- 56,753	(\$	- 1,015)

(c)Movements in net defined benefit assets (liabilities) are as follows:

(d)The Bank of Taiwan was commissioned to manage the Fund of the Company's and domestic subsidiaries' defined benefit pension plan in accordance with the Fund's annual investment and utilization plan and the "Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund" (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company and domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and domestic subsidiaries are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2018 and 2017 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

(e)The principal actuarial assumptions used are as follows:

	Year ended	Year ended
	December 31, 2018 December 31, 2017
Discount rate	0.84%	1.07%
Salary increment	2.37%	2.00%

Assumptions regarding the mortality and the disability rates are set based on Taiwan Standard Ordinary Experience Mortality Table.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis is as follows:

	Year ended	Year ended December 31, 2017
	December 31, 2018
Discount rate increase 0.5%	(\$	1,807)	(\$	1,677)
Discount rate decrease 0.5%		1,958		2,034
Salary increment increase 0.5%		1,917		2,004
Salary increment decrease 0.5%	(	1,789)	(	1,672)

The sensitivity analysis above is based on the condition that only one assumption is changed while all other assumptions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

The method and assumption used in preparing the current year sensitivity analysis are identical with those of the prior year.

(f)Expected contributions to the defined benefit pension plans of the Company for the year ended December 31, 2019 amounts to \$4,011.
B. Defined contribution plan
(a)Effective July 1, 2005, the Company has established a defined contribution pension plan (the "New Plan") under the Labor Pension Act (the "Act"). Under the New Plan, the Company contributes monthly an amount based on 6% of the employees' monthly salaries and wages to the employees' individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
(b)The pension costs under the above-mentioned pension plan of the Company for the years ended December 31, 2018 and 2017 were \$6,697 and \$6,506, respectively.

(14) Common stock

As of December 31, 2018 and 2017, the Company's authorized capital was \$6,000,000, and the paid-in capital was \$5,903,888 and \$5,622,750 respectively, with a par value of \$10 (in dollars) per share.

(15) Capital reserve

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paidin capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient. However, according to Jin-Kuan-Bao-Tsai Letter No. 10202501991, for the purpose of strengthening the solvency and operation, insurance companies having no deficit should submit relevant documents demonstrating the financial soundness and steady operation of their companies to FSC for approval before the stockholders' meeting if they propose to use legal reserve provided under Article 145-1 of Insurance Act and capital surplus to issue cash to shareholders in proportion to their share ownership in accordance with Article 241 of the R.O.C. Company Act.

(16) Retained earnings

A. Limitation on distribution of retained earnings and 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.

Pursuant to the R.O.C. Insurance Act, legal reserve shall be set aside until the total amount reaches the total capital. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company's paid-in capital. In addition, procedures for those requiring approval from competent authorities to use legal reserve for issuance of cash in accordance with Jin-Kuan-Bao-Tsai Letter No. 10202501991 are set out in Note 6 (15).

Under the Integrated Income Tax System, ROC, tax credits allocated to stockholders are based on the balance of Imputation Credit Account on the dividend distribution date.

B. Special reserve

	December 31, 2018	December 31, 2017
Equalization reserve	\$ 1,865,006	\$	1,565,887
Unrealized revaluation increment	126,557		126,557
Deduction of other equity	-		131,439
Employees' education and training	10,777		3,829
	\$ 2,002,340	\$	1,827,712

(a) According to regulations, the Company should set aside special reserve equal to the deducted amount of the equity from earnings after tax of the current year and the unappropriated earnings of the prior period. For the deducted amount from the equity accumulated from prior periods, an equal amount of special reserve should be set aside from unappropriated earnings of the prior period and is not to be distributed. If there is a reversal of deducted amount of equity, earnings may be distributed based on the reversal. The Company reversed special reserve under equity of \$131,439 for the year 2017 and approved by the stockholders in 2018.

(b) For the years 2018 and 2017, the provision for equalization reserve amounting to \$299,119 and \$258,283, respectively, had been recognized as special reserve under equity upon annual resolution and is not available for distribution.
(c) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Kuan-Zheng-Fa Order No. 1010012865, dated April 6, 2012 and Jin-Kuan-Bao-Tsai Order No. 10102508861, dated June 5, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. The Company had transferred the amount of \$126,557 of unrealized gain from real estate value-added to special reserve under equity.
(d)In accordance with the regulations of Jin-Kuan-Bao-Tsai Order No. 10502066461 promulgated on July 13, 2016, upon appropriating the earnings of 2016 through 2018, the Company shall provision 0.5% of income after tax as special reserve. And starting from the subsequent year of the provision of such special reserve, special reserve as mentioned above may be reversed in an amount equal to expenditures that were for employees' education and training and for the protection of employees' interest. The Company had transferred the amounts of \$6,948 and \$3,829 for expenditures that were for employees' education and training and for the protection of employees' interest to special reserve under equity for the years 2017 and 2016, and approved by the stockholders in 2018.
C. On May 30, 2018, the distribution of earnings for 2017 as resolved by the stockholders were \$281,138 (stock dividend of \$0.5 (in dollars) per share) and cash dividends of \$562,275 (cash dividend of \$1 (in dollars) per share). On March 20, 2019, the distribution of earnings for 2018 as proposed by the Board of Directors were \$531,350 (cash dividend of \$0.9 (in dollars) per share.

The Company reported the proposal of capital increase through earnings capitalization with the Securities and Futures Bureau of the Financial Supervisory Commission, and the proposal became effective on June 27, 2018. The ex-rights date of the issuance of new shares was set at July 31, 2018. When calculating earnings per share, the number of outstanding shares was retrospectively adjusted according to the percentage of 2017 earnings that was capitalized.

Detailed information on earnings appropriation resolved by the Board of Directors and ratified at the stockholders' meeting is posted in the "Market Observation Post System" at the website of the Taiwan Stock Exchange.

D. For information relating to employees' compensation and directors' remuneration, please see Note 6 (18).

(17) Income tax

A. Components of income tax expense:

			Year ended		Year ended
			December 31, 2018		December 31, 2017
	Current income tax:
	Current income tax on profits for the period	\$	270,080	\$	327,605
	Income tax on undistributed earnings		13,482		-
	Adjustments in respect of prior years		1,351		3,826
	Deferred income tax:
	Origination and reversal of temporary difference		50,545	(	26,733)
	Impact of change in tax rate	(	8,432)		-
	Income tax expense	\$	327,026	\$	304,698
B.	The income tax relating to components of other comprehensive income are as follows:
			Year ended		Year ended
			December 31, 2018		December 31, 2017
	Exchange differences on translation of foreign
	financial statements	\$	11,549	(\$	15,326)
	Other comprehensive income upon reclassification
	of applying overlay approach	(	112,556)		-
	Changes in fair value of available-for-sale
	financial assets		-		121,097
	Remeasurement of defined benefit obligations		62		93
	Impact of change in tax rate		12,267		-
		(\$	88,678)	\$	105,864
C.	Reconciliation between income tax expense and accounting profit:
			Year ended		Year ended
			December 31, 2018		December 31, 2017

	Tax calculated based on profit
	before tax and statutory tax rate	\$	275,419	\$	288,007
	Impact of tax adjustments by tax regulations		36,774		12,865
	Tax on undistributed earnings		13,482		-
	Prior year income tax underestimation		1,351		3,826
	Income tax expense	\$	327,026	\$	304,698

	2018
		January 1		Recognized in	Recognized in other
		(Note)		profit or loss	comprehensive income		December 31
Deferred tax assets
Allowance for bad debt
exceeding limit	\$	7,491	(\$	7,491)	\$	-	\$ -
Employee benefits-pension
expense		1,134		4,365	(	62)	5,437
Employee benefits-unused
compensated absences		1,348		231		-	1,579
Expected credit impairment and reversal of profit from
investment		169		229		-	398
Loss allowance of
reinsurance contract assets		-		293		-	293
Unrealized foreign exchange
losses		43,657	(	42,672)		-	985
Loss upon reclassification
of applying overlay
approach		-		-		10,536	10,536
Exchange differences on
translation of foreign		17,202		-	(	8,513)	8,689
financial statements	\$	71,001	(\$	45,045)	\$	1,961	\$ 27,917

Deferred tax liabilities
Gain on revaluation of land	\$	41,555	\$	-	\$	-	\$ 41,555
Gain upon reclassification
of applying overlay		86,717		-	(	86,717)	-
approach Unrealized profit on
valuation of financial
assets		6,016	(	2,932)		-	3,084
		\$ 134,288	(\$	2,932)	(\$	86,717)	\$ 44,639

D. Amounts of deferred tax assets or liabilities as a result of temporary difference are as follows:

Note: Inclusive of the effect of initial application of IFRS 9, please refer to Note 12 (7) B.

	2017
				Recognized in		Recognized in other
		January 1		profit or loss		comprehensive income		December 31
Deferred tax assets
Unrealized loss on valuation
of available-for-sale
financial assets	\$	38,290	\$	-	(\$	38,290)	\$	-
Allowance for bad debt
exceeding limit		7,491		-		-		7,491
Unrealized loss on valuation
of financial assets		3,373	(	3,373)		-		-
Employee benefits-pension
expense		1,227		-	(	93)		1,134
Employee benefits-unused
compensated absences		1,365	(	17)		-		1,348
Unrealized foreign exchange
losses		7,518		36,139		-		43,657
Exchange differences on
translation of foreign
financial statements		1,876		-		15,326		17,202
	\$	61,140	\$	32,749	(\$	23,057)	\$	70,832
Deferred tax liabilities
Gain on revaluation of land	\$	41,555	\$	-	\$	-	\$	41,555
Unrealized loss on valuation
of available-for-sale
financial assets		-		-		82,807		82,807
Unrealized profit on
valuation of financial
assets		-		6,016		-		6,016
	\$	41,555	\$	6,016	\$	82,807	\$	130,378

E.The Company's income tax returns have been assessed and approved by the Tax Authority up to 2016.

F. In accordance with the amendment to Income Tax Act R.O.C. that became effective on February 7, 2018, the corporate tax rate increased from 17% to 20%. The Company has adjusted to this tax rate starting from year 2018.

		Year ended		Year ended
Function		December 31, 2018		December 31, 2017
	Operating	Operating	Operating	Operating
Expense	Costs	Expenses	Costs	Expenses
Employee benefits expense	\$ -	\$ 218,634	\$ -	\$ 251,964
Salaries	-	171,092	-	180,497
Employees' insurance	-	12,206	-	11,464
Pension	-	8,793	-	33,511
Directors' remuneration		17,558		17,781
Other employee benefits
expense (Note 1)	-	8,985	-	8,711
Depreciation (Note 2)	2,470	6,543	2,525	6,518
Amortization	-	1,726	-	1,558

(18) Employee benefits expense, depreciation and amortization

Employee benefits expense, depreciation and amortization by function are as follows:

As of December 31, 2018 and 2017, the Company had 143 and 139 employees, respectively, and the number of directors who were not employed as employees are 9 for both years.

Note 1:Other employee benefits expense include employees' welfare and training expenses.

Note 2:The depreciation, which is classified as operating cost, is accounted for as deduction to gain on investment property.
A. According to the Company's Articles of Incorporation, after covering accumulated deficits with current year earnings, the remainder, if any, shall provision employees' compensation of no less than 0.5% and directors' remunerations of no more than 1%.
B. The Company's estimated employees' compensation of \$10,436 and \$14,034 for the years ended December 31, 2018 and 2017, respectively, were determined from earnings and the distribution in the past on a pro-rata basis, which fell within the scope of the Company's Articles of Incorporation's requirements. The Company's estimated directors' remuneration for the years ended December 31, 2018 and 2017 were both \$3,900. The estimates, which fell within the scope of the Company's Articles of Incorporation's requirements, were determined from earnings and the past distribution experiences during the tenure of directors. The aforementioned amounts were recognized in directors' remuneration.

The 2017 employees' compensation of \$14,304 and directors' remuneration of \$3,900 as approved by the Board of Directors of the Company were in agreement with the amounts recognized in the 2017 financial statements, and employees' compensation and directors' remuneration are distributed in the form of cash.

Information about the appropriation of employees' compensation and directors' remuneration by the Company as resolved by the Board of Directors will be posted in the "Market Observation Post System" at the website of the Taiwan Stock Exchange.

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and their relationship with the Company

Names of related parties	Relationship with the Company
Evergreen International Corporation	Parent company
Evergreen Insurance Company Limited	Other related parties
Directors, general managers, vice general	Key management of the Company
managers, etc.

(2) Significant related party transactions and balances

A. Due from reinsurers and ceding companies (shown under reinsurance contract assets)

	December 31, 2018	December 31, 2017
Other related parties	\$ 320	\$ 309
B. Other payables (shown under accounts payable)
	December 31, 2018	December 31, 2017
Parent	\$ 1,234	\$ 1,219
C. Operating revenues and operating costs

		Year ended	Year ended December 31, 2017
		December 31, 2018
Other related parties
Gross premiums written	\$	20,776	\$	14,135
Reinsurance premiums ceded		212		909
Reinsurance commission expenses		5,771		4,852
Reinsurance commission revenue	(	46)	(	51)
Reinsurance claims paid		3,915		11,392
Reinsurance claims recovery		521		192

The differences of prices and conditions between related parties and non-related parties were not significant.

D. Operating expenses

	Year ended		Year ended
	December 31, 2018		December 31, 2017
Parent
System service charge, fees paid to stock transfer agent and printing expenses, etc. (3) Key management compensation	\$	15,246	\$ 14,053
	Year ended		Year ended
	December 31, 2018		December 31, 2017
Salaries and other short-term employee benefits	\$	29,881	\$ 37,279
Post-employment benefits		1,294	25,126
	\$	31,175	\$ 62,405

8. PLEDGED ASSETS

Please see Note 6 (4).

9. COMMITMENTS

None.

SIGNIFICANT ACCIDENTAL LOSS

None.

1. SIGNIFICANT SUBSEQUENT EVENTS None.
1. OTHERS
(1) Fair value information
- A. The fair value of the Company's financial instruments not measured at fair value is provided in Note 12 (1) K. The fair value of the Company's investment property measured at cost model is provided in Note 6 (7).
- B. The different levels that the inputs to valuation techniques are used to measure fair value of financial instruments have been defined as follows:
- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability takes place with sufficient frequency and volume to provide pricing information on an on-going basis. The fair value of the Company's investment in listed and over-the-counter stocks, beneficiary certificates and convertible corporate bonds is included in Level 1.
- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company's investment in off-the-run government bonds, corporate bonds, financial bonds and derivative instruments is included in Level 2.
- Level 3:Unobservable inputs for the asset or liability. The fair value of the Company's investment in part of investments in debt instrument, mandatory convertible corporate bonds without active market and investment property is included in Level 3.
- C. The related information of financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2018 and 2017 is as follows:

December 31, 2018	Level 1	Level 2	Level 3	Total
Non-derivative financial instruments
Assets
Recurring fair value measurements
Financial assets at fair value through
profit or loss
Financial assets mandatorily measured
at fair value through profit or loss
Listed and over-the-counter
common stocks	\$ 942,472	\$ -	\$ -	\$ 942,472
Listed and over-the-counter preferred
stocks	-	23,870	-	23,870
Securitized real estate products	241,544	-	-	241,544
Mandatory convertible corporate
bonds	-	-	237,082	237,082
Index funds	17,895	-	-	17,895
Open-end funds	220,206	-	-	220,206
Derivative financial instruments
Assets
Recurring fair value measurements Financial assets at fair value through
profit or loss
FX swap contracts	\$ -	\$ 23,584	\$ -	\$ 23,584
Forward foreign exchange contracts	-	1,530	-	1,530
Liabilities
Recurring fair value measurements
Financial liabilities at fair value
through profit or loss
FX swap contracts	-	295	-	295
Forward foreign exchange contracts	-	3,360	-	3,360

December 31, 2017	Level 1	Level 2	Level 3	Total
Non-derivative financial instruments
Assets
Recurring fair value measurements
Financial assets at fair value through
profit or loss
Financial assets held for trading
Listed and over-the-counter
common stocks	\$ 503,195	\$ -	\$ -	\$ 503,195
Financial assets designated as at fair
value through profit or loss on initial
recognition
Mandatory convertible corporate
bonds	-	-	327,786	327,786
Available-for-sale financial assets
Securitized real estate products	524,734	-	-	524,734
Index funds	245,574	-	-	245,574
Government bonds	-	783,984	-	783,984
Listed and over-the-counter
common stocks	3,917,715	-	-	3,917,715
Listed and over-the-counter preferred	-	23,348	-	23,348
stocks Open-end funds	256,027	-	-	256,027
Corporate bonds	-	145,757	-	145,757
Derivative financial instruments
Assets
Recurring fair value measurements
Financial assets at fair value through
profit or loss
FX swap contracts	\$ -	\$ 29,528	\$ -	\$ 29,528
Forward foreign exchange contracts	-	11,502	-	11,502
Liabilities
Recurring fair value measurements
Financial liabilities at fair value
through profit or loss
FX swap contracts	-	1,282	-	1,282
Forward foreign exchange contracts	-	12,008	-	12,008

D. The methods and assumptions the Company used to measure fair value are as follows:
(a) The instruments the Company used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

		Real estate
Listed shares	Index funds	securitization products	Open-end funds
Closing price	Closing price	Closing price	Net asset value

(b) Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques method can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the balance sheet date (i.e. yield curves on the Taipei Exchange, average commercial paper interest rates quoted from Reuters).
(c) When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market and swap contracts, the Company adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.
(d) The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques. Forward exchange contracts are usually valued based on the current forward exchange rate.
(e) For high-complexity financial instruments, the fair value is measured by using self-developed valuation model based on the valuation method and technique widely used within the same industry. The valuation model is normally applied to debt instruments with embedded derivatives. Certain inputs used in the valuation model are not observable at market, and the Company must make reasonable estimates based on its assumptions. The effect of unobservable inputs to the valuation of financial instruments is provided in Note 12 (1) I.
(f) The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Company's financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Company's management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial instruments at the balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.
(g) The Company takes into account adjustments for credit risks to measure the fair value of financial instruments to reflect credit risk of the counterparty and the Company's credit quality.
E. For the years ended December 31, 2018 and 2017, there were no transfer between Level 1 and Level 2.

					Year ended December 31, 2018
			Gain or loss on valuation		Acquired in the period		Disposed of in the period
			Recognized in			Sell,	Transfers
		Recognized	other		Transfers	disposal	out
	Opening balance	in profit or loss	comprehensive income	Buy or issuance	into level 3	or settle	from level 3	Ending balance
Non-Derivative financial instruments Financial assets at fair value through profit or loss
Financial assets mandatorily measured at fair value through profit or loss	\$ 327,786	(\$ 90,704)	\$ -	\$ -	\$ -	\$ -	\$ -	\$ 237,082
					Year ended December 31, 2017
			Gain or loss on valuation		Acquired in the period		Disposed of in the period
			Recognized in			Sell,	Transfers
		Recognized	other		Transfers	disposal	out
	Opening balance	in profit or loss	comprehensive income	Buy or issuance	into level 3	or settle	from level 3	Ending balance
Non-Derivative financial instruments
Financial assets at fair value through profit or loss
Financial assets designated as
at fair value through profit or loss on initial recognition	\$ 431,568	(\$ 103,782)	\$ -	\$ -	\$ -	\$ -	\$ -	\$ 327,786
Gain or loss on valuation recognized in profit or loss arising from the assets held for the years ended December 31, 2018 and 2017 was (\$90,704)

F. The following table presents the changes in level 3 instruments for the years ended December 31, 2018 and 2017:

~57~

and (\$103,782), respectively.

G. For the years ended December 31, 2018 and 2017, there were no transfer into or out from Level 3.

H. Financial segment is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently updating inputs used to the valuation model and making any other necessary adjustments to the fair value. Financial segment set up valuation policies, valuation processes and rules for measuring fair value of financial instruments and ensure compliance with the related requirements in IFRS.
I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

	Fair value at	Valuation	Significant	Range	Relationship of
	December 31, 2018	technique	unobservable input	(weighted average)	inputs to fair value
Financial assets at fair value
through profit or loss
Financial assets mandatorily
measured at fair value through
profit or loss
Domestic mandatory		The binary tree stock			The lower the liquidity
convertible corporate bonds (Note)	\$ 237,082	discount model of convertible bonds	Liquidity premium	1.04%	premium, the higher the fair value

	Fair value at	Valuation	Significant	Range	Relationship of
	December 31, 2017	technique	unobservable input	(weighted average)	inputs to fair value
Financial assets at fair value
through profit or loss
Financial assets designated as at
fair value through profit or loss
on initial recognition
Domestic mandatory		The binary tree stock			The lower the liquidity
convertible corporate bonds	\$ 327,786	discount model of	Liquidity premium	3.19%	premium, the higher the
(Note)		convertible bonds			fair value

Note: Items that affect the fair value measurement of mandatory convertible corporate bonds include observable stock prices.

J. The Company has carefully assessed the valuation models and assumptions used to measure fair value; however, different valuation model or input could result in different valuation result. Specifically, if the valuation input of financial instrument classified in Level 3 such as market interest rates increase or decrease by 50 basis points, the effects on profit and loss in the period are as follows:

	December 31, 2018			December 31, 2017
	Change in fair value recognized in profit and loss		Change in fair value recognized in profit and loss
	Favorable	Unfavorable	Favorable			Unfavorable
Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss	\$ 342 (\$	340)	\$	-	\$	-
Financial assets designated as at fair value through profit or loss on initial recognition	-	-		1,734	(	1,709)

K. Fair value of the financial instruments not measured at fair value

Except for the financial instruments below and investment property, the carrying amounts of the Company's financial instruments not measured at fair value (including cash and cash equivalents, accounts receivable, other financial assets and accounts payable) are approximate to their fair values.

			December 31, 2018		December 31, 2017
			Fair value			Fair value
	Book value	Level 1	Level 2	Level 3	Book value	Level 1	Level 2	Level 3
Financial assets
Financial assets at amortized cost	\$ 11,950,545	\$ -	\$ 11,087,369	\$ 766,722	\$ -	\$ -	\$ -	\$ -
Investments in debt instruments
without active market	-	-	-	-	4,532,786	-	3,325,652	1,181,373
Held-to-maturity financial assets	-	-	-	-	2,885,915	-	2,873,146	-

The different levels that the inputs to valuation techniques are used to measure fair value of financial instruments have been defined in Note 12 (1) B, and the methods and assumptions are as follows:

If recent transaction prices or market maker quotes are available, the fair value is based on such information. If there is no quoted market price available, the fair value is determined by using valuation techniques and calculated as the present value of the estimated cash flows.

		(2) Assets and liabilities recoverable or payable within or over 12 months from the reporting date					are as follows:
--	--	----------------------------------------------------------------------------------------------------	--	--	--	--	-----------------

		December 31, 2018		December 31, 2017
Assets	Book value	Within 12 months	Over 12 months	Book value	Within 12 months	Over 12 months
Cash and cash equivalents	\$ 17,745,305	\$ 17,745,305	\$ -	\$ 16,772,180	\$ 16,772,180	\$ -
Accounts receivable	280,768	280,768	-	281,681	281,681	-
Financial assets at fair value through
profit or loss	1,708,183	1,708,183	-	872,011	544,225	327,786
Available-for-sale financial assets	-	-	-	5,419,337	4,967,398	451,939
Financial assets at amortized cost	11,012,551	771,983	10,240,568	-	-	-
Investments in debt instruments
without active market	-	-	-	4,532,786	897,202	3,635,584
Held-to-maturity financial assets	-	-	-	2,456,248	501,838	1,954,410
Other financial assets	237,199	237,199	-	684,362	639,362	45,000
Investment property	450,678	-	450,678	452,411	-	452,411
Reinsurance contract assets	4,216,071	3,416,258	799,813	3,726,066	3,008,098	717,968
Property and equipment	204,778	-	204,778	206,745	-	206,745
Intangible assets	5,186	-	5,186	922	-	922
Other assets	1,401,514	328,402	1,073,112	1,034,840	8,524	1,026,316
Liabilities
Accounts payable	\$ 309,813	\$ 308,219	\$ 1,594	\$ 409,870	\$ 409,869	\$ 1
Current income tax liabilities	102,276	102,276	-	217,574	217,574	-
Financial liabilities at fair value through
profit or loss	3,655	3,655	-	13,290	13,290	-
Insurance liabilities	25,565,926	14,029,776	11,536,150	24,430,514	13,389,118	11,041,396
Provisions	18,789	-	18,789	21,013	-	21,013
Other liabilities	46,816	42,856	3,960	36,310	34,044	2,266

(3) Calculation of retention earned premiums are shown below:

			Year ended December 31, 2018
	Gross	Reinsurance		Net change in	Retention earned
	premiums written	premiums ceded	Retention premiums	unearned premium reserve	premiums
Category of insurance	(1)	(2)	(3)=(1)-(2)	(4)	(5)=(3)-(4)
Non-Compulsory insurance	\$ 12,870,380	\$ 1,053,030	\$ 11,817,350	\$ 351,250	\$ 11,466,100
Compulsory insurance	2,521,082	-	2,521,082	12,072	2,509,010
	\$ 15,391,462	\$ 1,053,030	\$ 14,338,432	\$ 363,322	\$ 13,975,110
			Year ended December 31, 2017
	Gross	Reinsurance		Net change in	Retention earned
	premiums written	premiums ceded	Retention premiums	unearned premium reserve	premiums
Category of insurance	(1)	(2)	(3)=(1)-(2)	(4)	(5)=(3)-(4)
Non-Compulsory insurance	\$ 12,068,113	\$ 907,604	\$ 11,160,509	\$ 138,719	\$ 11,021,790
Compulsory insurance	2,495,933	-	2,495,933	41,450	2,454,483
	\$ 14,564,046	\$ 907,604	\$ 13,656,442	\$ 180,169	\$ 13,476,273

		Year ended December 31, 2018
	Reinsurance	Reinsurance	Retention reinsurance
	claims paid	claims recovery	claims paid
Category of insurance	(1)	(2)	(3)=(1)-(2)
Non-Compulsory insurance	\$ 5,777,506	\$ 493,982	\$ 5,283,524
Compulsory insurance	2,728,430	-	2,728,430
	\$ 8,505,936	\$ 493,982	\$ 8,011,954
		Year ended December 31, 2017
	Reinsurance claims paid	Reinsurance claims recovery	Retention reinsurance claims paid
Category of insurance	(1)	(2)	(3)=(1)-(2)
Non-Compulsory insurance	\$ 5,983,716	\$ 541,161	\$ 5,442,555
Compulsory insurance	2,126,252	-	2,126,252
	\$ 8,109,968	\$ 541,161	\$ 7,568,807
(5) Balance sheets for compulsory automobile		liability insurance are as follows:
		December 31, 2018	December 31, 2017
Assets
Cash and cash equivalents		\$ 4,381,809	\$ 4,580,461
Due from reinsurers and ceding companies		419,251	413,678
		\$ 4,801,060	\$ 4,994,139
Liabilities
Unearned premium reserve		\$ 1,496,635	\$ 1,484,563
Claims reserve		2,119,169	2,130,957
Equalization reserve		1,185,256	1,378,619
		\$ 4,801,060	\$ 4,994,139

(4) Calculation of retention reinsurance claims paid are shown below:

Note: As of December 31, 2018 and 2017, certain time deposits, which amounted to \$145,000 and \$662,200, included above as cash and cash equivalents of compulsory automobile liability insurance did not meet the definition of cash equivalents, consequently they are presented under other financial assets.

		Year ended		Year ended
		December 31, 2018		December 31, 2017
Operating revenues
Reinsurance premiums	\$	2,521,082	\$	2,495,933
Net change in unearned premium reserve	(	12,072)	(	41,450)
Retention earned premiums		2,509,010		2,454,483
Interest income		14,269		11,215
	\$	2,523,279	\$	2,465,698
Operating costs
Reinsurance claims paid	\$	2,728,430	\$	2,126,252
Net change in claims reserve	(	11,788)		44,386
Net change in equalization reserve	(	193,363)		295,060
	\$	2,523,279	\$	2,465,698

(6) Details of revenues and costs for compulsory automobile liability insurance are as follows:

(7) Effects on initial application of IFRS 9 and Details of significant accounts of 2017 under IAS39

A. Summaries of adopting significant accounting policies in the year of 2017:

(a) Financial assets at fair value through profit or loss
i. Financial assets at fair value through profit or loss are financial assets held for trading or financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition: (i) Hybrid (combined) contracts; or
(ii)They eliminate or significantly reduce a measurement or recognition inconsistency; or
(iii)They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.
ii.On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
iii.Financial assets at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in profit or loss.
iv.Gain or loss on valuation of financial assets or financial liabilities at fair value through profit or loss recognized in the statement of comprehensive income includes gain or loss arising from transactions, dividend and bonus, interest income, and evaluation at fair value on balance sheet date.
(b) Available-for-sale financial assets
i. Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.
ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognized

and derecognized using trade date accounting.

iii. Available-for-sale financial assets are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income. The cumulative gain or loss should be reclassified from equity to profit or loss when financial assets are derecognized.
iv. The realized gain or loss on available-for-sale financial assets recognized in the statement of comprehensive income includes gain or loss arising from transactions as well as dividend and bonus except interest income.
(c) Investments in debt instruments without active market
i. Investments in debt instruments without active market are loans and receivables not originated by the entity. They are bond investments with fixed or determinable payments that are not quoted in an active market, and also meet all of the following conditions:
- (i) Not designated on initial recognition as at fair value through profit or loss;
- (ii) Not designated on initial recognition as available-for-sale;
(iii) Not for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration.
ii.On a regular way purchase or sale basis, investments in debt instruments without active market are recognized and derecognized using trade date accounting.
iii.Investments in debt instruments without active market are initially recognized at fair value on the trade date plus transaction costs and subsequently measured at amortized cost using the effective interest method, less provision for impairment. Amortization of a premium or a discount on such assets is recognized in profit or loss.
iv.The realized gain or loss on investments in debt instruments without active market recognized in the statement of comprehensive income includes gain or loss arising from transactions except interest income.
(d) Held-to-maturity financial assets
i. Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturity date that the Company has the positive intention and ability to hold to maturity other than those that meet the definition of loans and receivables and those that are designated as at fair value through profit or loss or as available-for-sale on initial recognition.
ii.On a regular way purchase or sale basis, held-to-maturity financial assets are recognized and derecognized using trade date accounting.
iii.Held-to-maturity financial assets are initially recognized at fair value on the trade date plus transaction costs and subsequently measured at amortized cost using the effective interest method, less provision for impairment. Amortization of a premium or a discount on such assets is recognized in profit or loss.
iv.The realized gain or loss on held-to-maturity financial assets recognized in the statement of comprehensive income includes gain or loss arising from transactions except interest income.

(e) Derivative financial instruments

A derivative financial instrument is initially recognized and subsequently measured at fair value. Any changes in the fair value are recognized in profit or loss. The gain or loss relating to derivative financial instrument is recognized in the statement of comprehensive income within "gain or loss on valuation of financial assets or financial liabilities at fair value through profit or loss".

(f) Impairment of financial assets
i. The Company assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a "loss event") and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
ii.The criteria that the Company uses to determine whether there is objective evidence of an impairment loss are as follows:
- (i) Significant financial difficulty of the issuer or debtor;
- (ii) A breach of contract, such as a default or delinquency in interest or principal payments;
- (iii)The Company, for economic or legal reasons relating to the borrower's financial difficulty, granted the borrower a concession that a lender would not otherwise consider;
- (iv)It becomes probable that the borrower will enter bankruptcy or other financial reorganization;
- (v)The disappearance of an active market for that financial asset because of financial difficulties;
- (vi)Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;
(vii)Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered; or
(viii)A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
iii.When the Company assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:
- (i) Financial assets measured at amortized cost
- The amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate, and is recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can

be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(ii) Available-for-sale financial assets

The amount of the impairment loss is measured as the difference between the asset's acquisition cost (less any principal repayment and amortization) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss, and is reclassified from "other comprehensive income" to "profit or loss". If, in a subsequent period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognized, then such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(g) Allowance for doubtful accounts

Accounts receivable, due from reinsurers and ceding companies under reinsurance contract assets, refundable deposits and funds held by other insurance companies under other assets, and other rights may be transferred to overdue accounts booked in accordance with IAS 39, "Financial Instruments: Recognition and Measurement", IFRS 4, "Insurance Contracts" and the "Guidelines for Handling Assessment of Assets, Loans Overdue, Delinquent Accounts Receivable on Demand by Insurance Enterprises", and the Company shall also recognize appropriate allowance for doubtful accounts with consideration of impairment losses and unrecoverable amounts.

B. The reconciliations of carrying amount of financial assets transferred from December 31, 2017, IAS 39, to January 1, 2018, IFRS 9, were as follows:

									Debt instrument
							Held-to		without active
							maturity		market						Effects
											Deferred
			Measured at fair								income tax
		Accounts	value through		Available		Measured at		Measured at		assets			Retained	Other
		receivable	profit or loss		for-sale		amortized cost		amortized cost		(liabilities)	Total		earnings	equity
At December 31, 2017 (IAS 39) (Note 1)		\$ 281,681	\$ 872,011		\$5,897,139	\$	2,885,915	\$	4,532,786	\$	-	\$14,469,532	\$	-	\$	-
Transferred into measured at
fair value through profit or loss		-	4,967,398		( 4,967,398)		-		-		-	-		-		-
Transferred into measured
at amortized cost		-	-	(	929,741)		5,462,527	(	4,532,786)		-	-		-		-
Fair value adjustment		-	-		-		12,931		-	(	3,910)	9,021	(	66,332)	75,353
Impairment loss adjustment		-	-		-	(	2,783)		-		169	( 2,614)	(	2,614)		-
Others (Note 2)	(	62)	-		-		-		-		-	( 62)		-		-
At January 1, 2018 (IFRS 9) (Note 1)		\$ 281,619	\$ 5,839,409	\$	-	\$	8,358,590	\$	-	(\$	3,741)	\$14,475,877		(\$ 68,946)	\$ 75,353

Note 1: The amounts include statutory deposits.

Note 2: The loss allowance for bond interest receivable was reclassified from reinsurance contract assets to accounts receivable.

(a) Under IAS 39, because the cash flows of debt instruments, which were classified as: available-for-sale financial assets, held-to-maturity financial assets and debt instruments without active market, amounting to \$929,741(including loss on valuation \$12,931), \$2,885,915 and \$4,532,786, respectively, met the condition that it is intended to settle the principal and interest on the outstanding principal balance, they were reclassified as "financial assets at amortized cost" amounting to \$8,361,373, decreased deferred income tax assets and increased other equity interest in the amounts of \$3,910 and \$9,021 on initial application of IFRS 9.
(b) Under IAS 39, the equity instruments, which were classified as: available-for-sale financial assets, amounting to \$4,967,398, were reclassified as "financial assets at fair value through profit or loss (equity instruments)" amounting to \$4,967,398 under IFRS 9. In addition, other equity interest was increased by \$66,332 and retained earnings was decreased by \$66,332 for the equity instruments that did not apply overlay approach.
(c) A part of the financial assets at fair value through profit or loss amounting to \$872,011 are investments in mandatory convertible bond amounting to \$327,786 and was classified as financial assets at fair value through profit or loss under IAS 39. Because the objective of the Company's business model is achieved by selling the bond investments, they were reclassified as "financial assets mandatorily measured at fair value through profit or loss" under IFRS 9.
C. The reconciliation of loss allowance from December 31, 2017 , as these are impaired under IAS 39, to January 1, 2018, as these are expected to be impaired under IFRS 9, are as follows:

				Debt instrument without
			Held-to-maturity	active markets
	Accounts receivable	Available-for	Measured at	Measured at
	(bond interest receivable)	sale	amortized cost	amortized cost	Total
At December 31, 2017 (IAS 39)	\$ -	\$ -	\$ -	\$ -	\$ -
Loss allowance adjustments	-	-	1,100	1,683	2,783
Others (Note)	62	-	-	-	62
At January 1, 2018 (IFRS 9)	\$ 62	\$ -	\$ 1,100	\$ 1,683	\$ 2,845

Note: The loss allowance for bond interest receivable was reclassified from reinsurance contract assets to accounts receivable.

D. The fair value of financial assets at amortized cost reclassified under IFRS 9 and were previously classified as available-for-sale financial assets under IAS 39 was \$922,413 on December 31, 2018. If these assets were not reclassified as "financial assets at amortized cost", the Company will recognize the loss on changes in fair value on other comprehensive income of (\$7,328) for the year ended December 31, 2018.
E. Details of important accounts as of December 31, 2017, are as follows: (a) Financial assets and financial liabilities at fair value through profit or loss

		December 31, 2017
Financial assets held for trading
Domestic listed and over-the-counter stocks	\$	292,038
Foreign listed and over-the-counter stocks		195,066
Derivatives		41,030
		528,134
Valuation adjustment of financial assets held
for trading		16,091
		544,225
Financial assets designated as at fair value
through profit or loss on initial recognition
Domestic mandatory convertible
corporate bonds		500,000
Valuation adjustment of financial assets
designated as at fair value through profit	(	172,214)
or loss on initial recognition		327,786

	\$	872,011
		December 31, 2017
Financial liabilities held for trading
Derivatives	\$	13,290
i. The Company's gain or loss on financial asset or financial liability at fair value through profit or loss are as follows:
		2017
Financial instruments held for trading	\$	694,494
Financial instruments designated as at fair
value through profit or loss on initial
recognition	(	88,203)
	\$	606,291

ii. The credit rating levels of the counterparties of the Company's debt instrument investments are provided in Note 12 (7) F.

iii.The non-hedging derivative instruments transaction and contract information are as follows:

	December 31, 2017
		Contract amount
		(Notional	Contract
Derivative instruments		principal)	period
FX swap contracts	\$	6,329,315	2017.04.25~2018.07.05
Forward foreign exchange contracts		2,889,910	2017.09.28~2018.02.27

Note: Contract amount is translated into thousands of New Taiwan dollars using the exchange rates prevailing at the end of the period.

(i) FX swap contracts

(ii)Forward foreign exchange contracts

(iii)Futures

The Company holds Taiwan stock index futures. As of December 31, 2017, all futures contracts were settled, and the related margins were \$49,320.

iv. The Company has no financial assets at fair value through profit or loss pledged to others.

(b) Available-for-sale financial assets

	December 31, 2017
Domestic items:
Listed and over-the-counter common stocks	\$ 1,449,361
Listed and over-the-counter preferred stocks	14,232
Securitized real estate products	408,084
Government bonds	523,916
Open-end funds	75,000
Foreign items:
Listed and over-the-counter common stocks	2,040,766
Open-end funds	181,064
Government bonds	265,184
Corporate bonds	153,572
Index funds	233,678
	5,344,857
Valuation adjustment of available-for-sale
financial assets	552,282
Less: Statutory deposits	( 477,802)
	\$ 5,419,337

i. The credit rating levels of the counterparties of the Company's debt instrument investments are provided in Note 12 (7) F.

ii.Under the Insurance Act, the Company is required to deposit an amount equal to 15% of its paid-in capital. As of December 31, 2017, the Company provided government bonds with a par value of \$850,000 as statutory deposit, which have been respectively listed under available-for-sale financial assets and held-to-maturity financial assets.

iii.Changes in unrealized gain or loss on available-for-sale financial assets under other comprehensive income are as follows:

		2017
At January 1	(\$	248,838)
Recognized directly in other comprehensive income		958,070
Reclassified to profit or loss	(	118,660)
Effect of deferred income tax	(	121,097)
At December 31	\$	469,475

	December 31, 2017
Domestic items:
Securitized financial asset products	\$ 300,000
Corporate bonds	603,427
Foreign items:
Securitized financial asset products	743,642
Corporate bonds	809,789
Financial bonds	2,075,928
	\$ 4,532,786

i. The Company recognized interest income of \$135,206 from amortization costs through profit or loss for the year ended December 31, 2017.

ii.The credit rating levels of the counterparties of the Company's debt instrument investments are provided in Note 12 (7) F.

iii.No investments in debt instruments without active market held by the Company were pledged to others.

(d) Held-to-maturity financial assets

		December 31, 2017
Domestic items:
Corporate bonds	\$	750,376
Financial bonds		201,462
Government bonds		429,667
Foreign items:
Corporate bonds		811,641
Financial bonds		604,859
Government bonds		87,910
		2,885,915
Less: Statutory deposits	(	429,667)
	\$	2,456,248

i. The Company recognized interest income of \$26,887 from amortization costs through profit or loss for the year ended December 31, 2017.

ii.The credit rating levels of the counterparties of the Company's debt instrument investments are provided in Note 12 (7) F.

iii.Held-to-maturity financial assets held by the Company were pledged to others in Note 12 (7) E.

				Assets are neither past due nor impaired
			Credit rating
	S&P AAA or equivalents	Over S&P AA- or equivalents	Over S&P A- or equivalents	Over S&P BBB- or equivalents	Over S&P BB- or equivalents	Without credit rating etc.	Impaired assets	Impairment reserve	Total
December 31, 2017
Financial assets at fair value through profit or loss	\$ -	\$ -	\$ -	\$ -	\$ 327,786	\$ -	\$	-	\$ -	\$	327,786
Available-for-sale financial assets	395,753	533,988	-	-	-	-		-	-		929,741
Investments in debt instruments without active market	743,642	1,026,781	2,359,131	403,232	-	-		-	-		4,532,786
Held-to-maturity financial assets	231,338	711,846	1,492,731	450,000	-	-		-	-		2,885,915
	\$ 1,370,733	\$ 2,272,615	\$ 3,851,862	\$ 853,232	\$ 327,786	\$ -	\$	-	\$ -	\$	8,676,228

F. As of December 31, 2017, the credit quality information of financial instruments is as follows:

13. RISK MANAGEMENT

The Company has established risk management policy and procedure being the highest directive of promoting enterprise risk management, to efficiently identify, assess, respond and monitor all the risks assumed and to ensure that all risks are within the limitations as planned. Reasonable consideration relationship between risk and reward has been taken into account to maximize the value of equity, maintain the capital adequacy and solvency capability and strengthen the long-term operations of business. The Company has also set up risk management committee which is in charge of executing risk management decisions made by the Board of Directors, as well as independent risk management unit which is responsible for executive affairs in daily monitoring, assessment and evaluation of risks. With regard to the overall risk management of various circumstances, the Company implemented "Risk Managing Mechanism" covering market, credit, liquidity, operation, insurance, asset and liability, emerging market, money laundering, terrorist financing and other risks. In addition, in order to better improve the strategic risk management efficiency, risk quantitative module, finance of risk variance are put to use to analyze various businesses and calculate Value at Risk (VaR) and Risk-adjusted Return of Capital (RAROC). In addition, the Company sets up risk capacity and risk bearing as the basis for risk management, and promoting the computerization of various risk modules to continually strengthen the efficiency of risk management at the same time.

(1) Financial instruments

A. Financial risk management policies

Except for derivatives held by the Company, the Company's financial instruments mainly comprise cash and cash equivalents, and all kinds of investments. The Company utilizes those instruments to achieve adjustments to operating cash flows. The Company holds other financial assets and liabilities as well, such as notes receivable from operating activities, due from (to) reinsurers and ceding companies, reinsurance receivables (payables), other accounts receivable, and other accounts payable.

The Company undertakes derivative financial instruments such as futures, forward foreign exchange contracts and FX swap contracts to hedge fair value risk arising from fluctuations in stock prices and exchange rates.

B. Significant financial risks and degrees of financial risks
(a) Market risk
- i. Foreign exchange risk

To hedge cash flow fair value risk arising from fluctuations in exchange rates, the Company undertakes derivative financial instruments such as FX swap contracts and forward foreign exchange contracts to hedge recognized assets and liabilities denominated in foreign currencies.

The Company estimates that the conditions of the hedge instruments and the hedged items are the same, thus maximizing the hedging effectiveness.

(i)The Company's businesses involve some non-functional currency operations (the Company's functional currency: NTD, the Offshore Insurance Branch's currency: USD ). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

	December 31, 2018
	Foreign currency amount (in thousands)	Exchange rate	Book value
Assets
Monetary items
CAD	3,518	22.585	\$ 79,454
CNY	452,669	4.475	2,025,903
EUR	4,481	35.226	157,856
HKD	50,120	3.924	196,672
JPY	531,616	0.278	148,030
KRW	2,055,537	0.028	56,615
THB	78,889	0.949	74,874
USD	394,698	30.733	12,130,243
Non-monetary items
CNY	77,034	4.475	344,761
HKD	18,487	3.924	72,544
USD	5,279	30.733	162,225
Liabilities
Monetary items
CNY	139,008	4.475	622,127
EUR	1,822	35.226	64,191
INR	300,008	0.439	131,787
JPY	1,482,946	0.278	412,931
KRW	3,763,789	0.028	103,665
USD	83,769	30.733	2,574,464

	December 31, 2017
	Foreign currency amount
	(in thousands)	Exchange rate	Book value
Assets
Monetary items
CAD	3,301	23.798	\$ 78,563
CNY	524,058	4.577	2,398,689
EUR	3,385	35.707	120,858
HKD	279,306	3.819	1,066,732
JPY	719,723	0.265	190,750
USD	197,601	29.848	5,897,997
Non-monetary items
CNY	272,864	4.577	1,248,937
HKD	323,226	3.819	1,234,471
USD	20,879	29.848	623,192
Liabilities
Monetary items
CNY	124,747	4.577	570,983
HKD	22,497	3.819	85,920
INR	345,460	0.467	161,359
JPY	428,049	0.265	113,447
KRW	4,880,140	0.028	136,467
USD	65,940	29.848	1,968,192

(ii) Sensitivity analysis of foreign exchange risk for monetary financial assets and liabilities listed in the table below is performed for reasonably possible changes in foreign exchange rates with other conditions held constant and without considering foreign exchange derivatives for hedge, showing the effect on profit or loss before tax.

	Year ended		Year ended
		December 31, 2018	December 31, 2017
Foreign currencies to NTD
appreciate by 1%	\$	110,230	\$	67,431
Foreign currencies to NTD
depreciate by 1%	(	110,230)	(	67,431)

ii. Price risk

(i) The values of financial instruments may be changed by economic situations, industrial circumstances, market capital flows and government monetary policies. To hedge market value risk exposures, the Company adopts diversified assets allocation strategy taking into account the current trends of financial markets to flexibly adjust assets portfolio under the provisions of Article 146 (1) ~ (8) of the Insurance Act, regulating the limits of funds utilization ratios and accordingly, disperse the market value risk.
(ii)The Company adopts the FX swap contracts and forward foreign exchange contracts to hedge exchange rate fluctuations risk on foreign-currency denominated assets. As the gain (loss) arising from exchange rate changes will mostly offset against the loss (gain)

on hedged objectives, the Company estimates no material market value risk would arise. The Company is exposed to price risk because of investments in Taiwan Stock Index Futures, which have fair value in the active market. The Company sets limits to control the transaction volume and stop-loss amount of derivatives to reduce its market risk.

(iii)The Company's investments comprise equity securities and REITs, etc. Their fair value would change due to the change of the prices of equity securities. If the prices of these equity securities and REITs had increased/decreased by 1% with all other variables held constant, the effects on profit and loss and equity in the years ended December 31, 2018 and 2017 are as follows:

		December 31, 2018
	Changes in		Changes in other
	Changes in	profit or loss	comprehensive
	variables	before tax	income (before tax)
Financial assets at fair value	Increased/
through profit or loss	decreased by 1%	\$ 4,301	\$ 10,159
	December 31, 2017

		Changes in	Changes in other
	Changes in	profit or loss	comprehensive
	variables	before tax	income (before tax)
Financial assets at fair value	Increased/
through profit or loss	decreased by 1%	\$ 5,032	\$ -
Available-for-sale financial assets	Increased/ decreased by 1%	-	49,674

iii. Interest rate risk

Sensitivity analysis of interest rate risk listed in the table below is performed for reasonably possible changes in interest rate with other conditions held constant, showing the effect on profit or loss before tax and other comprehensive income before tax. Measurement of interest rate risk only takes into consideration the duration but does not include convexity. Relevant effects may differ from the actual values, but the differences are not significant.

		December 31, 2018
	Changes in variables	Changes in profit or loss	Changes in other comprehensive income
Financial assets at fair value through profit or loss	Increase/decrease 50 basis points	Decrease \$340/Increase \$342	-
		December 31, 2017
	Changes in variables	Changes in profit or loss	Changes in other comprehensive income
Financial assets at fair value through profit or loss	Increase/decrease 50 basis points	Decrease \$1,709/Increase \$1,734	-
Available-for-sale financial assets	Increase/decrease 50 basis points	-	Decrease \$22,838/Increase \$22,838

(b) Credit risk

i. When investing in financial instruments, the Company will encounter the risks that the transaction counterparties may default on contracts and the custodians may incur operating difficulties. The Company utilizes funds and makes investments in accordance with the Article 146 of Insurance Act and relevant laws, and conducts transactions only with counterparties with good credit ratings, or ensures that financial instruments are issued or guaranteed by reputable financial institutions, or acquires adequate collaterals. The Insurance Act also puts a limit to the transaction amount on an individual counterparty. Accordingly, the maximum loss to the Company is the total amount of all book value.
ii. The Company utilizes funds and makes investments in financial instruments except for short-term notes and bills, time deposits, demand deposits and cash equivalents in accordance with the Article 146 of Insurance Act and related laws, and sets limits to control the investment volume with an individual institution. Therefore, the Company has lower significant concentrations of credit risk. As for the management of credit risk of debt instruments, the Company identifies the credit risk by its rating provided by external institutions, credit quality, conditions of locations and risk of counterparties. For credit ratings of counterparties, the Company strictly complies with the Article 146 of Insurance Act, the relevant legal interpretations and the Company's internal regulations on risk control. The counterparties of bond investments are those financial institutions and companies with a certain degree of credit rating.
iii. The Company undertakes FX swap contracts and forward foreign exchange contracts only with high-credit-quality financial institutions. If the counterparties of Taiwan Stock Index Futures default, the futures brokers will be liable for the losses incurred on the default. Accordingly, the Company estimates no material credit risk would arise.
iv. The Company recognizes the following events as financial instruments' credit risk increases significantly:
(i) Bond interest receivable and debt instrument investments at amortized cost
- a. When an independent external rating system has rated such investment instrument as investment grade, then it is classified as low credit risk;
- b. When an independent external rating system has downgraded such investment instrument 2 notches and to non-investment grade; or
- c. When an independent external rating system has rated such investment instrument as non-investment grade and decline in market value (against to the cost) exceeds 30%, then it is classified as the credit risk increases significantly.
(ii) Accounts receivable (excluding bond interest receivable) and other financial assets at amortized cost

When contractual payments (excluding the debt instruments) are more than 30 days past due but less than 90 days, then it is classified as the credit risk increases significantly.

v. The Company uses the following indicators to assess whether a financial asset has a credit impairment:
(i) A breach of contract, such as a default or delinquency in interest or principal payments; when a contract (excluding the debt instruments) is overdue more than 90 days, it is

deemed breached.

(ii) The issuer enters into bankruptcy or reorganization that significantly affects its business.
vi. The Company wrote-off the financial assets partially or entirely to the extent of the amount which cannot be reasonably expected to be recovered. The indicators for reasonably expected to be unrecoverable include:
(i) The recourse procedure has ceased.
(ii) The debtor's assets or income is evaluated to be insufficient to repay outstanding payments.
vii. The Company uses credit ratings (including forward-looking information), probability of default and loss given default figures periodically published by international credit rating agencies to estimate expected credit loss of bond interest receivable and debt instruments at amortized cost. Information about expected loss rate is as follows:

	December 31, 2018
	12 Months
Bond interest receivable
Group 1	0.0000%
Group 2	0.0000%-0.0345%
Group 3	0.0232%-0.1171%
Group 4	0.0809%-0.1557%
Group 5	0.3293%
Debt instruments at amortized cost
Group 1	0.0000%
Group 2	0.0000%-0.0345%
Group 3	0.0232%-0.1171%
Group 4	0.0809%-0.1557%

Group 1: S&P AAA or equivalents. Group 2: Over S&P AA- or equivalents. Group 3: Over S&P A- or equivalents. Group 4: Over S&P BBB- or equivalents.

Group 5: Under S&P BBB- or equivalents.

The following credit risk information for the accounts receivable – bond interest receivable and investments in debt instruments at amortized cost are rated in 12-month period as of December 31, 2018:

	December 31, 2018
	12 Months

Bond interest receivable
Group 1	\$ 10,394
Group 2	36,272
Group 3	53,363
Group 4	4,672
Group 5	7,726
	\$ 112,427
Financial assets at amortized cost
Group 1	1,749,664
Group 2	3,917,239
Group 3	5,434,750
Group 4	852,457
	\$ 11,954,110
Group 1: S&P AAA or equivalents.
Group 2: Over S&P AA- or equivalents.

Group 3: Over S&P A- or equivalents.

Group 4: Over S&P BBB- or equivalents.

Group 5: Under S&P BBB- or equivalents.

Movements in 12-month loss allowance for bond interest receivable and investments in debt instruments at amortized cost as of December 31, 2018 are as follows:

12 Months
			Debt instruments at
			amortized cost
\$	62	\$	2,783
	-		782
(	5)		-
\$	57	\$	3,565
		Bond interest receivable

Note: Reconciliation of loss allowance for the effect on initial application of IFRS 9 are provided in Note 12 (7) C.

viii. The Company considers expected loss rate based on historical and current information and takes into account forecasts of future economic conditions to estimate expected credit loss of accounts receivable (excluding bond interest receivable) and other financial assets at amortized cost. As of December 31, 2018, the Company's accounts receivable (excluding bond interest receivable) and other financial assets at amortized cost are not overdue or past due no more than 30 days. The Company therefore assessed credit risk as low and do not recognize loss allowance for credit loss. The book value as of December 31, 2018 are as follows:

	December 31, 2018
	12 Months
Accounts receivable (excluding bond interest)	\$ 168,398
Other financial assets	237,199
Refundable deposits under other assets	340,196

(c) Liquidity risk

i. The Company uses time deposits to adequately adjust its cash flows. When conducting investment evaluation, the Company will take into account the liquidity of financial instruments in secondary markets and may allocate some funds to lower-liquidity but higher-yield-rate financial instruments on condition that the risk is controlled. Even if those financial instruments are sold in the short-term, there is a less likelihood that liquidity risk would arise due to the selling price being significantly lower than the fair value. However, those financial instruments are not intended to be sold in the short-term.
ii.The notional principal of FX swap contracts and forward foreign exchange contracts is normally used as a calculation basis of receivables and payables for these transactions, and is not the actual settlement amount. The actual settlement amount is usually lower than the notional principal. The Company has paid margins in advance before undertaking Taiwan Stock Index Futures transactions, and daily evaluates the unsettled futures positions. In case additional margins have to be paid later on, the Company has sufficient working capital to fulfill its payment obligations. Accordingly, the Company estimates no material cash flow risk would arise.
iii.The table below analyzes the Company's non-derivative financial liabilities and net-settled derivative financial liabilities into groupings based on the remaining period at the end of the reporting period to the contractual maturity date.

	(i) Non-derivative financial liabilities

		Due after one year
December 31, 2018	Due in one year	through three years	Total
Accounts payable Deposits-in (under other	\$ 308,219	\$ 1,594	\$ 309,813
liabilities)	1,457	3,960	5,417
		Due after one year
December 31, 2017	Due in one year	through three years	Total
Accounts payable Deposits-in (under other	\$ 409,869	\$ 1	\$ 409,870
liabilities)	2,586	2,266	4,852

(ii) Net-settled derivative financial liabilities

	Due in	Due after three months
December 31, 2018	three months	through one year	Total
FX swap contracts	\$ 295	\$ -	\$ 295
Forward foreign exchange
contracts	2,838	522	3,360
	Due in	Due after three months
December 31, 2017	three months	through one year	Total
FX swap contracts	\$ 976	\$ 306	\$ 1,282
Forward foreign exchange
contracts	12,008	-	12,008

(2) Risk management of insurance contracts

All insurance contracts assumed by the Company, after assessment, were considered risks transferred by reinsurance. Risk management and procedures are summarized below:

A. Measurement and management of insurance risk:

Insurance risk occurs when loss frequency, severity, timing and other possible risk factors are far from past experience. For example, natural and man-made catastrophes risk may occur randomly and thus actual claims may be more than expected.

The Company follows underwriting and risk management related guidelines to assume reinsurance business. The Company's internal quantitative model, external monitoring model, internal control system and other related systems are developed to ensure insurance risks are efficiently identified, measured, steered and monitored.

(a) Underwriting policy

The reinsurance portfolio of the Company consists of various types of reinsurance and businesses from different countries and territories. The insurance types include life insurance, property and casualty insurance and others which are in compliance with regulatory requirement. The Company's core markets are in Asia.

(b) Retrocession strategy

In consideration of financial strength, capacity and the operation strategies, the Company arranges retrocession to increase the capacity, diversify risks, mitigate retained risk and increase business competitiveness. Furthermore, the Company has purchased catastrophe cover to minimize the exposure to catastrophe loss which may greatly impact the Company's financial performance. Stringent evaluation of the reputation and credit rating of the reinsurer is taken into account when the Company arranges a retrocession contract.

Although the Company adopts various prescribed methods to control insurance risk, given the random and unpredictable nature of insured incidents, deviation may occur between the actual result and the expectation derived from historical experience.

B. Concentration of insurance risk

Premium income and retention premium income ratio based on the business type are as follows:

	Year ended		Year ended
Year	December 31, 2018		December 31, 2017
	Reinsurance	Retention	Reinsurance	Retention
Type	premiums	premiums	premiums	premiums
Domestic inward property reinsurance business	63.86%	63.03%	62.61%	61.93%
Domestic inward life reinsurance business	20.84%	21.43%	25.66%	26.06%
Subtotal-Domestic inward reinsurance business	84.70%	84.46%	88.27%	87.99%
Foreign inward reinsurance business	15.30%	15.54%	11.73%	12.01%
Total	100.00%	100.00%	100.00%	100.00%

C. Sensitivity analysis of insurance risk

The retention earned premium income of the Company (excluding the compulsory automobile liability insurance business) for the years ended December 31, 2018 and 2017 were \$11,466,100 and \$11,021,790, respectively. If the change of combined ratio of the Company is 1%, the estimated effect on gains and losses of underwriting for the years ended December 31, 2018 and 2017 would be approximately \$114,661 and \$110,217, respectively.

D. Loss development pattern

(a) As of December 31, 2018, the following table indicates the loss development pattern of the Company's inward business:

Year of underwriting		2013	2014	2015	2016	2017	2018	Total
Non-statutory insurance
Accumulated estimated claim amount
At the end of the year	\$	5,222,485	\$ 4,482,819 \$	5,067,741 \$	4,823,223 \$	4,676,211	\$ 4,930,116
After the first year		9,666,215	7,292,566	7,521,055	7,371,808	7,200,462
After the second year		9,033,742	6,837,791	7,049,813	7,038,930
After the third year		8,812,908	6,618,827	6,892,499
After the fourth year		8,732,883	6,551,918
After the fifth year		8,685,930
Accumulated estimated claim amount		8,685,930	6,551,918	6,892,499	7,038,930	7,200,462	4,930,116	\$ 41,299,855
Accumulated claim payment	(	8,081,943) (	5,917,261) (	5,840,556) (	5,849,020) (	4,202,835) (	513,064) (	30,404,679)
Accumulated unpaid claim		603,987	634,657	1,051,943	1,189,910	2,997,627	4,417,052	10,895,176
Add: accumulated unpaid claim before 2012								2,543,236
Subtotal								13,438,412
Provision for statutory insurance claims reserve (Note)		-	-	48,151	290,527	911,528	869,238	2,119,444
Recognition in balance sheet (under claims reserve of
insurance liabilities)								\$ 15,557,856

Year of underwriting		2013		2014	2015	2016		2017		2018		Total
Non-statutory insurance
Accumulated estimated claim amount
At the end of the year	\$	4,924,699	\$	4,218,773	\$ 4,796,487 \$	4,501,311	\$	4,427,596	\$	4,566,834
After the first year		9,076,191		6,809,108	7,012,164	6,787,551		6,686,191
After the second year		8,505,546		6,420,151	6,605,203	6,519,989
After the third year		8,296,211		6,214,332	6,459,501
After the fourth year		8,215,613		6,147,683
After the fifth year		8,167,665
Accumulated estimated claim amount		8,167,665		6,147,683	6,459,501	6,519,989		6,686,191		4,566,834	\$	38,547,863
Accumulated claim payment	(	7,580,192)	(	5,538,578) (	5,435,953) (	5,387,549)	(	3,898,608)	(	424,992)	(	28,265,872)
Accumulated unpaid claim		587,473		609,105	1,023,548	1,132,440		2,787,583		4,141,842		10,281,991
Add: accumulated unpaid
claim before 2012												2,414,718
Subtotal												12,696,709

Provision for statutory insurance
claims reserve (Note)		-		-	48,151	290,527		911,528		869,238		2,119,444
Less:Loss allowance of ceded claims reserve												286
Recognition in balance sheet											\$	14,816,439

(b) As of December 31, 2018, the following table indicates the loss development pattern of the Company's retention business:

Year of underwriting		2012	2013	2014	2015	2016	2017		Total
Non-statutory insurance
Accumulated estimated claim amount
At the end of the year	\$	4,333,245 \$	5,222,485 \$	4,482,819 \$	5,067,741 \$	4,823,223 \$	4,676,211
After the first year		7,341,226	9,666,215	7,292,566	7,521,055	7,371,808
After the second year		7,077,263	9,033,742	6,837,791	7,049,813
After the third year		6,703,107	8,812,908	6,618,827
After the fourth year		6,486,307	8,732,883
After the fifth year		6,420,054
Accumulated estimated claim amount		6,420,054	8,732,883	6,618,827	7,049,813	7,371,808	4,676,211	\$	40,869,596
Accumulated claim payment	(	5,895,290) (	8,002,460) (	5,835,729) (	5,564,829) (	4,719,541) (	615,464)	(	30,633,313)
Accumulated unpaid claim		524,764	730,423	783,098	1,484,984	2,652,267	4,060,747		10,236,283
Add: accumulated unpaid
claim before 2011									2,300,728
Subtotal									12,537,011
Provision for statutory insurance
claims reserve (Note)		-	-	39,306	301,981	958,448	831,917		2,131,652
Recognition in balance sheet
(under claims reserve of
insurance liabilities)								\$	14,668,663

(c) As of December 31, 2017, the following table indicates the loss development pattern of the Company's inward business:

Year of underwriting		2012	2013	2014	2015	2016	2017	Total
Non-statutory insurance
Accumulated estimated claim amount
At the end of the year	\$	4,062,535 \$	4,924,699 \$	4,218,773 \$	4,796,487 \$	4,501,311 \$	4,427,596
After the first year		6,797,370	9,076,191	6,809,108	7,012,164	6,787,551
After the second year		6,596,777	8,505,546	6,420,151	6,605,203
After the third year		6,262,364	8,296,211	6,214,332
After the fourth year		6,048,963	8,215,613
After the fifth year		5,984,878
Accumulated estimated claim amount		5,984,878	8,215,613	6,214,332	6,605,203	6,787,551	4,427,596 \$	38,235,173
Accumulated claim payment	(	5,481,925) (	7,504,053) (	5,462,548) (	5,179,433) (	4,341,019) (	589,692) (	28,558,670)
Accumulated unpaid claim		502,953	711,560	751,784	1,425,770	2,446,532	3,837,904	9,676,503
Add: accumulated unpaid claim before 2011								2,159,398
Subtotal								11,835,901
Provision for statutory insurance
claims reserve (Note)		-	-	39,306	301,981	958,448	831,917	2,131,652
Recognition in balance sheet							\$	13,967,553

(d) As of December 31, 2017, the following table indicates the loss development pattern of the Company's retention business:

14. THE OBJECTIVE, POLICY AND PROCEDURE OF CAPITAL MANAGEMENT

The Company's primary objectives when managing capital are to safeguard capital adequacy and solvency of the Company in order to support the Company's sustainable development and continuously create interests for shareholder.

In practice, Taiwan insurance enterprises usually measure whether the capital is adequate by using the capital adequacy ratio. Pursuant to Article 143-4 of Insurance Act, an insurance enterprise's ratio of selfowned capital to risk-based capital may not be lower than 200%. The Company calculates the capital adequacy ratio every six months in accordance with "Regulations Governing Capital Adequacy of Insurance Companies" to ensure that it can continuously meet the statutory capital requirement.

In accordance with "Regulations Governing Capital Adequacy of Insurance Companies", capital adequacy ratio is calculated as self-owned capital divided by risk-based capital. Self-owned capital is the total capital approved by the competent authority, which includes recognized owners' equity and other adjustment items as regulated by the competent authority; risk-based capital is the total capital calculated based on the extent of risk that an insurance enterprise assumes in its actual operations. Capital adequacy ratios of the Company as of December 31, 2018 and 2017 were all above 300% and in compliance with regulation.

15. OTHER DISCLOSURES

(1) Information of significant transactions
A. Acquisition of real estate in excess of \$300,000 or 20% of the paid-in capital: None.
B. Disposals of real estate in excess of \$300,000 or 20% of the paid-in capital: None.
C. Related party transactions in excess of \$100,000 or 20% of the paid-in capital: None.
D. Accounts receivable from related parties in excess of \$100,000 or 20% of the paid-in capital: None.
E. Derivative business transactions: Please see Note 6 (3).
F. Business and significant transactions between the parent company and subsidiaries, and those between subsidiaries: None.
(2) Information related to long-term investments None.
(3) Investments in Mainland China and business transactions None.

16. SEGMENT INFORMATION

(1) General information

The Company operates business only in reinsurance services. The Company allocates resources and assesses performance of the Company as a whole, and has identified that the Company has only one reportable operating segment.

(2) Product information

The Company has only one kind of product; therefore, disclosure of financial information by product is not applicable.

(3) Geographical information

Premium income of the Company from domestic and foreign clients for the years ended December 31, 2018 and 2017 are as follows:

	Year ended		Year ended
	December 31, 2018	December 31, 2017
Domestic inward reinsurance	\$ 13,036,466	\$	12,855,008
Foreign inward reinsurance	2,354,996		1,709,038
	\$ 15,391,462	\$	14,564,046

(4) Major customer information

There are specific customers of Compulsory Motor Insurance Pool that contributed over 10% of the total revenue stated on the Company's statement of comprehensive income. In 2018 and 2017, the premium income from these customers amounted to \$2,521,082 and \$2,495,933, constituting 16.38% and 17.14% of the related totals, respectively.

17. BORROWINGS RESULTED FROM PAYMENT OF CLAIMS

None.

1. ACQUISITION, CONSTRUCTION, IDLELIZATION AND SALES OF MAIN OPERATING ASSETS AND REAL ESTATE INVESTMENTS
None.
1. IMPORTANT LAWSUITS IN PROGRESS OR ADJUDICATED

None.

IMPORTANT CONTRACTS SIGNED, DISCHARGED BY PERFORMANCE, AGREEMENT, OR BREACHED

Aside from regular contracts related to the insurance business, the Company had no important contracts signed, discharged by performance, agreement, or breached.

1. INVESTMENT ITEMS AND INVESTMENT CEILINGS WITH THE INVESTMENT FUNDS BEING HANDLED AND MANAGED BY THE SECURITIES INVESTMENT TRUST COMPANIES OR SECURITIES INVESTMENT CONSULTING COMPANIES None.
1. ADJUSTMENT OF ORGANISATION AND SIGNIFICANT CHANGE OR REFORM OF MANAGEMENT MECHANISM None.
1. EFFECTS OF SIGNIFICANT CHANGES IN GOVERNMENT LAWS None.
1. INFORMATION ON DISCOUNTINUED OPERATIONS None.
1. MAJOR OPERATIONS, ASSETS, AND LIABILITIES RECEIVED FROM OR TRANSFERRED TO OTHER INSURANCE BUSINESSES None.

AI assistant

Central Re — Annual Report 2018

52207_rns_2018-11-13_c302d7dd-ec3a-4e16-81d0-4efd844862c6.pdf

CENTRAL REINSURANCE CORPORATION FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2018 AND 2017

CENTRAL REINSURANCE CORPORATION BALANCE SHEETS (Expressed in thousands of New Taiwan dollars)

CENTRAL REINSURANCE CORPORATION STATEMENTS OF COMPREHENSIVE INCOME

CENTRAL REINSURANCE CORPORATION STATEMENTS OF COMPREHENSIVE INCOME

CENTRAL REINSURANCE CORPORATION STATEMENTS OF CHANGES IN EQUITY (Expressed in thousands of New Taiwan dollars)

CENTRAL REINSURANCE CORPORATION STATEMENTS OF CASH FLOWS

CENTRAL REINSURANCE CORPORATION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2018 AND 2017

1. HISTORY AND ORGANISATION

the Company

(3) IFRSs issued by IASB but not yet endorsed by the FSC

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(4) Cash equivalents

(8) Impairment of financial assets

(11) Reinsurance contract assets

(13) Property and equipment

(18) Offsetting financial assets and financial liabilities

B. Pensions

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

(2) Critical accounting estimates and assumptions

6. DETAILS OF SIGNIFICANT ACCOUNTS

(9) Reserves for unqualified reinsurance

(10) Offsetting financial assets and financial liabilities

(11) Property and equipment

(12) Accounts payable

(13) Employee benefits

(14) Common stock

(15) Capital reserve

(16) Retained earnings

(17) Income tax

7. RELATED PARTY TRANSACTIONS

8. PLEDGED ASSETS

9. COMMITMENTS

K. Fair value of the financial instruments not measured at fair value

(3) Calculation of retention earned premiums are shown below:

(4) Calculation of retention reinsurance claims paid are shown below:

(6) Details of revenues and costs for compulsory automobile liability insurance are as follows:

13. RISK MANAGEMENT

(1) Financial instruments

ii. Price risk

iii. Interest rate risk

(b) Credit risk

(c) Liquidity risk

(2) Risk management of insurance contracts

D. Loss development pattern

14. THE OBJECTIVE, POLICY AND PROCEDURE OF CAPITAL MANAGEMENT

15. OTHER DISCLOSURES

16. SEGMENT INFORMATION

(3) Geographical information

(4) Major customer information

17. BORROWINGS RESULTED FROM PAYMENT OF CLAIMS

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Central Re Annual Report 2018