Central Re - Annual Report 2017 | FinancialReports.eu

2017

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Annual Report Printed on 1 April, 2018

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	CONTENTS
1.	LETTER TO SHAREHOLDERS	1
	1.1 2017 Business Report	3
	1.2 Summary of the 2018 Business Plan	9
	1.3 Future Development Strategies	11
	1.4 Influences of the External Competition, Regulatory Environment and Macro Environment	12
2.	COMPANY PROFILE	17
	2.1 Date of Incorporation	17
	2.2 Company History	17
3.	CORPORATE GOVERNANCE REPORT	18
	3.1 Organization	18
	3.2 Directors and Management Team	19
	3.3 Implementation of Corporate Governance	27
	3.4 Corporate Social Responsibility	39
	3.5 Ethical Corporate Management	51
	3.6 Material Resolutions of Shareholders Meeting and Board of Directors Meeting	60
	3.7 Information on CPA Professional Fees and Replacement of Certified Public Accountant	64
	3.8 Changes in Shareholdings and Shares Pledged by Directors, Managers and Major Shareholders	66
4.	CAPITAL OVERVIEW	68
	4.1 Source of Capital Stock	68
	4.2 Shareholders Structure	68
	4.3 Diffusion of Ownership and List of Principal Shareholders	69
	4.4 Disclosure of the Share Prices and Related Information for the Past Two Fiscal Years	70
	4.5 Dividend Policy and Earnings Distribution Implementation Status	71
5.	BUSINESS OPERATIONS OVERVIEW	72
	5.1 Business Activities	72
	5.2 Market Overview	77
	5.3 Human Resources	79
	5.4 Labor Relations	79
	5.5 Important Contracts	83
6.	FINANCIAL INFORMATION	85
	6.1 Financial Statement for Recent Five Years	85
	6.2 Financial Analyses for Recent Five Years	87
	6.3 Audit Committee’s Review Report	88
	6.4 Financial Statements and Report of Independent Accountants	88

1. LETTER TO SHAREHOLDERS

Dear Shareholders,

Established in 1968, Central Reinsurance Corporation (Central Re) is now about to celebrate its 50th anniversary on October 31, 2018. Constantly adhering to steady and prudent philosophy, we have been devoted to our core business in reinsurance as well as optimized fund utilization. Thanks for the efforts of all employees and the support of our shareholders, Central Re reported very good business results in 2017.

Looking back to the past year, Central Re was challenged by the abundant capacity and competitive pricing in the global reinsurance industry. Despite these, the Company still achieved a growth of 3.7% in its gross premium written, which was NTD14.564 billion. The total net earned premium and reinsurance commission income reached to NTD13.752 billion. The underwriting performance was very impressive, greatly attributable to our prudent underwriting policies and proper risk management. The recovery of global economy and effective fund management of the Company both contributed to the significant growth in investment performance. The net gain from investment has reached NTD845 million. On a consolidated basis, the Company’s operating revenue for 2017 was NTD14.6 billion, an 8.6% growth from the previous year. After-tax profit amounted to NTD1.389 billion.

In terms of financial strength and capital structure, the Company maintains a robust capital level as a whole. As at the end of 2017, the total amount of technical reserves for retained business is NTD23.096 billion. The equity before distribution of dividends is NTD11.251 billion, being a historical high. The paid-in capital, which was NTD15 million at the time of incorporation, has grown to NTD5.623 billion as at the end of 2017. In order to expand our underwriting capacity and increase our competitive advantages, a stock dividend of 0.05 shares per outstanding share is to be distributed this year to solidify our capitalization. The total amount of new shares issued will be NTD281 million. The paid-in capital of the Company, as a result, will increase to NTD5.904 billion, which is very close to the authorized capital of NTD6 billion.

In March, 2018, S&P Global Ratings affirmed our credit rating of "A" with stable outlook, based on the Company’s direct relationship with local insurers, solid domestic market position, extremely strong capital adequacy, as well as diversified and prudent investment profile. Taiwan Ratings Corp. also confirmed our rating of "twAA+". In addition, another international rating agency A.M. Best has continuously recognized

1 Central Reinsurance Corporation Annual Report 2017

our operation performance and reaffirmed our A rating and stable outlook in July 2017. Long term good credit ratings not only demonstrate our strong solvency capability to fulfill our commitment to customers, but also are beneficial for the development of quality business.

We are pleased to append below our 2017 Business Report, which provides a summary of the Company’s achievements in implementing the 2017 business plan, budget implementation, financial status, profitability analysis, research and development, as well as highlights of the 2018 business Plan.

Now Central Re has, firmly and confidently, stepped into its fiftieth year. Looking forward, the management team will commit to the corporate spirits of "Challenge, Innovation and Teamwork" to diligently cultivate the domestic market, build up international perspective and develop high-quality business. In the meantime, we will also ensure appropriate capital management and sound investment strategies to achieve steady profit growth and sustainable development, thereby fulfilling our vision to become "The Best Professional Reinsurer in Asia". We thank all shareholders for your continuous support and wish you all a healthy and successful year.

Chairman

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Central Reinsurance Corporation Annual Report 2017

1.1 2017 Business Report

Central Reinsurance Corporation is the sole domestic professional reinsurance company in Taiwan, mainly engaged in non-life and life reinsurance business for domestic and overseas insurance firms. Adhering to its business philosophy of ethical management, stability and integrity, the Company is devoted to maintaining the good order of the insurance market, diversifying risk for its customers, facilitating the development of insurance industry and fulfilling its corporate responsibilities. To ensure sound operation and sustainable development, the Company endeavors to enforce corporate governance, cultivate a customer-oriented culture, increase the effectiveness of fund utilization and build a business portfolio that holds proper risk management as well as steady profitability. To enlarge its operational scope and diversify the risk of geographical concentration, the Company has been actively cultivating its domestic market; in the meantime prudently expanding its international market.

With the collective efforts of all its employees, the Company reports a net income of NT$1,389,459 thousand for the year of 2017. Appended below is the Company's business report for 2017:

1.1.1 Implementation of the Business Plan

1.1.1.1 Business Performance:

The gross premium written for the year is NT$14,564,046 thousand, being NT$418,742 thousand or approximately 2.96% over the budgeted NT$14,145,304 thousand. An analysis is provided below based on business type:

Non-life Reinsurance: NT$10,752,614 thousand, being NT$552,775 thousand or approximately 5.42% over the budgeted NT$10,199,839 thousand. The difference was mainly because of the growth of gross premium in fire insurance and automobile insurance.
Life Reinsurance: NT$3,811,432 thousand, being NT$134,033 thousand or approximately 3.40% less than the budgeted NT$3,945,465 thousand. The difference was mainly because of the decreased gross premium from personal accident insurance and health insurance.

3 Central Reinsurance Corporation Annual Report 2017

1.1.1.2 Financial Management:

1. Capital Management:

As at the end of 2017, the total paid-in capital of the Company is NT$5,622,750 thousand. Total shareholders' equity before distribution is NT$11,251,472 thousand. The capital structure of the Company remains strong.

2. Reserve Adequacy:

In order to build up a solid financial basis and strengthen its solvency, the Company provides adequate reserves. At the end of 2017, the sum of various reserves is NT$23,096,380 thousand.

3. Fund Investment:

The investment income is NT$845,354 thousand, being NT$464,465 thousand or 121.94% over the budgeted NT$380,889 thousand.

1.1.1.3 Credit Ratings:

In 2018, S&P Global Ratings affirmed its credit rating of "A" with stable outlook based on the Company’s strong direct relationships with local clients and solid domestic market position, extremely strong capital adequacy, and diversified and prudent investment profile. Taiwan Ratings Corp. also confirmed the Company’s rating of "twAA+".

Meanwhile, A.M. Best affirmed the Company’s "A" rating with stable outlook in July, 2017 in recognition of its management performance. Good credit ratings are helpful for developing reinsuring high-quality business. They also prove the Company's strong solvency to fulfill its commitment to customers.

The latest ratings are shown as follows.


Rating Agency	Rating	Outlook

A.M. Best	A	Stable
S&PGlobal Ratings	A	Stable
Taiwan Ratings	twAA+	Stable

Central Reinsurance Corporation Annual Report 2017 4

1.1.2 Budget Implementation and Financial Status

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

follows:
			NT$thousands
Item	Actual	Budget	Achievement(%)
Operating Revenues	14,599,949	13,961,440	104.57
Operating Costs	12,533,111	12,669,780	98.92
Gross Operating Income	2,066,838	1,291,660	160.01
Operating Expenses	373,621	337,625	110.66
Net Operating Income	1,693,217	954,035	177.48
Non-Operating Income and Expenses	940	0	100.00
Income Before Tax	1,694,157	954,035	177.58
Income Tax Expense	304,698	145,721	209.10
Net Income	1,389,459	808,314	171.90

1.1.3 Profitability Analysis

The table below shows an analysis on the profitability ratios of 2017 as compared to those of 2016. The earnings per share (after tax) for 2017 is NT$2.47, a growth of NT$1.11 from the NT$1.36 of 2016. A profitability analysis is made in the chart below:

Ratio	Year	2017	2016	Average
Profitability	Return on Assets (%)	3.96	2.29	3.13
	Return on Equity (%)	13.39	8.13	10.76
	Net Operating Income / Paid-In Capital (%)	30.11	16.25	23.18
	Income from Continuing Operations Before Tax/Paid-In Capital(%)	30.13	16.23	23.18
	Net Profit Margin (%)	9.52	5.70	7.61
	Earnings Per Share (After Tax)(NT$)	2.47	1.36	1.92

5 Central Reinsurance Corporation Annual Report 2017

1.1.4 Research & Development

1.1.4.1 Research & Development/Customer Service
To strengthen its internal control and increase the efficiency at work, the Company has been continuously developing integrated information management system. An off-site back-up system has also been established to ensure the smooth operation of the system. In future, the Company will continue developing and upgrading the systems to align with its development plans and accommodate to statutory requirements. The implementation of data warehouse enables multi-faceted information analysis to assist with the strategic and business decision-making by the management team.
The Company endeavors to absorb and adopt the most advanced concepts and technologies from the global market to continuously improve its competency in integrated risk management. Based on its successful experience in risk management, the Company also provides relevant consulting services to customers and assists the competent authority in facilitating risk management policies and regulations for the industry. It is hoped that the collective efforts would help improving the technology standards in risk management for the whole industry.
By means of market analysis and consumer demand observation, the Company provides tailored services to achieve higher quality standard and build up marketing competitiveness. Various supporting programs are offered to customers on a timely basis, including new product design, underwriting and claim management expertise, regulatory and actuarial consulting services. The purpose is to solidify customer relationship and create superior business opportunities and platforms on an ongoing basis.
In order to render value-added services to customers and improve its professional image, the Company has organized many professional seminars in 2017.

Seminars or programs for our non-life insurance clients:

(1) Executive Summit of Non-life Insurance Companies
(2) Future Talent -Reinsurance Principles and Practices
(3) Seminars for Reinsurance Managers in Non-Life Insurance

Central Reinsurance Corporation Annual Report 2017 6

Industry- A Brief Overview of the Current Status and Future Development of Agricultural Insurance in Taiwan

(4) Seminar Series for the Underwriting of Health Insurance – Interpretation of Common Lab Values /The Theory and Practice of Simplified Underwriting

Seminars or programs for our life insurance clients:

(1) Sleep Disorders and Common Diseases of Newborn Babies
(2) The Theory and Practice of Simplified Underwriting
(3) Basic Principle and Practice of Life Reinsurance
(4) A Series of Seminars of Underwriting and Claims of Life Insurance: Interpretation of Lab Values, Tumor Underwriting, Oncology and Interpretation of Pathology Reports, New Definitions of Critical Illnesses, Underwriting Assessment of Abnormal ECG and Relevant Heart Diseases, Understanding Reinsurance, Financial Underwriting, Sleep Disorders and Common Diseases of Newborn Babies
(5) Medical Insurance Seminar: Minimally Invasive Surgery

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

1.1.4.2 Talent Development

The Company administers the following on-job training through its training system:
(1) Regular Training: Internally, the Company provides regular training on general knowledge and basic skills, including "Orientation for New Employees", "Compliance Training and Promotion", "Internal Audit and Internal Control Self-inspection Training", "Money Laundering Prevention Training and Promotion", "Personal Information Protection Awareness Training", "Information Safety Awareness", "Employee Confidentiality Obligations and Ethical Corporate Management Training", "Risk Management Training" (including senior executives) and "Fire Safety Training". A total of

7 Central Reinsurance Corporation Annual Report 2017

789 persons have attended the training in 2017.

(2) Professional Training and Statutory Training: To enhance the employees' professional knowledge and expertise and elevate their work efficiency, the Company also organizes various job-related courses to accommodate the needs of staff at different levels. According to the "Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises", the Company also requires its auditors and compliance personnel to attend related external courses and meet the required training hours. A total of 379 persons have attended the external training in 2017.
To support its operating plan and develop reinsurance professionals, the Company also sent employees overseas to attend international conventions, to observe best practices and to participate in training courses: total 11 persons.
On an ongoing basis, the Company encourages its employees to obtain professional licenses for their jobs. So far, a total of 62 employees have acquired domestic or international licenses on non-life/life insurance and financial management.
(1) The certificate as a qualified insurance underwriter of non-life insurance: 21
(2) The certificate as a qualified claim adjuster of non-life insurance: 8
(3) The certificate as a qualified insurance underwriter of life insurance: 5
(4) The certificate as a qualified claim adjuster of life insurance: 3
(5) Fellow of the Actuarial Institute of Chinese Taipei: 2
(6) International Certificates: CPCU 3 persons, ACII 1 person, DipCII 1 person, SOA ASA 2 persons, CAS ACAS 1 person, ALU 1 person, FLMI 5 persons, ALMI 1 person, LOMA ACS 3 persons, LOMA AAPA 1 person, LOMA ARA 1 person, FRM 2 persons, ARM 1 person.
To optimize its human resources, the Company endeavors to place employees at the most suitable positions in terms of personal interest and strengths, in the meantime fulfill the human resources strategies. During the year, therefore, the Company has recruited 11 new employees, arranged job transfer for 5 employees and promoted 10 employees.

Central Reinsurance Corporation Annual Report 2017 8

1.2 Summary of the 2018 Business Plan

Based on the competitive market, the regulatory influence and business environment, the Company has established its 2018 business plan as follows:

1.2.1 Business Strategies

1.2.1.1 Exercise good corporate governance Ensure ethical management, fulfill corporate social responsibilities, increase information transparency and continuously strengthen the structure and operational effectiveness of the board of directors.
1.2.1.2 Focus on customer demands and provide feedback to the insurance market.
Grasp market trends and organize professional seminars, aiming to providing value-added service to customers and enhance customer relationship.
Accommodate customer needs by providing tailored reinsurance services; create win-win business opportunities.
Actively participate in research programs relating to actuarial and statistics, insurance operations, risk management and corporate governance, so as to contribute to the professional development of the local insurance market.
1.2.1.3 Strengthen capital structure management; improve the effectiveness of fund utilization.
Solidify the financial strength and capital base, so as to expand the underwriting capacity and elevate risk tolerance.
Conduct proper assessment on risk asset/return relationship, exercise caution in asset allocation to improve the effectiveness of capital utilization and create shareholder value.
Prudently develop international business, diverse geographic concentration risks and improve the effectiveness of fund utilization.
1.2.1.4 Building a business portfolio with equal emphasis on risk management and optimized profitability.
Apply strategically risk management; align business decisions with risk management policies.
Grasp the development trend of emerging risks to ensure prudent control

9 Central Reinsurance Corporation Annual Report 2017

of catastrophe risk accumulation.

Ensure the suitability of the risk transactions undertaken; execute the risk control procedures effectively.
Instill a culture of risk awareness; incorporate risk management into daily routines.

1.2.2 Sales Forecast and Basis

Momentum in the global economy has been building since last year and is expected to continue growing in 2018. This will bring favorable opportunities for the positive growth of insurance demand. The global reinsurance market has encountered a number of major catastrophe events last year, such as the hurricane and wildfires in the USA and earthquake in Mexico. The reinsurance price is expected to be partially supported, while the reinsurance capacity is not to be weakened as a result. As a whole, the reinsurance market remains to be a buyers’ market. Reinsurance companies, therefore, remain facing a very competitive business environment. This will partially offset the favorable opportunities accompanying the economic growth. The sales performance of the Company for the coming year, therefore, is expected to be the same as that of last year, or slightly better.

1.2.3 Important Production and Sales Policies

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

Central Reinsurance Corporation Annual Report 2017 10

1.3 Future Development Strategies

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

Optimize the advantage of a domestic establishment; provide professional services to further develop the local market and secure a long-term and stable market position.
Steadily expand the international market; continuously elevate the operational standards and enhance accumulated risk control to optimize the quantity and quality of our overseas business.
Provide customer-oriented services to increase service effectiveness and customer satisfaction.
Continuously elevate the effectiveness of fund utilization and improve asset quality; strengthen fund structure management to pursue steady income growth, thereby ensuring the sustainability of the Company.
Enhance compliance and internal audit/control procedures; strengthen risk management; implement good corporate governance.
Fulfill corporate social responsibilities; achieve sound ethical corporate management to facilitate the continuous development of the insurance market.
Devote to talent development to create motivating visions for employees.

11 Central Reinsurance Corporation Annual Report 2017

1.4 Influences of the External Competition, Regulatory Environment and Macro Environment

1.4.1 External Competition

As at the end of 2017, there were three reinsurance companies in Taiwan. Apart from the Company, the other two were General Reinsurance AG Taiwan Branch and RGA Global Reinsurance Company Limited Taiwan Branch. While the high retention ratio maintained by domestic insurers has led to the slowdown of domestic reinsurance market, the momentum in global reinsurance capacity remains abundance. The Company, therefore, is still facing a challenging business environment.

1.4.2 Regulatory Environment

Regulations Governing Anti-Money Laundering of Financial Institutions

Based on the first part of Paragraph 4, Article 7 of the “Money Laundering Control Act”, the competent authority has announced the “Regulations Governing Anti-Money Laundering of Financial Institutions” on June 28, 2017. The Regulations provide guidelines on various issues including the confirmation of customer identity, record keeping, reporting of large amount cash transactions and suspicious transactions. The major points of the Regulations are as follows:

(1) The Regulations highlight the customer due diligence (CDD) and ongoing due diligence measures to be undertaken by financial institutions. When the customer is a legal person, the financial institution shall identify the beneficial owners of the customer. (Article 3 and 5 of the Regulations)
(2) When verifying the customer identity or exercising ongoing CDD, the financial institution shall use a risk-based approach to determine to what extent such measures shall be applied. (Article 6 of the Regulations.)
(3) A financial institution shall investigate and determine whether a customer is currently or has been entrusted with a prominent public function by the domestic or a foreign government or an international organization, or is an individual or entity subject to financial sanctions.

Central Reinsurance Corporation Annual Report 2017 12

The scope of such investigation shall be extended to the beneficial owners and senior managerial officers of a legal person or an organization. (Article 8 and 10 of the Regulations)

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

Directions Governing the Internal Control System of Anti-Money Laundering and Countering Terrorism Financing (AML/CFT) of the Insurance Sector

In order to enhance the AML/CFT mechanisms, the competent authority amended the “Directions Governing Anti-Money Laundering and Countering Terrorism Financing of the Insurance Sector” on February 2 and June 28, 2017 respectively and renamed the Directions as “Directions Governing the Internal Control System of Anti-Money Laundering and Countering Terrorism Financing of the Insurance Sector”. The major amendments to the Directions are as follows:

(1) The insurance company shall submit the risk assessment report of AML/CFT to the competent authority for recordation. The board of directors shall hold the ultimate responsibility of AML/CFT internal controls. (Amendment of Article 5)
(2) The insurance company shall have an adequate number of AML/CFT personnel and sufficient resources for such purposes. The board of directors shall appoint a senior officer to act as the chief AML/CFT compliance officer and vest the officer full authority in coordinating and supervising AML/CFT implementation. (Amendment of Article 6)
(3) The chairman, president, chief auditor and chief AML/CFT compliance officers shall jointly issue a statement on internal AML/CFT control, which shall be submitted to the board of the directors for approval and announced/reported in accordance with the relevant regulations. (Amendment of Article 7)

13 Central Reinsurance Corporation Annual Report 2017

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

Regulations Governing Transactions Other than Loans between Insurance Enterprises and Interested Parties

To ensure the consistency of the financial supervisory policies, the competent authority has, based on Article 45 of the Financial Holding Company Act, amended the aforementioned Regulations on June 30, 2017. The major amendments of the Regulations are as follows:

(1) When an insurance company purchases from a non-interested party the financial derivatives or structured products linked to securities issued by an interested party, such a transaction is considered a “transaction other than Loans” between the insurance company and its interested parties. (Amendment of Article 3)
(2) The competent authority has relaxed the regulations regarding the scope of the general authorization to be granted by the board of directors and the conditions for doing so. (Amendment of Article 4)
(3) Delete the wording “(reinsurance) claims payable to the insured (insurers), or losses recovered from reinsurers (retrocessionaires)” in the relevant articles, considering that such payments and recoveries are conducted for the performance of insurance or reinsurance treaties. (Amendment of Item 2, Subparagraph 4, Paragraph 3 of Article 4)

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

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

To raise the compliance and AML/CFT awareness by insurance companies and to enhance the reporting mechanism of the industry, the competent authority amended the aforementioned Regulations on October 19, 2017. The major amendments of the Regulations are as follows:

(1) The board of directors shall be alert of the operating risks faced by the company and ensure the availability of an effective internal control

Central Reinsurance Corporation Annual Report 2017 14

system. They should manage and report the risks properly and timely if such risks are likely to cause significant loss to the industry (Amendments of Article 3 and 4-1)

(2) The control operation guidelines and procedures shall include the critical incident contingency plan and AML/CFT compliance guidelines. (Amendment of Article 5)
(3) After the completion of an audit inspection by the competent authority or when the audit report is received, the internal audit unit of the head office of the insurance company shall, based on the principle of materiality, promptly inform the directors and make a report to the forthcoming meeting of the board of directors. (Amendment of Article 36-1)

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

1.4.3 Macro Environment

According to the updated statistics announced by a number of international economic institutes such as World Bank, Global Insight and International Monetary Fund, higher growth rates in global economy are expected in 2018, as compared to those of 2017. IMF also forecasted a growth of 4.6% in world trade this year, which has for two consecutive years outperformed the world economic growth. As a whole, the economic recovery is expected to continue in this year.

In the "National Income and Domestic Economic Outlook" issued by the Directorate General of Budget, Accounting and Statistics (DGBAS) in February, 2018, the forecast made by Global Insight was cited: The global economic growth rate for 2018 is estimated at 3.3%, being a record-high since 2011. The US economic growth rate is expected to increase to 2.7%, EU 2.2%, China 6.6%, South Korea 3.1%, Hong Kong 2.8%, and Singapore 2.7%. As to Taiwan, the increase in domestic demand is the main drive for the economic growth this year, which is forecast at 2.42%, a slight rise when compared with last year.

The world economy will be facing increasing uncertainties in future, affected by various factors such as the adjustment of monetary policies by main economies,

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the more-than-expected increase of oil prices, the unsettled geopolitical conflicts, the effects of Trump’s new policies (such as tax reform and trade protection policies) on the US-China relationship, and the impact of China’s further industrial structure adjustment. Increased fluctuation in the world financial market is therefore unavoidable.

Looking at the world economic situation as a whole, the growth will remain being impacted by the potential risks in spite of the continuous warming trend. The insurance industry will inevitably be influenced by the economic environment. In terms of the management of reinsurance industry, the results of contract renewal for the year reflect the abundance of capacity in the market. The overall environment remains challenging. To successfully achieve its business objectives, the Company will continue concentrating on its core business and strengthen capital management, adhering to its consistent business principles for optimized profit and stable growth.

Central Reinsurance Corporation Annual Report 2017 16

2. COMPANY PROFILE

2.1 Date of Incorporation

October 31, 1968

2.2 Company History

Central Re was established by the Ministry of Finance (MOF) on October 31, 1968 with the mission of promoting the sound development and sustainable growth of the domestic insurance industry. Central Re was founded with capital stock of NT$15 million, but after numerous capital injections, the company’s paid-in capital reached its current NT$5,622.75 million.

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

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

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

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3. CORPORATE GOVERNANCE REPORT

3.1 Organization

Central Reinsurance Corporation Annual Report 2017 18

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Relation	-	-	-	Brother
	Name	-	-	-	Chang, Kuo- Ming
	Title	-	-	-	Director
Other Position		-	Adjunct Associate Professor, Dept. of Risk Management and Insurance, National Chengchi University	-	Director: EVA Airways Corp., Evergreen International Storage &Transport Corp. Supervisor, Evergreen International Corp. Chairman, Evergreen Insurance Company Limited
Experience & Education		-	President, Central Reinsurance Corp. Deputy Director General, Dept. of Insurance, Ministry of Finance MBA, The College of Insurance, New York City	-	Chairman, Evergreen Marine Corp. (Taiwan) Ltd. Bachelor of Science in Business Administration, Boston University(BSBA)
Shareholding by Other Nominee	�	0	0	0	0
	Shares	0	0	0	0
Spouse & Dependents Shareholding	�	-	0	-	0
	Shares	-	0	-	0
Present Shareholding	�	35.13	0.18	35.13	1.16
	Shares	197,541,037	1,000,735	197,541,037	6,541,899
Shareholding when Elected	�	35.13	0	35.13	0
	Shares	197,541,037	0	197,541,037	0
Date of Initial Election, Appointment		2002.10.29	1993.09.29	2002.10.29	2007.06.12
Tenure (Years)		3 Years	3 Years	3 Years	3 Years
Date Elected		2017.05.31	2017.05.31	2017.05.31	2017.05.31
Gender		-	M	-	M
Name		Evergreen International Corp.	Representative: Yang, Cheng-Tui	Evergreen International Corp.	Representative: Chang, Kuo-Cheng
Nationality or Place of Registration		Republic of China		Republic of China
Title		Chairman		Vice Chairman

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Relation	-	Brother	-	-
	Name	-	Chang, Kuo- Cheng	-	-
	Title	-	Director	-	-
Other Position		-	Director: Evergreen Marine Corp. (Taiwan) Ltd. Evergreen International Corp.	Director & President, Evergreen International Corp. Director: EVA Airways Corp. Evergreen International Storage &Transport Corp. Uni Airways Corp. Evergreen Sky Catering Corp. Evergreen Security Corp. Shun An Enterprise Corp. Evergreen Aviation Technologies Corp. Taipei Port Container Terminal Corp. Super Max Engineering Enterprise Corp.	-
Experience & Education		-	Director, Evergreen International Corp. Bachelor of Science in Electrical Engineering, University of Southern California	Legal Executive Vice President, Evergreen International Corp. Master of Maritime Law, National Taiwan Ocean University	-
Shareholding by Other Nominee	�	0	0	0	0
	Shares	0	0	0	0
Spouse & Dependents Shareholding	�	-	0	0	-
	Shares	-	0	0	-
Present Shareholding	�	35.13	0	0	21.03
	Shares	197,541,037	0	0	118,229,689
Shareholding when Elected	�	35.13	0	0	21.92
	Shares	197,541,037	0	0	123,266,689
Date of Initial Election, Appointment		2002.10.29	2017.05.31	2014.06.11	1968.10.31
Tenure (Years)		3 Years	3 Years	3 Years	3 Years
Date Elected		2017.05.31	2017.05.31	2017.05.31	2017.05.31
Gender		-	M	M	-
Name		Evergreen International Corp.	Representative: Chang, Kuo-Ming	Representative: Tai, Jiin-Chyuan	Ministry of Finance, R.O.C.
Nationality or Place of Registration		Republic of China		Republic of China	Republic of China
Title		Director		Director	Director

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Relation	-	-	-
	Name	-	-	-
	Title	-	-	-
Other Position		Deputy Director General, Department of Planning, Ministry of Finance, R.O.C.	Counselor, Ministry of Finance, R.O.C.	Professor, School of Law, Soochow University Executive Director & Chief Executive Officer, John Tung Foundation
Experience & Education		Senior Executive Officer, Department of Planning, Ministry of Finance, R.O.C. Master of Institute of Public Policy Science, National Chung Hsing University	Acting Director General, Training Institute, Ministry of Finance, R.O.C Master of Department of Land Economics, National Chengchi University	Dean, College of Law, Chinese Culture University Member, Administrative Appeal Review Committee, Executive Yuan Juris Doctor, University of Iowa
Shareholding by Other Nominee	�	0	0	0
	Shares	0	0	0
Spouse & Dependents Shareholding	�	0	0	0
	Shares	0	0	0
Present Shareholding	�	0	0	0
	Shares	0	0	0
Shareholding when Elected	�	0	0	0
	Shares	0	0	0
Date of Initial Election, Appointment		2011.06.15	2014.07.25	2008.06.13
Tenure (Years)		3 Years	3 Years	3 Years
Date Elected		2017.05.31	2017.05.31	2017.05.31
Gender		F	M	M
Name		Representative: Lee, Yi-Fen	Representative: Chen, Kuan-Pao	Yau, Sea-Wain
Nationality or Place of Registration		Republic of China	Republic of China	Republic of China
Title		Director	Director	Independent Director

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Relation	-	-
	Name	-	-
	Title	-	-
Other Position		CPA, NengShiang Certified Public Accounts	-
Experience & Education		Partner, Pricewaterhouse Coopers Vice President, Yuanta Futures Co., Ltd. Master of Accounting, University of Alabama	CEO of Guy Carpenter Taiwan branch Senior Consultant also has a side job as the legal compliance staff of Wilson Re (Taiwan) Limited Bachelor of Department of Insurance, Feng Chia University
Shareholding by Other Nominee	�	0	0
	Shares	0	0
Spouse & Dependents Shareholding	�	0	0
	Shares	0	0
Present Shareholding	�	0	0
	Shares	0	627
Shareholding when Elected	�	0	0
	Shares	0	627
Date of Initial Election, Appointment		2014.06.11	2017.05.31
Tenure (Years)		3 Years	3 Years
Date Elected		2017.05.31	2017.05.31
Gender		M	M
Name		Chou, Yu-Cheng	Chow, Ker-Kaoo
Nationality or Place of Registration		Republic of China	Republic of China
Title		Independent Director	Independent Director

3.2.1.1 Major Shareholders of Institutional Shareholders

April 1, 2018

	April 1, 2018	April 1, 2018

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

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

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

April 1, 2018

			April 1, 2018
		Major Shareholders of the	Institutional
	Name of Institutional
		Shareholders
Ll Ei
ega ntty	Shareholders		Percentage
		Name
			(%)

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

23 Central Reinsurance Corporation Annual Report 2017

3.2.1.3 Professional qualifications and independence analysis of directors

April 1, 2018

														April 1, 2018
	Meet One of the Following Professional Qualification
	Requirements, Together with at Least Five Years Work			Independence Criteria(Note)
		Experience
	An Instructor or	A Judge, Public	Have Work	1	2	3	4	5	6	7	8	9	10
	Higher Position in	Prosecutor, Attorney,	Experience
														Number of Other
Criteria	a Department of	Certified Public	in the Areas
	Commerce, Law,	Accountant, or Other	of											Public Companies
	Finance,	Professional or	Commerce,											in Which the
	Accounting, or	Technical Specialist	Law,											Individual is
														Concurrently
	Other Academic	Who has Passed a	Finance, or
														Servin as an
	Department	National	Accounting,											g Iddt
Name	Related to the	Examination and	or Otherwise											nepenen Director
	Business Needs of	been Awarded a	Necessary

	the Company in a	Certificate in a	for the
	Public or Private	Profession Necessary	Business of
	Junior College,	for the Business of	the
	College or	the Company	Company
	University
Yang, Cheng-Tui	�		�	�	�		�	�	�	�	�	�		0
Chang, Kuo-Cheng			�	�								�		0
Yau, Sea-Wain	�	�	�	�	�	�	�	�	�	�	�	�	�	0
Chou, Yu-Cheng	�	�	�	�	�	�	�	�	�	�	�	�	�	0
Chow, Ker-Kaoo			�	�	�	�	�	�	�	�	�	�	�	0
Lee, Yi-Fen			�	�	�	�	�		�	�	�	�		0
Chen, Kuan-Pao			�	�	�	�	�		�	�	�	�		0
Chang, Kuo-Ming			�	�		�						�		0
Tai, Jiin-Chyuan			�			�	�				�	�		0

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

Not an employee of the Company or any of its affiliates.
Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the preceding three subparagraphs.
Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the top five in holdings.
Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company.
Not a professional individual who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof. These restrictions do not apply to any member of the remuneration committee who exercises powers pursuant to Article 7 of the “Regulations Governing the Establishment and Exercise of Powers of Remuneration Committees of Companies whose Stock is Listed on the TWSE or Traded on the TPEx”.
Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
Not been a person of any conditions defined in Article 30 of the Company Law.
Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

Central Reinsurance Corporation Annual Report 2017 24

Spouse or Relatives within the Second Degree Holding Position as Manager	Relationship	None	None	None	None	None	None	None
	Name
	Title
Current Position(s) in Other Companies		None	None	None	None	None	None	None
Principal Work Experience and Academic Qualifications		1. Executive Vice President, Central Re 2. B.S. in Maritime Science, National Taiwan Ocean University	1. Senior Vice President, Risk Management Department of Central Re 2. M.S. in Chemical Engineering, National Cheng Kung University	1. Junior Vice President, Finance Division of Evergreen International Corp. 2. M.B.A., Chung Hua University	1. Junior Vice President, Computer Division of Evergreen International Corp. 2. B.B.A., National Taiwan University	1. Deputy Senior Vice President, Project Division of Central Re 2. M.B.A. in Actuarial Science, Feng Chia University	1. Senior Vice President, Project Division of Central Re 2. M.B.A., National Taipei University	1. Junior Vice President, Personnel Division of Evergreen International Corp. 2. B.L., National Chung Hsing University
Shareholding by Other Nominee	%	0	0	0	0	0	0	0
	Shares	0	0	0	0	0	0	0
Spouse & Dependents Shareholding	%	0	0	0	0	0	0	0
	Shares	0	0	0	0	0	0	0
Shareholding	%	0	0.00	0.01	0	0	0.01	0.01
	Shares	0	227	33,736	0	0	51,000	50,000
Date of Accession		2017.10.01	2016.07.01	2006.01.01	2011.01.01	2016.01.01	2015.04.01	2014.06.16
Gender		M	M	F	F	M	M	M
Name		Tsai, Bai-Long	Lin, Cheng-Yen	Cheng, Ching-Fen	Chang, Yung-Ning	Lin, Yu-Te	Chung, Chih-Hung	Hsu, Tzu-Cheng
Nationality		Republic of China	Republic of China	Republic of China	Republic of China	Republic of China	Republic of China	Republic of China
Title		President	Chief Auditor (Executive Vice President)	Executive Vice President (Financial Officer)	Senior Vice President	Appointed Actuary (Senior Vice President)	Senior Vice President	Deputy Senior Vice President

Spouse or Relatives within the Second Degree Holding Position as Manager	Relationship	None	None	None	None
	Name
	Title
Current Position(s) in Other Companies		None	None	None	None
Principal Work Experience and Academic Qualifications		1. Junior Vice President, Investment Department of Central Re 2. B.B.A, National Taiwan University	1. Junior Vice President, Legal & Claim Department of Central Re 2. M.B.A., College of Insurance, New York City, U.S.A.	1. Junior Vice President, Life & Health Department of Central Re 2. B.B.A. in Statistics, National Chengchi University	1. Junior Vice President, Accounting Department of Central Re 2. B.B.A., Ming Chuan College of Management
Shareholding by Other Nominee	%	0	0	0	0
	Shares	0	0	0	0
Spouse & Dependents Shareholding	%	0	0	0	0
	Shares	0	0	0	0
Shareholding	%	0	0.05	0	0
	Shares	0	288,809	0	0
Date of Accession		2008.01.01	2013.01.01	2012.01.01	2018.01.01
Gender		F	M	F	F
Name		Hsiung, Pei-Ching	Ting, Wen-Cheng	Liu, Yu-Hsueh	Liao, Min-Ju
Nationality		Republic of China	Republic of China	Republic of China	Republic of China
Title		Deputy Senior Vice President	Deputy Senior Vice President	Deputy Senior Vice President	Deputy Senior Vice President (Principal Accounting Officer)

Central Reinsurance Corporation Annual Report 2017 26

3.3 Implementation of Corporate Governance

3.3.1 The Composition and Operations of the Board of Directors

The Board of Directors consists of nine directors (three independent directors are included).
The Board Meetings were convened nine (A) times in 2017.

The directors’ attendance status is as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate in Person (%) �B/A�	Remarks
Chairman	Evergreen International Corp. Representative : Yang, Cheng-Tui	9	0	100%	Reelected on May 31, 2017 Required numbers of attendance: 9
Vice Chairman	Evergreen International Corp. Representative : Chang, Kuo-Cheng	8	1	88.89%
Independent Director	Yau, Sea-Wain	9	0	100%
Independent Director	Chou, Yu-Cheng	9	0	100%
Independent Director	Chow, Ker-Kaoo	5	0	100%	Newly elected on May 31, 2017 Required numbers of attendance: 5
Independent Director	Tsen, Ron-Syou	4	0	100%	Term terminated on May 31, 2017 Required numbers of attendance: 4
Director	Ministry of Finance, R.O.C. Representative: Lee,Yi-Fen	9	0	100%	Reelected on May 31, 2017 Required numbers of attendance: 9
Director	Ministry of Finance, R.O.C. Representative: Chen, Kuan-Pao	9	0	100%
Director	Evergreen International Corp. Representative: Chang, Kuo-Ming	5	0	100%	Newly elected on May 31, 2017 Required numbers of attendance: 5

27 Central Reinsurance Corporation Annual Report 2017

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate in Person (%) �B/A�	Remarks
Director	Evergreen International Corp. Representative: Tai, Jiin-Chyuan	7	2	77.78%	Reelected on May 31, 2017 Required numbers of attendance: 9
Director	Evergreen International Corp. Representative: Ku Lai, Mei-Hsueh	4	0	100%	Term terminated on May 31, 2017 Required numbers of attendance: 4

3.3.2 The Composition and Operations of the Audit Committee

The Audit Committee consists of all of the independent directors of the Company. Six (A) regular meetings were convened in 2017.
The members’ attendance status is as follows.

Title				Attendance Rate (%) �B/A�	Remark
	Name	Attendance	By Proxy
		in Person(B)
Independent Director	Yau, Sea-Wain	6	0	100 %	Reelected on May 31, 2017 Required numbers of attendance: 6
Independent Director	Chou, Yu-Cheng	6	0	100 %
Independent Director	Chow, Ker-Kaoo	3	0	100 %	Newly elected on May 31, 2017 Required numbers of attendance: 3
Independent Director	Tsen, Ron-Syou	3	0	100 %	Term terminated on May 31, 2017 Required numbers of attendance: 3

Central Reinsurance Corporation Annual Report 2017 28

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

29 Central Reinsurance Corporation Annual Report 2017

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

Central Reinsurance Corporation Annual Report 2017 30

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None None
Implementation Status1	Brief Explanation	Title Name Gender Manage- ment Insurance Finance / Account- ing Risk Manage- ment Law Asset Manage- ment Electronic information Chairman Yang, Cheng-Tui M ✓ ✓ ✓ Vice Chairman Chang, Kuo-Cheng M ✓ Director Chang, Kuo-Ming M ✓ ✓ Director Tai, Jiin-Chyuan M ✓ ✓ Director Lee, Yi-Fen F ✓ ✓ Director Chen, Kuan-Pao M ✓ ✓ Independent Director Yau, Sea-Wain M ✓ ✓ ✓ Independent Director Chou, Yu-Cheng M ✓ ✓ Independent Director Chow, Ker-Kaoo M ✓ ✓ ✓ (2) In order for the sound supervision and reinforcement of management, the Company established the Enterprise Risk Management Committee in addition to the Remuneration Committee and the Audit Committee. These functional committees shall be responsible for the Board of Directors. (3) According to article 43 of the Company's "Corporate Governance Best Practice Principles", the Company may conduct annual
	No
	Yes	○ ○
	Evaluation Item	(2) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee? (3) Does the company establish a standard to measure the performance of the Board, and

31 Central Reinsurance Corporation Annual Report 2017

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None	None
Implementation Status1	Brief Explanation	performance assessment on its board of directors, functional committees and individual directors through self-assessment, peer to peer assessment, engaging outside professional institutions or any other appropriate methods. The assessment criteria shall be specifically defined. The 2017 performance assessment results of the Board of directors please refer to the Company’s official website. (4) The Company assesses the professional service performed and independence of CPAs annually, and CPAs, in the meantime, are issue a declaration of independence for auditing of the financial report. The engagement, remuneration and independence assess of CPAs for financial report auditing and corporate income tax return compliance for the year 2017 has been approved by the Board of Directors on March 22, 2017. The CPAs appointed by the Company are in compliance with the Company's independent evaluation standards and are eligible for auditing the Company.	1.The Supervisory Division officer, who has been conducted stock affairs, shareholders’ meeting and Board meeting affairs for at least 3 years, is responsible for corporate governance affairs, and is
	No
	Yes	○	○
	Evaluation Item	implement it annually? (4) Does the company regularly evaluate the independence of CPAs?	4. Does the company set up a corporate governance unit or appoint personnel responsible for corporate governance matters

Central Reinsurance Corporation Annual Report 2017 32

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons		None
Implementation Status1	Brief Explanation	supervised by the top management of Finance Division. The main duties are as follows: (1) To provide information and regulations for Directors to assist Directors to perform their duty. (2) To set up the meeting agenda and minutes of Shareholders’ meeting, Board meeting and functional committees’ meeting, prepare meeting affairs and file the company registrations application with MOEA according to laws. (3) To hold Directors training course according to industrial characteristics and Directors’ needs. (4) To contact with shareholders and service. 2.The business development in 2017 are as follows, and were reported to the Board of directors on Dec. 21, 2017: Renewed the directors & officers liability insurance of 2018.	The Company has established grievance-handling procedures and channels for grievance, and appointed dedicated personnel to handle the queries or disputes of shareholders and stakeholders, please refer to the Company's website for details. The Company has also established corporate governance and corporate social responsibilities area on the Company’s website to provide relevant information.
	No
	Yes		○
	Evaluation Item	(including but not limited to providing information for directors and supervisors to perform their functions, handling work related to meetings of the Board of Directors and the shareholders' meetings, filing company registration and changes to company registration, and producing minutes of board meetings and shareholders’ meetings)?	5. Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?

33 Central Reinsurance Corporation Annual Report 2017

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

Central Reinsurance Corporation Annual Report 2017 34

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons		None
Implementation Status1	Brief Explanation	in two investor conferences in the year 2018.	Please refer to the details as follows:
	No
	Yes		○
	Evaluation Item	people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)?	8. Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?

35 Central Reinsurance Corporation Annual Report 2017

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	(1) The Company will hold or join in two investor conferences in the year 2018. (2)The Company will continually encourage directors to attend training courses according to the “Directions
Implementation Status1	Brief Explanation
	No
	Yes
	Evaluation Item	9. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System

Central Reinsurance Corporation Annual Report 2017 36

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies”.
Implementation Status1	Brief Explanation
	No
	Yes
	Evaluation Item	released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures.

Central Reinsurance Corporation Annual Report 2017

3.3.4 The Composition and Operations of the Remuneration Committee

The Remuneration Committee was established in 2011 and consists of three independent directors.
The duties of the Remuneration Committee are as follows:
(1) Establish and periodically review the performance evaluation and remuneration policy, system, standards, and structure for directors and managerial officers.
(2) Periodically evaluate and establish the remuneration of directors and managerial officers.
The Remuneration Committee convened five (A) meetings in 2017.

The members' attendance status is as follows:

Title	Name	Attendance in Person (B)	Attendance Rate (%)�B/A�	Remark
Convener	Yau, Sea-Wain	5	100%	Reappointed on May 31, 2017 Required numbers of attendance: 5
Member	Chou, Yu-Cheng	5	100%
Member	Chow, Ker-Kaoo	3	100%	Newly appointed on May 31, 2017 Required numbers of attendance: 3
Member	Tsen, Ron-Syou	2	100%	Term terminated on May 31, 2017 Required numbers of attendance: 2

Central Reinsurance Corporation Annual Report 2017 38

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

	Brief Explanation (Note 2)	(1) The Company has established the "Central Reinsurance Corporation - Corporate Social Responsibility Policy" and "Central Reinsurance Corporation - Corporate Social Responsibility Principles" as the guidelines for fulfilling the Corporate Social Responsibilities and as the basis for relevant management measures. All business units shall set up their annual operating plans based on the aforementioned policies and principles and to implement the plans accordingly. To successfully fulfill its corporate social responsibilities, under the leadership of the President, the Company has designated the Project Division to coordinate and facilitate all related business units and related CSR projects based on the annual operating plan. Business units involved include the Supervisory Division, Risk Management Department, Legal and Compliance Department, Finance Division, Property & Casualty Division, Life and Health Division and International Department. Regular reviews are carried out each year to check the implementation status, enabling the relevant business units to develop their annual CSR plans for the coming year. The
Implementation Status (Note1)
	No
	Yes	○

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

39 Central Reinsurance Corporation Annual Report 2017

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

	Brief Explanation (Note 2)	Company summaries the review results to compile the “Corporate Social Responsibility Report” which is submitted to the board of directors each year and disclosed on the Market Observation Post System�http://mops.twse.com.tw/mops/web/t100sb11 as well as the official website of the Company� http://www.centralre.com/content/information/information09.htm� (2) Each year, the Company organizes regular CSR-related trainings including ethical corporate management, personal information protection, compliance and internal audit/control. From time to time, it also assigns our employees to participate in external training or seminars on corporate governance and corporate social responsibility. (3) Under the leadership of the President and focusing on the four major aspects of “implementing corporate governance”, “developing a sustainable environment”, “preserving public welfare” and “enhancing information disclosure”, the Company has designated the Project Division to coordinate and facilitate all related business units and related CSR projects based on the annual operating plan. Business units involved include the Supervisory Division, Risk Management Department, Legal and Compliance Department,
Implementation Status (Note1)
	No
	Yes	○ ○

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

Central Reinsurance Corporation Annual Report 2017 40

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

	Brief Explanation (Note 2)	Finance Division, Property & Casualty Division, Life and Health Division and International Department. The implementation status and achievements are incorporated into the “Corporate Social Responsibility Report” of the Company, which will be regularly presented to the board of directors each year. (4) In the Company’s “Regulation of Payment for Managers” and “Regulations Governing the Salary and Compensation to Employees”, it is respectively stipulated that compensation shall be adjusted based on the results of regular annual performance review. Salary of individual employees shall be adjusted at each year end in accordance with their results of performance review. Employee performance reviews of the Company are conducted based on criteria such as “Work performance”, “Leadership”, “Sense of Responsibility”, “Character”, “Knowledge, Experience & Skills”, “Reliability” and so on. Suppose that employees have violated regulations or internal rules, such as work rules, principles of ethical corporate management or code of ethical conducts, the violated behaviors will be assessed in the performance appraisal, and subject to disciplinary actions prescribed in the work rules, based on the severity of the violation. Similarly, employees having
Implementation Status (Note1)
	No
	Yes	○

	Evaluation Item	(4) Has the Company established reasonable remuneration policies? Has it aligned the employee performance evaluation system with its corporate social responsibility policies? Is there a specific and effective reward and disciplinary system?

41 Central Reinsurance Corporation Annual Report 2017

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

	Brief Explanation (Note 2)	contribution to the Company will be rewarded based on their extent of contribution.	(1) The Company endeavors to improve the efficiency of energy utilization by adjusting its operational/service procedures and adopting high-performance equipment. The measures taken include: making announcements through online channels, reducing photocopies, promoting paperless meetings, raising the temperature setting of central air-conditioners and changing to energy-saving lighting systems comprehensively.	(2) The Company is a professional reinsurer, not within significant pollution and energy intensive industries. Hence, ISO14001 or relevant environmental management systems are not applicable to the Company. Nevertheless, the Company has made efforts in natural environment protection and established the "Central Reinsurance Corporation - Guidelines for Promoting Energy Conservation/Carbon Reduction." The General Affairs Department is responsible for formulation, implementation and maintenance of relevant environmental management systems and action plans. The General Affairs Department also arranges environmental education for all employees duly.
Implementation Status (Note1)
	No
	Yes		○	○

	Evaluation Item		2. Sustainable Environment Development (1) Is the Company devoted to improving the efficiency in resource utilization? Does it use reusable material with low environmental impact?	(2) Has the Company established suitable environmental management system based on the characteristics of the industry?

Central Reinsurance Corporation Annual Report 2017 42

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

	Brief Explanation (Note 2)	(3) The Company's management objective of energy conservation and carbon reduction is 0.5% reduction in water and electricity consumption annually. The methods are as follows: a. Promote the concept of water and electricity conservation on a regular basis. b. Set the air-conditioner at a temperature of 26-28 degrees; clean and maintain the air-conditioners on a regular basis to improve the energy efficiency. c. Use T5 lights to replace traditional lighting devices; save power consumption; turn off the lights for one hour during lunch breaks. d. Purchase the electrical goods affixed with energy-saving labels. The following measures are also being strengthened: a. Facsimiles are transmitted via electronic files without printing to reduce the use of paper and carbon toner. b. Encourage employees to commute by public transportation or by bicycle.
Implementation Status (Note1)
	No
	Yes	○

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

43 Central Reinsurance Corporation Annual Report 2017

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

	Brief Explanation (Note 2)	(1) Central Re supports the International Bill of Human Rights and observes relevant labor regulations. The Company has established various human resources policies, endeavoring to provide equal employment opportunities to its employees. Central Re has never employed any child worker. (2) The Company has set up concrete whistle-blowing procedures and has built up dedicated telephone line and e-mail address to receive employee grievance, as well as sexual harassment case. The whistle-blower's identity and the contents of the report will be kept confidential. On receiving a grievance or whistle-blowing case, the Company will assign dedicated personnel to investigate and manage the case immediately. There was no grievance case in 2017. (3) In order to provide a safe and healthy working environment to employees, the Company is committed to accident prevention and environmental hygiene. In addition to routine inspections on water quality and carbon dioxide level in the office area, the Company also organizes employee safety training and fire drills. An office
Implementation Status (Note1)
	No
	Yes	○ ○ ○

	Evaluation Item	3. Preserving Public Welfare (1) Has the Company established relevant management policies and procedures based on the International Bill of Human Rights and relevant regulations? (2) Has the Company established employee grievance mechanisms and channels? Are the complaints properly dealt with? (3) Has the Company provided a safe and healthy working environment for its employees as well as relevant training on a regular basis?

Central Reinsurance Corporation Annual Report 2017 44

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

	Brief Explanation (Note 2)	access control system is in place. Employee physical examinations are offered on a regular basis. (4) The Company provides smooth communication channels for its employees. Issues regarding to the rights and obligations of employees or involving significant influence to employees may be communicated through face-to-face discussions with the supervisors, e-mails or meetings. Labor management meetings are convened at least once in a quarter to harmonize employee right and condition. The meetings are attended by equal number of representatives from both the management team and the employees. (5) To develop employees' job competency, the Company provides various internal and external professional training programs for employees, and attending overseas training or international conferences. In addition, employees are also encouraged to attend diversified self-learning and development programs. In 2017, there were 379 attendances to attend related domestic courses including finance and reinsurance. The Company also organizes various internal professional training, and encourages employees to acquire various professional
Implementation Status (Note1)
	No
	Yes	○ ○

	Evaluation Item	(4) Has the Company established a regular communication mechanism with its employees? With regard to any operational changes which may have significant impact on the employees, does the Company notify the employees through a reasonable method? (5) Has the Company established effective competency development plans for its employees?

45 Central Reinsurance Corporation Annual Report 2017

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

	Brief Explanation (Note 2)	certificates to improve their competitiveness. (6) As a reinsurance company, the Company provides reinsurance services based on the needs of customers. Customers are welcomed to consult the Company or file a complaint through the website, e-mail address or telephone of the Company. (7) This item is not applicable, since Central Re is a reinsurance company. (8) As a current practice, before establishing business partnerships with suppliers, the Company proceeds to survey their company registration information, professional background and performance in the past. Especially the Company puts emphasis on the records of suppliers’ impact on the environment and society. (9) The Company must evaluate the legitimacy and the records of integrity behavior of its suppliers, its customers and all trading partners when being engaged in business. The contracts between
Implementation Status (Note1)
	No
	Yes	○ ○ ○ ○

	Evaluation Item	(6) Has the Company established relevant consumer protection policies and complaint procedures with regard to its R&D, procurement, production, operational and service flows? (7) With regard to the marketing and labeling of its products and services, has the Company followed relevant regulations and international standards? (8) Before engaging a new supplier, has the Company checked whether the supplier has any previous record of environmental or social impact? (9) Has the Company included a provision in its contracts with the main suppliers that the Company is entitled to terminate or

Central Reinsurance Corporation Annual Report 2017 46

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

	Brief Explanation (Note 2)	the Company and its suppliers must state the clauses of integrity management, which the Company is entitled to terminate the contracts and request for a compensation for damages if the suppliers breach the clauses of integrity management.	(1) The Company has disclosed its "Corporate Social Responsibility Policies", "Corporate Social Responsibility Principles" and annual "Corporate Social Responsibility Reports" in its official website. The information has also been reported to the Market Observation Post System (http://mops.twse.com.tw/mops/web/t100sb11). With regard to the Company’s achievement in fulfilling the corporate social responsibilities has also been disclosed in the annual report. Please visit the “Corporate Social Responsibility” section of the Company’s official website: http://www.centralre.com/content/information/information09.htm and The “Corporate Interest Parties” section of the Company’s official website: http://www.centralre.com/content/information/information07.htm.
Implementation Status (Note1)
	No
	Yes		○

	Evaluation Item	rescind the contract at any time when the supplier is involved in activities which have breached its corporate social responsibility or have significant environmental or social impact?	4. Enhancing Information Disclosure (1) Has the Company disclosed through its website or the Market Observation Post System important and reliable information relating to corporate social responsibility?

47 Central Reinsurance Corporation Annual Report 2017

					Facilitating the Exchange of Knowledge among Insurance Professionals In 2017 the Company organized a total of eleven seminars, which was participated by 317 persons. The seminars covered eight subjects, including “Sleep Disorders and Common Diseases of Newborn Babies”, “Minimally Invasive Surgery”, “A Brief Overview of the Current Status and Future Development of Agricultural Insurance in Taiwan” and “Future Talent -Reinsurance Principles and Practices”.
Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Achievements	To meet the demand for coverage against environmental change and natural disasters, the Company provides underwriting capacity to the market of direct insurers so that they can offer reliable life and non-life coverage to the customers and consumers, including earthquake, typhoon, flood, business interruption and personal accident insurance products.	The Company offers services such as “Compulsory Automobile Liability Insurance” and “Residential Earthquake Insurance”.	In 2017 the Company organized a total of eleven seminars, which was participated by 317 persons. The seminars covered eight subjects, including “Sleep Disorders and Common Diseases of Newborn Babies”, “Minimally Invasive Surgery”, “A Brief Overview of the Current Status and Future Development of Agricultural Insurance in Taiwan” and “Future Talent -Reinsurance Principles and Practices”.

	Brief Explanation (Note 2)
Implementation Status (Note1)
	No
		The major implementation plan	Providing Underwriting Capacity to Direct Writing Insurers	Supporting the Development and Operation of Insurance Products Initiated by the government	Facilitating the Exchange of Knowledge among Insurance Professionals
	Yes

	Evaluation Item

Central Reinsurance Corporation Annual Report 2017 48

				Implement Strict Risk Control Measures to safeguard the rights and interests of our customers and all interested parties. For insurance companies, risk management is an important part of corporate governance. Appropriate risk management helps to reduce the probability of incorrect business decision, minimize or avoid potential loss, in the meantime pursue optimized profit for the Company with acceptable risk. The Company, therefore, is devoted to building up an effective risk management system to fulfill its commitments to customers and all interested parties. As a professional reinsurance service provider, the Company is devoted to building up an integrated risk management system to support the insurance firms when accommodating the insurance requirements of the public against natural catastrophes and man-made disasters. The risk management
Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Achievements	To support the hard-working students and contribute to the society, Centre Re has been, collaboratively with other financial institutions, donating NTD80,000 each year as scholarship for four consecutive years. To show its care to the underprivileged and encourage social participation, the Company also invited the visually-impaired massage therapists from Eden Social Welfare Foundation to provide massage service at the site of its customer networking event in 2017, aiming to create employment opportunities for the underprivileged. In the same year, the Company also purchased a total of 132 egg roll gift boxes from the Workshop with Happiness (Syin-Lu Social Welfare Foundation) for our employees. For similar purposes, the Company bought in 2017 a variety of client gifts, including the “Fresh Fruit Gift Set” and “Rice and Bean Gift Set” produced by the sheltered workhouse of the Taiwan Foundation for the Blind and the “Coffee Gift Set” from the Ai-Heng Training Center for the Mentally Retarded.	For insurance companies, risk management is an important part of corporate governance. Appropriate risk management helps to reduce the probability of incorrect business decision, minimize or avoid potential loss, in the meantime pursue optimized profit for the Company with acceptable risk. The Company, therefore, is devoted to building up an effective risk management system to fulfill its commitments to customers and all interested parties. As a professional reinsurance service provider, the Company is devoted to building up an integrated risk management system to support the insurance firms when accommodating the insurance requirements of the public against natural catastrophes and man-made disasters. The risk management

	Brief Explanation (Note 2)
Implementation Status (Note1)
	No
		The major implementation plan	Supporting Public Welfare and Contributing to the Society	Implement Strict Risk Control Measures to safeguard the rights and interests of our customers and all interested parties.
	Yes

	Evaluation Item

Central Reinsurance Corporation Annual Report 2017

			system is also important for the Company to cope with its overall operating risks and maintaining adequate solvency, thereby safeguarding the rights and interests of its customers and all interested parties. In order to effectively plan, supervise and implement the risk management affairs, the Company has established its Enterprise Risk Management Committee, which reports directly to the board of directors. The Committee is composed of independent directors, the president and all department heads, with the independent director being the chairperson. In addition to providing regular reports to the board of directors, the Committee is also responsible to execute the risk management policies set forth by the board of directors. Providing a Safe and Healthy Working Environment The Company is committed to accident prevention and environmental hygiene. In addition to routine inspections on water quality and carbon dioxide level in the office area, the Company also organizes employee safety training and fire drills. An office access control system is in place. Employee physical examinations are offered on a regular basis. (3) With regard to the Company’s other achievements in fulfilling the corporate social responsibilities, please visit the “Corporate Social Responsibility” section of the Company’s official website: http://www.centralre.com/content/information/information09.htm.	system is also important for the Company to cope with its overall operating risks and maintaining adequate solvency, thereby safeguarding the rights and interests of its customers and all interested parties. In order to effectively plan, supervise and implement the risk management affairs, the Company has established its Enterprise Risk Management Committee, which reports directly to the board of directors. The Committee is composed of independent directors, the president and all department heads, with the independent director being the chairperson. In addition to providing regular reports to the board of directors, the Committee is also responsible to execute the risk management policies set forth by the board of directors. Providing a Safe and Healthy Working Environment The Company is committed to accident prevention and environmental hygiene. In addition to routine inspections on water quality and carbon dioxide level in the office area, the Company also organizes employee safety training and fire drills. An office access control system is in place. Employee physical examinations are offered on a regular basis. (3) With regard to the Company’s other achievements in fulfilling the corporate social responsibilities, please visit the “Corporate Social Responsibility” section of the Company’s official website: http://www.centralre.com/content/information/information09.htm.
Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Achievements	system is also important for the Company to cope with its overall operating risks and maintaining adequate solvency, thereby safeguarding the rights and interests of its customers and all interested parties. In order to effectively plan, supervise and implement the risk management affairs, the Company has established its Enterprise Risk Management Committee, which reports directly to the board of directors. The Committee is composed of independent directors, the president and all department heads, with the independent director being the chairperson. In addition to providing regular reports to the board of directors, the Committee is also responsible to execute the risk management policies set forth by the board of directors.	The Company is committed to accident prevention and environmental hygiene. In addition to routine inspections on water quality and carbon dioxide level in the office area, the Company also organizes employee safety training and fire drills. An office access control system is in place. Employee physical examinations are offered on a regular basis.

	Brief Explanation (Note 2)
Implementation Status (Note1)
	No
		The major implementation plan		Providing a Safe and Healthy Working Environment
	Yes

	Evaluation Item

Central Reinsurance Corporation Annual Report 2017 50

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

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

Central Reinsurance Corporation Annual Report 2017

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

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

Central Reinsurance Corporation Annual Report 2017 52


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

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

53 Central Reinsurance Corporation Annual Report 2017

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

Implementation Status (Note 1)	Brief Illustration	business dealings, including construction contractors, financial institutions, and providers of office suppliers.	(1) Central Re adheres to its “Principles for Ethical Corporate Management” and ensures all commercial activities are conducted with fairness and transparency. Before establishing any business relationship with its distributors, suppliers, customers or transaction counterparties, the Company always examines the legality and integrity of such activities and avoids dealing with those involved in dishonest behaviors. The Company has included an ethical corporate management clause in the contracts signed with its distributors, suppliers, customers or other business counterparties. The Company would claim to terminate or rescind the contract whenever the counterparty is involved in dishonest conducts. (2) The Human Resources Department of the Supervisory Division shall be the dedicated business unit to facilitate ethical corporate management, and shall regularly report the implementation status to the board of directors each year. The Auditing Division shall be responsible to audit and evaluate
	No
	Yes		○ ○
	Evaluation Item		2. Carry out Ethical Corporate Management (1) Has the Company checked the creditworthiness record of its counterparties and included a specific ethical conduct clause in its contracts with the counterparties? (2) Has the Company established a full-time (part-time) business unit to facilitate matters on ethical corporate management, which is subordinate to the board of directors and provides

Central Reinsurance Corporation Annual Report 2017 54

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

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

55 Central Reinsurance Corporation Annual Report 2017

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

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

Central Reinsurance Corporation Annual Report 2017 56

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

Implementation Status (Note 1)	Brief Illustration	every year, while the accountant audit and certify the Company’s financial report. (5) The Company has disclosed on its official website the "Ethical Corporate Management Best Practice Principles" and "Procedures for Ethical Corporate Management and Guidelines for Conduct" of the Company to notify employee. Related trainings are provided each year to eliminate dishonest behaviors. In 2017, the Company had held the training to promote the importance of ethical corporate management and staff confidentiality. On a monthly basis, the Legal and Compliance Department of the Company will consolidate the cases involving violation of the Principles. Such cases will be reported in the operation and management meeting and notified to all departments to alert the employees from time to time.
	No
	Yes	○
	Evaluation Item	(5) Does the Company provide internal or external training on ethical corporate management on a regular basis?	3. Implementation of Whistle-blowing System within the Company

57 Central Reinsurance Corporation Annual Report 2017

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

Implementation Status (Note 1)	Brief Illustration	(1) The Company has established its “Whistle-blowing Procedures” which have been reviewed by its Audit Committee and approved by the Board of Directors on December 21, 2017. The Procedures have incorporated into the Company’s internal control system. Mainly, the Procedures provide clear guidelines about the designated unit to receive whistleblowing, the channels for reporting, the types and procedures of whistleblowing, measures to protect the whistleblowers, the obligations of the internal whistleblowers and rewards thereto. (2) It is specifically stipulated the whistle-blowing processes and protective measures in the "Whistle-blowing Procedures" of the Company. The procedures also guarantee the confidentiality of the identity of whistle-blowers and the content of reported cases. (3) Through the Whistleblowing Procedures, the Company also undertakes to protect whistleblowers from inappropriate disciplinary actions.
	No
	Yes	○ ○ ○
	Evaluation Item	(1) Has the Company established specific whistle-blowing and award systems? Does it provide convenient whistle-blowing channels and, based on the status of the reported party, appointed suitable and dedicated personnel to handle the case? (2) Has the Company established the standard operating procedures for investigating the reported case, as well as relevant confidentiality mechanisms? (3) Has the Company adopted measures to protect the whistle-blower against any inadequate treatment caused thereby?

Central Reinsurance Corporation Annual Report 2017 58

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

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

59 Central Reinsurance Corporation Annual Report 2017

3.6 Material Resolutions of Shareholders Meeting and Board of Directors Meeting

3.6.1 Material Resolutions of Shareholders Meeting

Date	Major Resolutions	Execution
May 31, 2017	Approval of the distribution of earnings of the year 2016. Cash Dividends: NT$281,137,500. Cash dividend per share NT$0.5.	1. The Board Meeting convened on May 31, 2017 resolved the record date for distribution of cash dividends on Jun. 26, 2017 and payment date on Jul. 13, 2017. 2. The cash dividend was distributed on Jul. 13, 2017.
	To amend “Procedures for Acquiring and Disposing of Assets”.	The related actions on behalf of the Company have been conducted in accordance with revised “Procedures for Acquiring and Disposing of Assets”.
	To amend “Procedures for Transaction of Financial Derivatives”.	The related actions on behalf of the Company have been conducted in accordance with revised “Procedures for Transaction of Financial Derivatives”.
	To elect nine Directors (including three Independent Directors) according to the “Articles of Incorporation”.	The Directors election has been approved by Commerce Department, Ministry of Economic Affairs (no. 10601103350). The new Directors have executed authority in accordance with “Articles of Incorporation”and relevant laws.
	To approve the release of restrictions of competitive activities of Directors.	The related actions have been executed in accordance with the resolution.

3.6.2 Material Resolutions of Board of Directors Meeting


Date	Major Proposals

Jan. 24, 2017	(1) To propose to elect the directors in the 2017 Annual General Meeting of Shareholders. (2) To propose to release restrictions of competitive activities of newly elected directors in the 2017 Annual General Meeting of Shareholders. (3) To convene the 2017 Annual General Meeting of Shareholders. (4) To approve the 2016 year-end bonus to managers. (5) Toapprovethe2016 year-end bonustothe chairman and vice chairman.
Mar. 22, 2017	(1) To approve the 2016 employees' compensation. (2) To approve the 2016 remuneration of directors. (3) To approve the Business Report of the year 2016. (4) To approve the Financial Report of theyear 2016.

Central Reinsurance Corporation Annual Report 2017 60


Date	Major Proposals

	(5) To approve the distribution of earnings of the year 2016. (6) To appoint the Company's Certified Public Accountants and approve the remuneration. (7) To engage PricerwaterhouseCoopers for International Financial Reporting Standards No. 9 "Financial Instruments" Agreement Procedure Project Services. (8) To approve the audit report of financial derivative transactions of the fourth quarter of 2016. (9) To amend the Internal Control System and Internal Audit Implementation Rules and Internal Control System of Shareholder Services. (10) To approve the 2016 Internal Control Statement. (11) To amend "Directions Governing Anti-Money Laundering and Countering theFinancing of Terrorism".
Apr. 20, 2017	(1) To amend "Procedures for Transaction of Financial Derivatives". (2) To amend Risk Management Mechanism. (3) To amend "Codes of Ethical Conduct". (4) To examine the roster of director candidates. (5) To appoint the Anti-Money Laundering and Countering the Financing of Terrorism responsible officer.
May 3, 2017	(1) To approve the Corporate Social Responsibility Report of 2016. (2) To approve the project audit report of the "Risk Assessment of Money Laundering and Financing Terrorist" and the "Program of Anti-Money Launderingand Counteringthe Financingof Terrorism".
May 31, 2017	(1) To re-elect the chairman of the Board of Directors. (2) To re-elect the vice chairman of the Board of Directors. (3) To appoint the members of the third Remuneration Committee. (4) To appoint the Convener of Risk Management Committee. (5) To approve Own Risk and Solvency Assessment Report of 2017. (6) To resolve the record date and payment date for distribution of cash dividends.
Aug. 9, 2017	(1) To approve the Financial Report of the first half of year 2017. (2) To amend Accounting System. (3) To change the authorized persons of foreign investment custodian institutions. (4) To approve the audit report of financial derivative transactions of the first and second quarter of 2017. (5) To amend the Internal Control System and Internal Audit Implementation Rules. (6) To amend the "Procedures for the compliance of Anti-Money Laundering and Countering the Financing of Terrorism regulations". (7) To amend "Policies and Procedures for Transactions Other Than Loans with Interested Parties" and "Internal Operational Rules for Transactions Other Than Loans with Interested Parties". (8) To amend "Work Rules". (9) To amend "Corporate Governance Best Practice Principles". (10) To appoint the new president. (11) To approvethenew president’sremuneration.

61 Central Reinsurance Corporation Annual Report 2017


Date	Major Proposals

	(12) To amend "Regulation of Payment for Directors". (13) To approve 2017 remuneration for the chairman. (14) To approve 2017 remuneration for the vice chairman. (15) To approve transportation allowances for the current directors (except chairman, vice chairman, and independent directors). (16) To approve remuneration and transportation allowances of functional committeefor the current independentdirectors.
Sep. 20, 2017	(1) To amend "Work Rules". (2) Toapprovethe president’s pension.
Nov.8, 2017	(1) To approve the Risk Appetite and Risk Tolerance of 2018. (2) To amend the "Risk Management Policies and Procedures for Anti-Money Laundering and Countering the Financing of Terrorism" and "Anti-Money Laundering and Countering the Financing of Terrorism Programs". (3) To amend "Policies and Procedures for Transactions Other Than Loans with Interested Parties" and "Internal Operational Rules for Transactions Other Than Loans with Interested Parties". (4) To amend "the Plan of Security Measures for the Personal Information File and the Disposal Measures for the Personal Information after Termination of Business". (5) To amend "Meeting Rules of order of the Board of Directors". (6) To amend "Rules Governing the Scope of Power of Independent Directors". (7) To amend "Corporate Governance Best Practice Principles". (8) To amend "Audit Committee Charter".
Dec. 21, 2017	(1) To approve Business Plan and Budget for the year 2018. (2) To approve 2018 Investment Policy. (3) To amend "Policies and Procedures for Transaction and Risk Management of Financial Derivatives". (4) To renew Fee Schedule Addendum with The Bank of New York Mellon. (5) To amend the Internal Control System and Internal Audit Implementation Rules. (6) To approve the audit report of financial derivative transactions of the third quarter of 2017. (7) To approve the 2018 Annual Audit Plan. (8) To stipulate the "Procedures for mechanism and regulatory compliance management of Anti-Money Laundering and Countering the Financing of Terrorism". (9) To approve Annual Regulatory Compliance Plan 2018. (10) To amend the Regulatory Compliance system. (11) To change the accounting officer and accounting personnel. (12) To amend "Regulation of Payment for Managers". (13) To approve the 2018 remuneration for managers. (14) To amend "Regulation of Payment for Directors". (15) To approve 2018 remuneration for the chairman and vice chairman.
Jan. 31, 2018	(1) To amend the "Procedures for Transaction of Financial Derivatives", "Policies and Procedures for Transaction and Risk Management of Financial Derivatives", and" Internal Control System and Internal Audit Implementation RulesPart 2Chapter 4Section 11 thefundsallocations

Central Reinsurance Corporation Annual Report 2017 62


Date	Major Proposals

	items�Transaction of Financial Derivatives". (2) To amend Accounting Policy. (3) To amend Accounting System. (4) To amend "Directions Governing Anti-Money Laundering and Countering the Financing of Terrorism" and establish "Suspicious Transaction Patterns of Money-Laundering or the Financing of Terrorism". (5) To amend the Internal Control System and Internal Audit Implementation Rules. (6) To convene the 2018 Annual General Meeting of Shareholders. (7) To approve the 2017 year-end bonus to managers. (8) To approve the 2017year-end bonus to the chairman and vice chairman.
Mar. 21, 2018	(1) To amend "Regulation of Payment for Managers". (2) To approve the 2017 employees' compensation. (3) To approve the 2017 remuneration of directors. (4) To approve the Business Report of the year 2017. (5) To approve the Financial Report of the year 2017. (6) To approve the distribution of earnings of the year 2017. (7) To approve the issuance of new shares for capital increase by earnings re-capitalization. (8) To approve the write off of bad debts caused by overdue account of Wilson Re. (9) To approve the write off of bad debts caused by aviation insurance short payment of Taiwan Fire & Marine Insurance Co., Ltd. (10) To approve the audit report of financial derivative transactions of the fourth quarter of 2017. (11) To approve the 2017 Internal Control Statement. (12) To approve the Internal Control Statement of Anti-Money Laundering and CounteringtheFinancing of Terrorism.

63 Central Reinsurance Corporation Annual Report 2017

3.7 Information on CPA Professional Fees and Replacement of Certified Public Accountant

3.7.1 Audit Fee

NT$ thousands

Accounting Firm	Name of CPA	Audit Fee	Non-audit Fee	Non-audit Fee	Non-audit Fee	Non-audit Fee		Period Covered by CPA’s Audit
			System of Design	Company Registration	Human Resource	Others	Subtotal
Pricewaterhouse Coopers, Taiwan	Chen, Hsien-I	4,485	-	-	-	-	-	2017/01/01 ~ 2017/12/31
	Lai, Chung-Hsi

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

3.7.2 Replacement of CPA

1. Regarding the former CPA

1. Regarding the former	CPA	CPA	CPA	CPA	CPA
Replacement Date	March 17,2016(Date of the Board of Directors Resolution)
Replacement reasons and explanations	Due to internal adjustments of PwC Taiwan.
Describe whether the Company terminated or the CPA did not accept the appointment	Parties Status			CPA	The Company
	Termination of appointment			Note	Note
	No longer accepted (continued) appointment			Note	Note
Other issues (except for unqualified issues) in the audit reports within the last two years	None
Differences with the company	Yes	-	Accounting principles or practices
		-	Disclosure of Financial Statements
		-	Audit scope or steps
		-	Others
	None	Note
	Remarks/specifydetails:
Other Revealed Matters	None

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

Central Reinsurance Corporation Annual Report 2017 64

Regarding the successor CPA

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

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

3. Reply of the Previous Accountant: None.

65 Central Reinsurance Corporation Annual Report 2017

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


		2017		As of April, 1, 2018

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

Chairman	Evergreen International Corp.	0	0	0	0
	Representative: Yang, Cheng-Tui	0	0	0	0
Vice Chairman	Evergreen International Corp.	0	0	0	0
	Representative: Chang, Kuo-Cheng	0	0	0	0
Independent Director	Yau, Sea-Wain	0	0	0	0
Independent Director	Chou, Yu-Cheng	0	0	0	0
Independent Director	Chow, Ker-Kaoo	0	0	0	0
Director	Ministry of Finance, R.O.C.	(6,162,000)	0	0	0
	Representative: Lee, Yi-Fen	0	0	0	0
	Representative: Chen, Kuan-Pao	0	0	0	0
Director	Evergreen International Corp.	0	0	0	0
	Representative: Chang, Kuo-Ming	0	0	0	0
	Representative: Tai, Jiin-Chyuan	0	0	0	0
President	Tsai, Bai-Long	0	0	0	0
Major Shareholder	Ministry of Finance, R.O.C.	(6,162,000)	0	0	0
Major Shareholder	Evergreen International Corp.	0	0	0	0
Chief Auditor (Executive Vice President)	Lin, Cheng-Yen	0	0	0	0

Central Reinsurance Corporation Annual Report 2017 66


		2017		As of April, 1, 2018

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

Executive Vice President (Financial Officer)	Cheng, Ching-Fen	0	0	0	0
Senior Vice President	Chang, Yung-Ning	0	0	0	0
Appointed Actuary (Senior Vice President)	Lin, Yu-Te	0	0	0	0
Senior Vice President	Chung, Chih-Hung	0	0	0	0
Deputy Senior Vice President	Hsu, Tzu-Cheng	40,000	0	5,000	0
Deputy Senior Vice President	Hsiung, Pei-Ching	0	0	0	0
Deputy Senior Vice President	Ting, Wen-Cheng	0	0	0	0
Deputy Senior Vice President	Liu, Yu-Hsueh	0	0	0	0
Deputy Senior Vice President (Principal Accounting Officer) (Note )	Liao, Min-Ju	0	0	0	0

Note: Liao, Min-Ju was appointed as Principal Accounting Officer from Jan. 1, 2018.

67 Central Reinsurance Corporation Annual Report 2017

4. CAPITAL OVERVIEW

4.1 Source of Capital Stock

4.1.1 Issued Share

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

4.1.2 Type of Stock

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

Common Shares	562,275	37,725	600,000	Based on Total Shares Outstanding as of April 1,2018

4.2 Shareholders Structure

	As of April 1,2018	As of April 1,2018	As of April 1,2018	As of April 1,2018	As of April 1,2018	As of April 1,2018
Item					Foreign Institutions & Natural Persons
			Other	Domestic
	Government	Financial
			Juridical	Natural		Total
	Agencies	Institutions
			Person	Persons


Number of Shareholders	1	2	41	8,561	60	8,665
Shareholding (shares)	118,229,689	37,020	337,606,849	91,531,345	14,870,097	562,275,000
Percentage	21.03%	0.01%	60.04%	16.28%	2.64%	100%

Central Reinsurance Corporation Annual Report 2017 68

4.3 Diffusion of Ownership and List of Principal Shareholders

4.3.1 Diffusion of Ownership (Common Shares)

	As of April 1,2018	As of April 1,2018	As of April 1,2018
	Number of
Range of Shareholdings		Number of Shares	Holding (%)
	Shareholders

1 - 999	2,700	318,846	0.06
1,000 - 5,000	3,647	7,921,987	1.41
5,001 - 10,000	887	6,778,583	1.21
10,001 - 15,000	392	4,762,834	0.85
15,001 - 20,000	252	4,642,998	0.83
20,001 - 30,000	244	5,977,743	1.06
30,001 - 50,000	218	8,573,577	1.53
50,001 - 100,000	162	11,492,491	2.04
100,001 - 200,000	81	11,218,000	2.00
200,001 - 400,000	42	11,899,478	2.11
400,001 - 600,000	12	5,806,677	1.03
600,001 - 800,000	4	2,672,695	0.48
800,001 - 1,000,000	5	4,400,211	0.78
1,000,001 and above	19	475,808,880	84.61
Total	8,665	562,275,000	100

4.3.2 List of Principal Shareholders

4.3.2 List of Principal Shareholders
	As of April 1,2018
Shareholding Entity		Holding (%)
	Number of Shares

Evergreen International Corp.	197,541,037	35.13
Ministry of Finance, R.O.C.	118,229,689	21.03
Evergreen International Storage & Transport Corp.	48,788,966	8.68
Evergreen Marine Corp. (Taiwan) Ltd.	47,491,873	8.45
EVA Airways Corp.	33,526,675	5.96
Chang, Kuo-Cheng	6,541,899	1.16
EFG Bank	6,255,707	1.11
Hsiang-Li Investment Corp.	2,610,040	0.46
Tsai, Han-Chang	2,027,076	0.36
Jung, Ji-Cheng	1,975,000	0.35

69 Central Reinsurance Corporation Annual Report 2017

4.4 Disclosure of the Share Prices and Related Information for the Past Two Fiscal Years

			NT$
			01/01/2018~
Year
	2017	2016	04/01/2018
Items
			(Note2)

Market Prices per Share
Highest	18.90	16.30	19.15
Lowest	14.20	13.55	16.80
Average	16.31	14.56	18.05
Net Worth per Share
Before Distribution	20.01	16.89	NA
After Distribution	(Note1)	16.39	NA
Earnings per Share
Weighted Average Shares	562,275,000	562,275,000	NA
Diluted Earnings per Share	2.47	1.36	NA
Adjusted Diluted Earnings per Share	(Note1)	1.36	NA
Dividends per Share
Cash Dividends	(Note1)	0.50	NA
Stock Dividends
Dividends from Retained Earnings	(Note1)	-	NA
Dividends from Capital Surplus	(Note1)	-	NA
Accumulated Undistributed Dividends	(Note1)	-	NA
Return on Investment
Price/Earnings Ratio	6.19	10.50	NA
Price/Dividend Ratio	(Note1)	28.56	NA
Cash Dividend Yield Rate	(Note1)	3.50%	NA

Note:

Earnings distribution for the year 2017 has not yet been ratified at the stockholders’ meeting as of the reporting date.
As of the reporting date, the Company did not have the latest financial information audited or reviewed by CPA for the current year.

Central Reinsurance Corporation Annual Report 2017 70

4.5 Dividend Policy and Earnings Distribution Implementation Status

4.5.1 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.

4.5.2 Earnings Distribution Implementation Status

On March 21, 2018, the Board of Directors proposed that total stock dividends and cash dividends for the distribution of earnings for 2017 were $281,138 thousand (stock dividend of 0.5 in dollars per share) and $562,275 thousand (cash dividend of $1.0 in dollars per share). Earnings distribution for the year 2017 has not yet been ratified at the stockholders’ meeting as of the reporting date.

71 Central Reinsurance Corporation Annual Report 2017

5. BUSINESS OPERATIONS OVERVIEW

5.1 Business Activities

5.1.1 Business Scope

5.1.1.1 Breakdown by Source

NT$ thousands

5.1.1.1 Breakdown by Source NT$ thousands	5.1.1.1 Breakdown by Source NT$ thousands	5.1.1.1 Breakdown by Source NT$ thousands	5.1.1.1 Breakdown by Source NT$ thousands	5.1.1.1 Breakdown by Source NT$ thousands
Gross Premium Written
	2017		2016
Year
Item	Amount	Percentage	Amount	Percentage
		(%)		(%)

Domestic Non-Life Business	9,117,784	62.61	8,751,585	62.33
Domestic Life Business	3,737,224	25.66	3,884,165	27.66
Subtotal	12,855,008	88.27	12,635,750	89.99
International Non-Life Business	1,634,830	11.22	1,320,010	9.40
International Life Business	74,208	0.51	85,991	0.61
Subtotal	1,709,038	11.73	1,406,001	10.01
Total	14,564,046	100.00	14,041,751	100.00

5.1.1.2 Breakdown by Line

.1.1.2 Breakdown by Line	.1.1.2 Breakdown by Line	.1.1.2 Breakdown by Line	.1.1.2 Breakdown by Line	.1.1.2 Breakdown by Line
NT$thousands
Gross Premium Written
	2017		2016
Year
Line	Amount	Percentage	Amount	Percentage
		(%)		(%)

Fire	1,861,062	12.78	1,628,941	11.60
Marine Hull	259,863	1.78	295,891	2.11
Marine Cargo	430,019	2.95	336,780	2.40
Automobile	3,811,430	26.19	3,603,033	25.65
Aviation	17,336	0.12	8,240	0.06
Engineering	332,331	2.28	280,200	2.00
Miscellaneous Casualty	1,422,081	9.76	1,404,796	10.00
Fish Vessel	68,784	0.47	49,750	0.35
Compulsory Automobile Liability	1,488,857	10.22	1,453,627	10.35
Compulsory Motorcycle liability	1,007,076	6.91	958,367	6.83
Residential Earthquake	53,774	0.37	51,970	0.37
Life	2,266,198	15.56	2,285,907	16.28
Personal Accident	539,764	3.71	644,091	4.59
Health	1,005,471	6.90	1,040,158	7.41
Total	14,564,046	100.00	14,041,751	100.00

Central Reinsurance Corporation Annual Report 2017 72

5.1.1.3 New Products, Potential Customers and Markets

1. Domestic Non-Life Business

The government has been actively encouraging insurance firms to underwrite and develop new products on agricultural insurance. The entry of new market participants also drives non-life insurers to diligently develop new personal insurance products to remain competitive. To facilitate its business development, the Company will also provide timely services to its customers in various aspects including new product design, underwriting techniques training and claim consultancy services.

2. Domestic Life Business

Aging population and low birth rate in the country both drive up the demand for medical and long-term care insurance products for the elderly. Product development and sales for aging group and related health products will increase. To pursue business diversification, the Company will also, on a timely basis, offer varieties of new services such as professional consultancy on new products, building up and providing information on incidence rates or experience rates, etc.

3. International Non-life Business

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

73 Central Reinsurance Corporation Annual Report 2017

5.1.2 Industry Overview

5.1.2.1 Market Player

According to statistics released by the Insurance Bureau at the end of 2017, there were 54 insurance companies in Taiwan, of which 28 were life insurance companies, 23 were non-life insurance companies and 3 were reinsurance companies. Out of the 28 life insurance companies, 23 were domestic companies while 5 were branches of foreign companies. The 23 non-life insurance companies include 17 domestic and 6 foreign companies.

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

2013	56	3	-	17	164	12	6	9	24	123	13	6	3
2014	54	3	-	17	165	10	5	8	24	123	13	5	2
2015	54	3	-	17	165	10	5	8	24	123	13	5	2
2016	54	3	19	17	164	9	6	8	23	125	14	5	1
2017	54	3	20	17	169	9	6	8	23	125	13	5	1

Source�Insurance Bureau, Financial Supervisory Commission Note�Offshore Insurance Unit

5.1.2.2 Gross Premium Written

The gross premium written of the domestic insurance industry during 2017 was NT$3,576,945 million, a rise of 9.08% over the previous year. Non-life insurance gross premium written accounted for NT$156,712 million, a rise of 7.36% over the previous year. Total life insurance gross premium written was NT$3,420,233 million, a rise of 9.16% over 2016.

							NT$ millions
	Gross		Premium Written over the Past Five Years
Yr			Non-Life		Life
	Insurance Industry		Insurance		Insurance		Premium Income: NnLif Lif
ea	Amount	Growth Rate	Amount	Growth Rate	Amount	Growth Rate	o-e vs. e Insurance
		(%)		(%)		(%)
2013	2,708,436	4.22	124,904	3.67	2,583,532	4.24	1:20.7
2014	2,903,350	7.20	132,220	5.86	2,771,130	7.26	1:21.0
2015	3,062,796	5.49	136,119	2.95	2,926,677	5.61	1:21.5
2016	3,279,319	7.07	145,962	7.23	3,133,357	7.06	1:21.5
2017	3,576,945	9.08	156,712	7.36	3,420,233	9.16	1:21.8

Source: Taiwan Insurance Institute

Central Reinsurance Corporation Annual Report 2017 74

5.1.2.3 Long-Term and Short-Term Business Plans

1. Long-Term Plan

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

(1) Optimize the advantage of a domestic establishment; provide professional services to further develop the local market and secure a long-term and stable market position.
(2) Steadily expand the international market; continuously elevate the operational standards and enhance accumulated risk control to optimize the quantity and quality of our overseas business.
(3) Provide customer-oriented services to increase service effectiveness and customer satisfaction.
(4) Continuously elevate the effectiveness of fund utilization and improve asset quality; strengthen fund structure management to pursue steady income growth, thereby ensuring the sustainability of the Company.
(5) Enhance compliance and internal audit/control procedures; strengthen risk management; implement good corporate governance.
(6) Fulfill corporate social responsibilities; achieve sound ethical corporate management to facilitate the continuous development of the insurance market.
(7) Devote to talent development to create motivating visions for employees.

2. Short-Term Plan

(1) Domestic Reinsurance Business
a. Identify customer needs and actively take high-quality business through our market advantages in the local market and tailored service. The objective is continued expand our local market.

75 Central Reinsurance Corporation Annual Report 2017

b. Grasp the new product trend and monitor the development of InsurTech to optimize our business opportunities.
c. Enforce strict underwriting disciplines and ensure proper control over accumulated catastrophe risks to secure stable underwriting profit.
d. Provide professional services to maintain good and close customer relationship; improve the professional image of the company.
(2) International Reinsurance Business
a. Prudently expand international business and diversify the risk of geographical concentration to increase the efficiency of capital utilization.
b. Cultivate a profit-oriented culture; periodically monitor the quality of business to eliminate underperforming contracts.
c. Increase direct business; in the meantime develop the small and medium size clients’ market. The purpose is to improve the business quality and the transparency of underwriting information.
d. Develop high-quality facultative insurance business through strengthening employees' professional expertise in underwriting to enhance profitability.
e. Design suitable retrocession programs on areas or portfolios with higher catastrophe risks to reduce the fluctuation in business performance.
(3) Fund utilization

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

Central Reinsurance Corporation Annual Report 2017 76

5.2 Market Overview

5.2.1 Breakdown by Region

	TN$ thousands	TN$ thousands	TN$ thousands	TN$ thousands
Year	2017		2016
Region		Percentage		Percentage
	Amount		Amount
		(%)		(%)

Domestic Inward Business	12,855,008	88.27	12,635,750	89.99
Overseas Inward Business	1,709,038	11.73	1,406,001	10.01
Total	14,564,046	100.00	14,041,751	100.00

5.2.2 Market Share

In Taiwan market, our market share at the end of 2017 is as follows.

		NT$millions
Year
	Non-Life	Life
Item	Insurance	Insurance

Written Premium	156,712	3,420,233
Outward Premium	48,597	19,257
Cession Rate(%)	31.01	0.56
Central Re's Inward	9,118	3,737
Our Market Share(%)	18.76	19.41

Source: Taiwan Insurance Institute

5.2.3 Market Development

1. Domestic Non-Life Business

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

Looking forward to 2018, gross premium written in the non-life insurance company is expected to continue growing. Reasonable underwriting profit is predicted subject to that there is no major large loss in the market.

2. Domestic Life Business

The aging population has led to increased need for retirement preparation and health/wealth protection. Considering the upturning global economy and the anticipated rise of interest rate and NTD exchange rate, we expect the key

77 Central Reinsurance Corporation Annual Report 2017

products for 2018 to remain similar to those of 2017, including foreign currency policies, interest-sensitive policies, unit-linked policies and health insurance products. The rising demand for protection products will increase the product diversity and contribute to the growth of reinsurance business.

3. International Non-life Business

After several catastrophes in 2011 such as Japan Tohoku Earthquake, Christchurch Earthquake and Thailand Flood, the renewal prices had substantially increased, with terms improved in the following years. At the same time, more and more new underwriting capacity were accumulated and injected into the market. However, with less natural perils activities over recent years, global market insurance losses were considerably reduced and excessive underwriting capacity were accumulated. The reinsurance pricing remains soft and competition are heating up. As a result, the profit margins of some insurance and reinsurance companies were affected. Though insured natural catastrophe loss hit a record high in 2017, reinsurance capacity provided through alternative risk transfer facilities funded by the capital market was quickly recovered, as such, dynamics of the demand and supply has been delicately maintained. It’s expected that the market trend is to continue for a period of time.

Central Reinsurance Corporation Annual Report 2017 78

5.3 Human Resources

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

Year	Year	2017	2016	Data as of April 1,2018
Number of Employees		132	129	129
Average Age		40.58	40.71	40.77
Average Years of Service		10.64	10.40	10.59
Education (%)	Masters	42.42	43.41	41.86
	University or College	56.82	55.81	57.36
	Others	0.76	0.78	0.78

Note: The number of full-time employees includes 1 person, who took leave without pay till April, 2018.

5.4 Labor Relations

5.4.1 The Company’s implementation status of employee benefit plans, on-job training, continuing education and retirement systems; the status of labor-management agreements and measures for preserving employees' rights and interests are listed in the following.

5.4.1.1 Employee benefit plans:

Leave Policies: According to the Labor Standards Act, employees are entitled to annual leave.
Employee Insurances: Employees are covered by labor insurance, national health insurance, group personal accident insurance and travel insurance on overseas business trips.
Health Care: The Company offers employee physical examination programs on a regular basis to ensure the physical health of its employees (including physical examination for new employees).
On-job training and Continuing education: The Company encourages its employees to elevate their professional abilities. In 2017, it totals 379 attendances to attend various domestic reinsurance, finance, or risk management courses. The Company also holds internal professional trainings, and inspires employees to acquire professional certifications and licenses in order to self-improvement. Please refer to page 7 for details.

79 Central Reinsurance Corporation Annual Report 2017

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

5.4.1.2 Retirement system:

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

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

5.4.1.3 Labor-management agreement:

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

5.4.1.4 Measures for preserving employees' rights and interests:

The Company sets forth the human resource regulations in accordance with

Central Reinsurance Corporation Annual Report 2017 80

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

5.4.2 The loss suffered due to labor conflicts during the recent one year as at the date the annual report is printed, and the estimated amount for current and potential conflicts as well as the measures to deal with these issues:
As at the date the latest annual report is printed, the Company does not have any loss caused by labor conflicts during the recent year.
Estimated amount for current and potential conflicts as well as the measures to deal with these issues:

The Company has well-established management and welfare systems, and has been actively promoting employer/employee cooperation. It has maintained a harmonious employer/employee relationship. So far, the Company has not suffered from any loss caused by labor conflicts. It is very unlikely that the Company would suffer from any loss caused by labor conflicts in future.

5.4.3 Employee code of conduct or ethical principles:

The Company has established the code of ethical conducts, which shall be followed by all directors and employees. The Company also provides grievance channels for employees to express their opinions. According to the work rules of the Company, employees are required to observe the following service guidelines:

Obey the policies and rules of the Company and follow the reasonable guidance of the supervisors at different management levels.
Be dedicated to individual job responsibilities, maintain good order at work, and demonstrate team spirit to improve work efficiency.
Preserve the good reputation of the Company. The employee should report to the direct supervisor immediately on discovering any matters which may adversely impact the reputation of the Company. Concealment of

81 Central Reinsurance Corporation Annual Report 2017

facts is prohibited.

Any job reports should be made in accordance with the hierarchy of authority and responsibility. Bypassing the direct supervisor to report is prohibited. This shall not apply, however, in special cases or emergencies.
Supervisors should show respect and care to their subordinates and provide suitable guidance thereto.
Employees should cherish the public facilities and avoid waste of money.
Employees are not allowed to work for other employers unless required by law or approved by the Company.

5.4.4 Protective measures on environmental and personal safety:

The office building of the Company is featured by convenient transportation and high-quality work environment. The users of the office building have organized building management committee. The committee conducts regular fire safety and public utility inspections. Security systems and access control are available in the building to ensure the security of the environment and the personal safety of the employees. No case of occupational injury was reported in the office area in 2017.
As required by law, the Company has assigned the occupational safety and health affair supervisor and first-aid personnel. They are required to attend on-job trainings and have acquired relevant course certificates. The Company has also established its "Labor Safety and Health Work Rules" and the annual occupational safety and health management plan as the guidelines for administering relevant employee health and safety matters.
The Company has organized a Self-Defense Fire Protection Team based on its "Fire Protection Plan", responsible to handle relevant issues in the building. The Company also organized internal labor safety training and fire-drill on a yearly basis. The drill for 2017 was completed on November 23, 2017. A disaster reporting system has been established to minimize the loss.
The Company has established its Regulations for Energy Saving and

Central Reinsurance Corporation Annual Report 2017 82

Carbon Reduction to fulfill its environmental protection objectives. Regular inspections are conducted to monitor the carbon dioxide concentration in the offices. Water quality test on drinking machines and office disinfection are also carried out in respective floors of the office building.

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

5.5 Important Contracts

5.5.1 Non-Life Business

Type of Contract	Counterparty	Period	Major Contents	Restrictions
Reinsurance Contracts	Domestic and overseas non-life insurance companies	2017.1.1-2017.12.31 2018.1.1-2018.12.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
	Overseas non-life insurance companies	2017.4.1-2018.3.31 2018.4.1-2019.3.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
Retrocession Contracts	Domestic and overseas non-life insurance companies	2017.1.1-2017.12.31 2018.1.1-2018.12.31	Non-life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas non-life reinsurance companies	2017.1.1-2017.12.31 2018.1.1-2018.12.31	Non-life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas non-life reinsurance companies	2017.1.1-2017.12.31 2018.1.1-2018.12.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
	Overseas non-life reinsurance companies	2017.4.1-2018.3.31 2018.4.1-2019.3.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
Catastrophe Reinsurance Contracts	Overseas non-life reinsurance companies	2017.2.1-2018.1.31 2018.2.1-2019.1.31	To protect our domestic net retention excess catastrophe losses	The contracts include exclusion clauses
	Overseas non-life reinsurance companies	2016.12.1-2018.1.31 2018.2.1-2019.1.31	To protect our overseas net retention excess catastrophe losses	The contracts include exclusion clauses

83 Central Reinsurance Corporation Annual Report 2017

5.5.2 Life Business

5.5.2 Life	Business

Type of
	Counterparty	Period	Major Contents	Restrictions
Contract


Reinsurance Contracts	Domestic and overseas life insurance companies	2017.1.1-2017.12.31 2018.1.1-2018.12.31	Life reinsurance inward businesses	Some contracts include exclusion clauses
Retrocession Contracts (Non-Cat)	Domestic life insurance companies	2017.1.1-2017.12.31 2018.1.1-2018.12.31	Life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas life reinsurance companies	2017.1.1-2017.12.31 2018.1.1-2018.12.31	Life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas life reinsurance companies	2017.4.1-2018.3.31 2018.4.1-2019.3.31	Life retrocession inward businesses	Some contracts include exclusion clauses
Catastrophe Reinsurance Contracts (Cat)	Overseas life reinsurance companies	2017.2.1-2018.1.31 2018.2.1-2019.1.31	To protect our domestic net retention excess catastrophe losses	The contracts include exclusion clauses

Central Reinsurance Corporation Annual Report 2017 84

6. FINANCIAL INFORMATION

6.1 Financial Statement for Recent Five Years

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

1. Condensed Balance Sheets:

							NT$ thousands
Year Items			From 2013 To 2017 (Note 1)				01/01/2018 ~04/01/2018 (Note3)
		2017	2016	2015	2014	2013
Cash and Cash Equivalents		16,772,180	15,588,709	16,461,567	18,430,910	17,673,887	NA
Account Receivable		281,681	116,044	248,065	399,901	183,877	NA
Financial Assets		14,417,155	12,908,694	11,698,239	9,909,822	9,814,286	NA
Reinsurance Contract Assets		3,726,066	3,624,254	3,455,783	3,859,592	3,877,374	NA
Property and Equipment		206,745	208,193	213,444	214,772	203,973	NA
Intangible Assets		922	2,480	3,786	1,531	2,142	NA
Other Assets		1,105,672	1,139,858	1,184,187	1,192,639	1,181,693	NA
Total Assets		36,510,421	33,588,232	33,265,071	34,009,167	32,937,232	NA
Account Payable		409,870	317,140	425,192	577,906	393,767	NA
Financial Liabilities		13,290	25,879	31,549	66,470	11,785	NA
Insurance Liabilities		24,430,514	23,594,638	23,279,625	23,664,460	23,382,630	NA
Provisions		21,013	3,142	8,015	5,778	772	NA
Other Liabilities		384,262	148,224	171,209	237,637	114,730	NA
Total Liabilities	Before Distribution	25,258,949	24,089,023	23,915,590	24,552,251	23,903,684	NA
	After Distribution	(Note 2)	24,370,161	24,309,183	25,226,981	24,578,414	NA
Capital		5,622,750	5,622,750	5,622,750	5,622,750	5,622,750	NA
Capital Reserve		300,000	300,000	300,000	300,000	300,000	NA
Retained Earnings	Before Distribution	4,943,231	3,834,455	3,459,020	3,369,901	3,178,535	NA
	After Distribution	(Note 2)	3,553,317	3,065,427	2,695,171	2,503,805	NA
Other Equity		385,491	(257,996)	(32,289)	164,265	(67,737)	NA
Total Equity	Before Distribution	11,251,472	9,499,209	9,349,481	9,456,916	9,033,548	NA
	After Distribution	(Note 2)	9,218,071	8,955,888	8,782,186	8,358,818	NA

Note:

The above financial statements are prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Insurance Enterprises”.
Earnings distribution for the year 2017 has not yet been ratified at the stockholders’ meeting as of the reporting date.
As of the reporting date, the Company did not have the latest financial information audited or reviewed by CPA for the current year.

85 Central Reinsurance Corporation Annual Report 2017

2. Condensed Statement of Comprehensive Income:

NT$ thousands

Year Items		From 2013 To 2017 (Note 1)	From 2013 To 2017 (Note 1)	From 2013 To 2017 (Note 1)		01/01/2018 ~04/01/2018 (Note3)
	2017	2016	2015	2014	2013
Operating Revenue	14,599,949	13,444,095	14,068,010	16,283,563	15,384,494	NA
Gross Profit	2,066,838	1,223,947	1,319,034	1,376,146	1,322,146	NA
Net Operating Income	1,693,217	913,911	983,606	1,001,012	944,214	NA
Non-Operating Income and Expenses	940	(1,190)	(1,790)	(1)	586	NA
Income from Continuing Operations before Tax	1,694,157	912,721	981,816	1,001,011	944,800	NA
Income from Continuing Operations after Tax	1,389,459	765,790	765,865	870,874	732,090	NA
Net Income	1,389,459	765,790	765,865	870,874	732,090	NA
Total Other Comprehensive Income for The Year(after tax)	643,942	(222,469)	(198,570)	227,224	583,162	NA
Total Comprehensive Income for The Year	2,033,401	543,321	567,295	1,098,098	1,315,252	NA
Earnings per Share(after tax) (NT$)(Note 2)	2.47	1.36	1.36	1.55	1.30	NA

Note:

The above financial statements are prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Insurance Enterprises”.
Earnings per share were adjusted retroactively based on the number of shares after distribution for the past years.
As of the reporting date, the Company did not have the latest financial information audited or reviewed by CPA for the current year.

Central Reinsurance Corporation Annual Report 2017 86

6.1.2 Independent Auditors’ Name and Audit Opinion

Year	CPA Firm	CPA’s Name	Audit Opinion
2017	PricewaterhouseCoopers, Taiwan	Chen, Hsien-I Lai, Chung-Hsi	Unqualified Opinion
2016	PricewaterhouseCoopers, Taiwan	Chen, Hsien-I Lai, Chung-Hsi	Unqualified Opinion
2015	PricewaterhouseCoopers, Taiwan	Kuo, Puo-Ju Lai, Chung-Hsi	Unqualified Opinion
2014	PricewaterhouseCoopers, Taiwan	Kuo, Puo-Ju Lai, Chung-Hsi	Unqualified Opinion
2013	PricewaterhouseCoopers, Taiwan	Chen, Hsien-I Lee, Hsiu-Ling	Unqualified Opinion

6.2 Financial Analyses for Recent Five Years

Financial Analyses:

Financial Analyses:
Year Items		From 2013 To 2017 (Note 1)				01/01/2018 ~04/01/2018 (Note3)
	2017	2016	2015	2014	2013
Operating Ability
Changes in Gross Premiums	3.72%	(1.07%)	(13.18%)	4.47%	8.92%	NA
Changes in Reinsurance Claims Paid	(2.42%)	(9.46%)	(8.70%)	7.45%	0.85%	NA
Changes in Retention Premiums	3.99%	(1.11%)	(13.00%)	3.55%	9.99%	NA
Profitability
Return on Total Assets	3.96%	2.29%	2.28%	2.60%	2.25%	NA
Return on Equity	13.39%	8.13%	8.14%	9.42%	8.60%	NA
Net Investment Gain on Available Fund	2.49%	0.52%	1.27%	1.40%	1.59%	NA
Return on Investments	2.44%	0.51%	1.24%	1.37%	1.55%	NA
Retention Combined Ratio(Note 2)	91.06%	95.28%	97.75%	106.04%	98.69%	NA
Retention Expenses Ratio(Note 2)	31.55%	32.44%	32.81%	31.70%	33.94%	NA
Retention Loss Ratio(Note 2)	59.51%	62.84%	64.94%	74.34%	64.75%	NA
Operating Structure
Retention Premiums on Equity	121.37%	138.25%	142.04%	161.41%	163.18%	NA
Gross Premiums on Equity	129.44%	147.82%	151.82%	172.89%	173.24%	NA
Net Reinsurance Commission on Equity	0.90%	1.10%	1.15%	1.06%	1.08%	NA

87 Central Reinsurance Corporation Annual Report 2017

Insurance Liabilities on Equity	217.13%	248.39%	248.99%	250.23%	258.84%	NA
Changes in Equity	18.45%	1.60%	(1.14%)	4.69%	13.01%	NA
Expenses Ratio	31.48%	32.34%	32.81%	31.54%	33.78%	NA
Analysis of financial ratio in last two years. (If the difference doesn’t exceed 20%, the analysis is not required) 1. Changes in gross premiums and Changes in retention premiums more than last year�Mainly due to the change in gross premiums increased in 2017 more than in 2016. 2. Changes in reinsurance claims paid less than late year�Mainly due to the change in reinsurance claims paid in 2017 less than in 2016. 3. Net Investment Gain on Available Fund and Return on Investments more than last year�Mainly due to the net investment gain increased in 2017. 4. Return on total assets and Return on Equity more than late year�Mainly due to net income increased in 2017. 5. Changes in equity more than last year�Mainly due to retained earnings and unrealized gain on available-for-sale financial assets increased in 2017.

Note:

The above financial analyses are prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Insurance Enterprises”, and these ratios are the key performance indicators of the Company.
Pursuant to Article 3 of the “Regulations for Management of the Reserve for Compulsory Automobile Liability Insurance”, prior to amending legislation on December 31, 2013, the company shall set aside an amount equal to 1% of earned pure premium over the last 12 months as claims reserve for incurred but not reported losses. Effective January 1, 2014, claims reserve for incurred but not reported losses are set aside based on past claim experience and expense using the loss development triangle method, of these fix percentages of earned pure premium for reinsurance assumed shall be set aside as claims reserve for incurred but not reported losses of automobile and motor reinsurance assumed under compulsory automobile liability insurance, respectively. The fixed percentage referred to in the preceding paragraph shall be calculated by the professional institution entrusted by the competent authority in accordance with the formulation of premium rates under the Act and the past claim experience and expense of the overall industry using the loss development triangle method. The fixed percentage should then be submitted to the competent authority for approval prior to public announcement (2014:60%, 45%; 2015: 60%,45%; 2016:63%,48%; 2017:63%,48%).
As of the reporting date, the Company did not have the latest financial information audited or reviewed by CPA for the current year.

6.3 Audit Committee’s Review Report

Please refer to page 89.

6.4 Financial Statements and Report of Independent Accountants

Please refer to pages 90 to 174.

Central Reinsurance Corporation Annual Report 2017 88

Audit Committee’s Review Report

TO�2018 Annual General Shareholders’ Meeting

Central Reinsurance Corporation (Central Re)

The Board of Directors has prepared the Company’s 2017 business report, financial report, and proposal for distribution of earnings. The CPA firm of PricewaterhouseCoopers, Taiwan has audited the financial report and issued the audit report. The above business report, financial report, and proposal for distribution of earnings have been reviewed and determined to be correct and accurate by the Audit Committee members of Central Re. In accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Law, we hereby submit this report.

AI assistant

Central Re — Annual Report 2017

52207_rns_2018-06-19_0f470a86-fe6c-49ad-8929-bd89f8e496fd.pdf

2017

CONTENTS

1. LETTER TO SHAREHOLDERS

Dear Shareholders,

Chairman

1.1 2017 Business Report

1.1.1 Implementation of the Business Plan

1.1.1.1 Business Performance:

1.1.1.2 Financial Management:

1. Capital Management:

2. Reserve Adequacy:

3. Fund Investment:

1.1.1.3 Credit Ratings:

1.1.2 Budget Implementation and Financial Status

1.1.3 Profitability Analysis

1.1.4 Research & Development

1.1.4.2 Talent Development

1.2 Summary of the 2018 Business Plan

1.2.1 Business Strategies

1.2.2 Sales Forecast and Basis

1.2.3 Important Production and Sales Policies

1.3 Future Development Strategies

1.4 Influences of the External Competition, Regulatory Environment and Macro Environment

1.4.1 External Competition

1.4.2 Regulatory Environment

1.4.3 Macro Environment

2. COMPANY PROFILE

2.1 Date of Incorporation

2.2 Company History

3. CORPORATE GOVERNANCE REPORT

3.1 Organization

3.2.1.1 Major Shareholders of Institutional Shareholders

3.2.1.3 Professional qualifications and independence analysis of directors

3.3 Implementation of Corporate Governance

3.3.1 The Composition and Operations of the Board of Directors

3.3.2 The Composition and Operations of the Audit Committee

3.3.4 The Composition and Operations of the Remuneration Committee

3.6 Material Resolutions of Shareholders Meeting and Board of Directors Meeting

3.6.1 Material Resolutions of Shareholders Meeting

3.6.2 Material Resolutions of Board of Directors Meeting

3.7 Information on CPA Professional Fees and Replacement of Certified Public Accountant

3.7.1 Audit Fee

3.7.2 Replacement of CPA

1. Regarding the former CPA

3. Reply of the Previous Accountant: None.

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

4. CAPITAL OVERVIEW

4.1 Source of Capital Stock

4.1.1 Issued Share

4.1.2 Type of Stock

4.2 Shareholders Structure

4.3 Diffusion of Ownership and List of Principal Shareholders

4.3.1 Diffusion of Ownership (Common Shares)

4.3.2 List of Principal Shareholders

4.4 Disclosure of the Share Prices and Related Information for the Past Two Fiscal Years

4.5 Dividend Policy and Earnings Distribution Implementation Status

4.5.1 Dividend Policy

4.5.2 Earnings Distribution Implementation Status

5. BUSINESS OPERATIONS OVERVIEW

5.1 Business Activities

5.1.1 Business Scope

5.1.1.1 Breakdown by Source

5.1.1.2 Breakdown by Line

5.1.1.3 New Products, Potential Customers and Markets

1. Domestic Non-Life Business

2. Domestic Life Business

3. International Non-life Business

5.1.2 Industry Overview

5.1.2.1 Market Player

5.1.2.2 Gross Premium Written

5.1.2.3 Long-Term and Short-Term Business Plans

1. Long-Term Plan

2. Short-Term Plan

5.2 Market Overview

5.2.1 Breakdown by Region

5.2.2 Market Share

5.2.3 Market Development

Central Re Annual Report 2017