Central Re — Annual Report 2021

Apr 23, 2021

CENTRAL REINSURANCE CORPORATION

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Central Re

Your reliable partner

Apr. 23, 2021

Disclaimer

• This document is provided by Central Reinsurance Corp. (the "Company"). Except for the numbers and information included in the Company's financial statements, the information contained in this document has not been audited or reviewed by any accountant or independent expert. The Company makes no express or implied representations or warranties as to the fairness, accuracy, completeness, or correctness of such information or opinions. This document is provided as of the date herein and will not be updated to reflect any changes hereafter. The Company, its affiliates and their representatives do not accept any responsibility or liability for any damage caused by their negligence or any other reasons, nor do they accept responsibility or liability for any loss or damages arising from the use of this document or the information contained herein or anything related to this document.

• This document may contain forward-looking statements, including but not limited to all statements that address activities, events or developments that the Company expects or anticipates to take place in the future based on the projections of the Company toward the future, and various factors and uncertainness beyond the Company's control. Therefore, the actual results may differ materially from those contained in the forward-looking statements.

• This document is not and cannot be construed as an offer to purchase or sell securities or other financial products or solicitation of an offer.

• This document may not be directly or indirectly reproduced, redistributed or forwarded to any other person and may not be published in whole or in part for any purpose.

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Outline

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Introduction
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Industry Overview Business Overview Performance Overview

Future Prospect

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Introduction

Basic Information Business Scope

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Basic Information

Time Company History Central Re was established by the Ministry of October 31, 1968 Finance (MOF). July , 2000 Central Re became publicly listed company. Central Re completed its privatization process. July , 2002 Meanwhile, Evergreen Group is Central Re’s lar est shareholder. g Central Re was approved to set up Offshore January 1, 2016 Insurance Unit (OIU) in September 2015 and started doing business on January 1, 2016.

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Basic Information

• Paid up Capital ： TWD 5.904 Billion

• No. of Employee ： 139

• Address ： 12F, 53, Sec. 2, Nanjing East Rd., Taipei, Taiwan

• Credit Ratings ：

Ratin A enc Ratin Outlook g g y g A.M. Best A Stable S&P Global A Stable Taiwan Ratings twAA+ Stable

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Basic Information

 Shareholders’ Structure

As of March 31, 2021

Structure	Government Agencies	Financial Institutions	Financial Institutions	Other Juridical Person	Domestic Natural Persons	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total
Percentage	19.27%	0.05%		61.14%	17.51%		2.03%	100%
Market Share Year 2019 P&C Insurance Life Insurance Gross Prem. Written in Taiwan 188.11 3,163.97 Ceded Premium 57.80 23.56 Retro Share (%) 30.7 0.7 Central Re’s Premium 11.67 2.94 Market Share in Taiwan (%) 20.2 12.5 Unit：TWD Billions；%
Year 2019			P&C Insurance			Life Insurance
Gross Prem. Written in Taiwan			188.11			3,163.97
Ceded Premium			57.80			23.56
Retro Share (%)			30.7			0.7
Central Re’s Premium			11.67			2.94
Market Share in Taiwan (%)			20.2			12.5

 Market Share

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Business Scope

 Scope ： Domestic and Overseas P&C and Life Reinsurance.

 Line of Business ： Fire, Residential earthquake, Marine Hull, Marine Cargo, Aviation, Fishing P&C Vessel, Automobile, Compulsory Automobile Liability, Engineering and Casualty Insurance Life Life, PA and Health Insurance

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Outline

Introduction

Business Overview

Performance Overview

Future Prospect

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Industry Overview

Market Development

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Market Trend
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Industry Overview

 Market Development ：

• Domestic Market

 There are 53 insurance companies in Taiwan, of which 27 are life insurance companies, 23 are non-life insurance companies and 3 are reinsurance companies, including Central Re, General Re (Taiwan Branch) and RGA (Taiwan Branch).

• Overseas Reinsurance Market: London, Singapore, China…

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Industry Overview

 Global Reinsurance Market

 In the perspective of wind events losses in Asia and the United States from previous years, uncertain impacts from COVID-19 , as well as ongoing concerns regarding climate change on future losses, reinsurance rates are considered insufficient to boost profits to a necessary level of cost of capital.

• The weakened risk-adjusted return on capital has motivated underwriters to reassess pricing and capacity allocation strategies.

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Industry Overview

 Market Trend:

• Domestic P&C

• According to Non-Life Insurance Association, mainly due to the growth in Auto insurance, overall gross premiums written has grown by 6% as of December 2020, compared to the same period last year. In addition, Fire insurance, Casualty insurance and Engineering insurance have also grown significantly.

 Domestic Life

• Considering the future implementation of IFRS17 and ICS, the market for protection products is expected to grow.

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Outline

Introduction

Industry Overview

Performance Overview

Future Prospect

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Business Overview

Business Portfolio

Gross Premium Written

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Business Portfolio

Gross Premium Written By Line 2020/1-4Q

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Business Portfolio

Gross Premium Written By Region 2020/1-4Q

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Gross Premium Written

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Unit ： TWD Billions
20
18.4
16.8
14.6 15.4
15
10
5
0
2017 2018 2019 2020
Domestic Overseas
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Outline

Introduction

Industry Overview

Business Overview

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Performance Overview
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Future Prospect

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Performance Overview

Operating Performance

Key Profitability Ratios Dividend Policy

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Operating Performance
Unit ： TWD Millions
1,600
1,516
1,389
1,400
1,200
1,104
1,050
981 931
1,000
845 848 850 856
800
657
600
396
400
200
0
2017 2018 2019 2020
Net Income Investment Income Underwriting Profit
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• Underwriting profit = Operating revenues-Net gain from investment-Operating costs-Operating expenses

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Capital Structure

Unit ： TWD Billions

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18
16.2
16
14.8
14.0 14.0
14
12
10
8
6
4
2
0
2017 2018 2019 2020
Paid-up Capital Equalization Reserve Capital Surplus , Retained Earnings &Other Equity Interest
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• Equalization Reserve excludes CALI.

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Total Assets

Unit ： TWD Billions

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45
42.7
40
39.2
37.3
36.5
35
30
2017 2018 2019 2020
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Asset Allocation

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Equity 15%
Cash &
Cash
Equivalents
45%
Fixed
Income
39%
Real Estate
1%
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2020/12/31 Unit ： TWD Billions
Cash & Cash
15.80
Equivalents
Equity 5.32
Fixed Income 13.52
Real Estate 0.45
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Key Profitability Ratios

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2017 2018 2019 2020
Combined Ratio (%) 91.1 94.8 95.2 94.4
ROA (%) 3.96 2.85 2.89 3.70
ROE (%) 13.39 9.35 9.51 11.92
Net Profit Margin (%) 9.52 7.06 6.86 8.58
EPS (TWD) 2.35 1.78 1.87 2.57
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Note : The earnings per share has been retroactively adjusted after capital increase.

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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 accumulate 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.

 Past 5 years ：

	Year	2017	2018	2019	2020	2021*
	Cash Dividends	0.5	1	0.9	0.9	1.3
	Stock Dividends	0	0.5	0	0	0
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。 *Earnings distribution has not yet been ratified at the stockholders’ meeting

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Outline

Introduction

Industry Overview Business Overview

Performance Overview

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Future Prospect
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Future Prospect

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Competitive Advantage
Business Strategies
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Competitive Advantage

• Favorable operating performance, with positive underwriting results and investment income

A.M. S&P  Solid domestic market Best Global position

 Extremely strong capital adequacy

• Strong and stable market position in Taiwan’s reinsurance market with a diversified underwriting portfolio

From Rating Agency

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• Strong risk-adjusted capitalization

 Appropriate enterprise risk management capability and control 中央再保險公司 mechanisms

 Diversified and prudent investment profile  Adequate enterprise risk management with strong risk controls

• Strong liquidity profile

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Future Prospect

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Implement good corporate governance

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Enhance compliance
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Business Strategies

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Devote to talent development
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Strengthen Risk Management
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Fulfill corporate social responsibilities

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Business Strategies

 Domestic Business

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Focus on better customer service

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Understand customers’ needs, provide assistance in product developments and quotation, extend the business scope

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Optimize the retrocession strategy and expand the underwriting capacity

 International business

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Keep prudent underwriting strategy (Focus on bottom line more than top line) Expanding new product lines to increase portfolio diversification Enhancing risk management for natural catastrophic risks

 Investment Business

Adhering to a sound investment strategy, we are committed to pursue a stable return to support the sustainable development of insurance business

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Q ＆ A
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