Central Re - Annual Report 2021 | FinancialReports.eu

2020

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Annual Report Printed on 30 March, 2021

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	CONTENTS
1.	LETTER TO SHAREHOLDERS	1
	1.1 Implementation of the Business Plan	3
	1.2 Budget Implementation and Financial Status	4
	1.3 Profitability Analysis	5
	1.4 Research & Development	5
	1.5 Summary of the 2021 Business Plan	8
	1.6 Future Development Strategies	11
	1.7 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	19
	3.1 Organization	19
	3.2 Directors and Management Team	22
	3.3 Implementation of Corporate Governance	45
	3.4 Information on CPA Professional Fees	114
	3.5 Replacement of CPA	114
	3.6 The company's chairman, president, or any managerial officer in charge of finance or
	accounting matters has held a position at its CPA’s accounting firm or at an affiliated enterprise
	in the most recent year	115
	3.7 Changes in Shareholding of Directors, Managers and Major Shareholders and Information of
	Stock Transfer or Stock Pledge	115
	3.8 Relationship among the Top Ten Shareholders	118
	3.9 The total number of shares and total equity stake held in any single enterprise by the company,
	its directors, managerial officers, and any companies controlled either directly or indirectly by
	the company	120
4.	CAPITAL OVERVIEW	121
	4.1 Capital and Shares	121
	4.2 Corporate Bonds	127
	4.3 Preferred Stock	127
	4.4 Global Depository Receipts	127
	4.5 Employee Stock Options	127
	4.6 Employee Restricted Stock	127
	4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions	127
	4.8 Financing Plans and Implementation	128
5.	BUSINESS OPERATIONS OVERVIEW	129
	5.1 Business Activities	129
	5.2 Market and Sales Overview	142

	5.3 Human Resources	150
	5.4 Information on Environmental Protection Expenditure	150
	5.5 Labor Relations	150
	5.6 Important Contracts	154
6.	FINANCIAL INFORMATION	156
	6.1 Financial Statement for Recent Five Years	156
	6.2 Financial Analyses for Recent Five Years	159
	6.3 Audit Committee’s Review Report	161
	6.4 Financial Statements and Report of Independent Accountants	161
	6.5 A parent company only financial statement for the most recent fiscal year, certified by a CPA,
	but not including the statements of major accounting items	161
	6.6 If the company or its affiliates have experienced financial difficulties in the most recent fiscal
	year or during the current fiscal year up to the date of publication of the annual report, the
	annual report shall explain how said difficulties will affect the company's financial situation	161
7.	REVIEW OF FINANCIAL POSITION, FINANCIAL PERFORMANCE, AND RISK ASSESSMENT 245
	7.1 Financial Position	245
	7.2 Financial Performance	247
	7.3 Cash Flows	248
	7.4 Impact of Major Capital Expenditures on Finance and Business Operations during 2020	248
	7.5 Investment Policy in the Last year, Main Causes for Profit or Losses, Improvement Plans and
	Investment Plans for the Coming Year	248
	7.6 The Analysis and Assessment of Risk Management in the last year up to the publication date of
	this report	249
	7.7 Other Importance Disclosure	251
8.	SPECIAL DISCLOSURE	252
	8.1 Summary of Affiliated Companies	252
	8.2 Private Placement of Securities in the most recent year up to the publication date of this report	252
	8.3 Holding or Disposal of the Company’s share by subsidiaries in the most recent year up to the
	publication date of this report	252
	8.4 Other importance supplementary information	252
	8.5 Other Disclosure	252

1. LETTER TO SHAREHOLDERS

Dear Shareholders,

Central Reinsurance Corporation was incorporated in 1968. It is the sole domestic professional reinsurance company in Taiwan with more than fifty years of experience in both domestic and international life and non-life reinsurance business. Since its establishment, the Company has been consistently adhering to solid and prudent philosophy while devoting to core business in reinsurance as well as financial management.

The coronavirus (COVID-19) pandemic in 2020 had not only affected the growth of global economy but also caused the fluctuation in global financial market. However, thanks to the efforts of all employees and the support of our shareholders, the Company was able to accomplish an exceptional operating result under this severe environment. With prudent underwriting strategy and risk control, the Company achieved not only steady growth in premium income but also outstanding underwriting profits and investment performance. The Company achieved total operating revenues of NT$17.7 billion in 2020, up 9.7% from 2019, and net profit of NT$1.5 billion, an increase of 37.3%; both financial figures have set record highs for recent years. The after-tax earnings per share is NT$2.57.

Aiming to build a strong financial foundation and to improve the efficiency of capital allocation, the Company has been maintaining capital structure at a sturdy and comprehensive level, which not only supports the sustainability of its reinsurance business but also reduces the impact of capital market fluctuation. Currently, the paid-in capital stays at NT$5.9 billion, which is very close to the authorized capital of NT$6 billion. The equity before distribution of dividends is NT$13.4 billion, up 11.5% from 2019, and the total amount of technical reserves for retained business is NT$26.3 billion, an increase of 7.5%.

Both A.M. Best and S&P Global Ratings affirmed the Company’s “A” rating with stable outlook, supported by its solid and leading market position in Taiwan, strong capital level, prudent risk management as well as sound operating performance. Meanwhile, Taiwan Rating Corporation rated the Company as “twAA+” with stable outlook. Long-term good credit ratings not only demonstrate our strong solvency capability to fulfill our commitment to clients, but also contribute to the development

Central Reinsurance Corporation Annual Report 2020 1

of quality business.

We are pleased to append below our 2020 Business Report, which provides a summary of the Company’s achievements in implementing the 2020 business plan, budget implementation, financial status, profitability analysis, research and development as well as highlights of the 2021 Business Plan.

The management team will continuously commit to the corporate spirits of "Challenge, Innovation and Teamwork" to pursue stable growth and sustainable development, thereby fulfilling our vision to become "The Best Professional Reinsurer in Asia". We would like to thank you as shareholders for your trust and support and wish you all a healthy and successful year.

Chairman

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2 Central Reinsurance Corporation Annual Report 2020

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 sustainable development, the Company operates its business based on the principles of sound corporate governance, customer-focused services, effective fund utilization, as well as a business profile that focuses on both sound risk management and stable profitability. In order to enlarge its operational foundation and diversify the risk of geographical concentration, the Company not only diligently grows its domestic market, but also continuously expands its international territory through prudent strategies.

With the collective efforts of all its employees, the Company reports a net income of NT$1,515,729 thousand for the year of 2020. Appended below is the Company's business report for 2020:

1.1 Implementation of the Business Plan

1.1.1Business Performance:

The gross premium written for the year is NT$18,407,855 thousand, being NT$851,574 thousand or approximately 4.85% over the budgeted NT$17,556,281 thousand. An analysis is provided below based on business type:

1.1.1.1 Non-life Reinsurance: The gross premium written is NT$15,410,978 thousand, being NT$779,859 thousand or approximately 5.33% over the budgeted NT$14,631,119 thousand. The difference was mainly due to the increased premium income from fire insurance, automobile insurance and personal accident insurance.
1.1.1.2 Life Reinsurance: The gross premium written is NT$2,996,877 thousand, being NT$71,715 thousand or approximately 2.45% over the budgeted NT$2,925,162 thousand. The difference was mainly due to the increased premium income from life insurance.

1.1.2Financial Management:

Central Reinsurance Corporation Annual Report 2020 3

1.1.2.1 Capital Management:

As at the end of 2020, the total paid-in capital of the Company is NT$5,903,888 thousand. Total shareholders' equity before distribution is NT$13,409,237 thousand. The capital structure of the Company remains strong.

1.1.2.2 Reserve Adequacy:

In order to build up a solid financial basis and strengthen its solvency, the Company provides adequate reserves. At the end of 2020, the sum of various reserves is NT$26,265,483 thousand.

1.1.2.3 Fund Investment:

The investment income is NT$855,521 thousand, being NT$181,103 thousand or 26.9% over the budgeted NT$674,418 thousand.

1.1.3Credit Ratings:

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, both A.M. Best and S&P Global Ratings affirmed the Company’s "A" credit rating with stable outlook. Meanwhile, Taiwan Ratings Corp. also confirmed the Company’s credit rating of "twAA+".

Good credit ratings not only help the Company develop reinsuring high-quality business, but also prove the Company’s strong solvency to fulfill its commitment to clients.

1.2 Budget Implementation and Financial Status

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

follows:
	NT$thousands
Year 2020	Actual	Budget	Achievement (%)
Operating Revenues	17,656,923	16,934,188	104.27%
Operating Costs	15,467,129	15,171,249	101.95%
Gross Operating Income	2,189,794	1,762,939	124.21%
Operating Expenses	403,480	397,470	101.51%
Net Operating Income	1,786,314	1,365,469	130.82%
Non-Operating Income and Expenses	2,322	0	100.00%

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	NT$thousands	NT$thousands	NT$thousands
Year 2020	Actual	Budget	Achievement (%)
Income Before Tax	1,788,636	1,365,469	130.99%
Income Tax Expense	272,907	231,106	118.09%
Net Income	1,515,729	1,134,363	133.62%

1.3 Profitability Analysis

The table below shows an analysis on the profitability ratios of 2020 as compared to those of 2019. The earnings per share (after tax) for 2020 is NT$2.57, being NT$0.7 more than the NT$1.87 of 2019:

Ratio	Year	2020	2019	Average
Profitability	Return on Assets (%)	3.70	2.89	3.30
	Return on Equity (%)	11.92	9.51	10.72
	Net Operating Income / Paid-In Capital (%)	30.26	25.53	27.90
	Income from Continuing Operations Before Tax/Paid-In Capital(%)	30.30	25.53	27.92
	Net Profit Margin (%)	8.58	6.86	7.72
	Earnings Per Share (After Tax)(NT$)	2.57	1.87	2.22

1.4 Research & Development

1.4.1Research & Development/Customer Service

1.4.1.1 The Company endeavors to absorb and adopt the most advanced concepts and technologies from the global market to achieve integrated risk management on a continuous basis. Based on its successful experience in risk management, the Company provides relevant consulting services to customers. Meanwhile, the Company also assists the competent authority in facilitating risk management policies and regulations for the industry in accordance with government’s initiatives. The collective efforts are hoped to help improving the technology standards of risk management for the whole industry.
1.4.1.2 In recent years, the possible impact of climate change on environment and economy has become one of the important risks faced by the insurance industry. The Company continues to pay attention to relevant

Central Reinsurance Corporation Annual Report 2020 5

issues in order to strengthen the control of catastrophe accumulation risk and its resilience�

1.4.1.3 Since last year, the pandemic (COVID-19) has severely affected global economy and industries. The Company continues to enhance its continuous operation management and emergency response plan in order to timely evaluate the impact of emerging risks on the Company.
1.4.1.4 In order to align with the strategic plan, strengthen internal control and improve work efficiency, the Company has developed information security management system in accordance with ISO27001/CNS27001 and regulations. With a complete off-site back-up system and business continuity management, the Company is able to ensure the confidentiality, comprehensiveness and availability of information system as well as reduce probable losses from accidents. In future, the Company will continue enhancing information security and making system adjustments and upgrades to align with development plan and accommodate to statutory requirements.
1.4.1.5 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 underwriting and claim management expertise, new product design, and regulatory and actuarial consulting services, etc. The purpose is to solidify customer relationship and create superior business opportunities on an ongoing basis�
1.4.1.6 To closely suit the needs of customers, strengthen customer service and enhance its professional image, the Company has held a series of "Life Insurance Underwriting and Claims Seminars" in 2020 including Risk Characteristics of Various Types of Health Insurance, Sleep Disorders and Sleep Apnea, Interpretation of Laboratory Values, Interpretation of Pathology Reports, Lecture of Interpretation of Medical Records (How to Understand a Pile of Medical Records)

The Company has organized various professional seminars to satisfy our clients’ needs for years. Participants were given the opportunities to

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discuss on the market status and future trends, share information and improve their expertise. The courses and seminars also contributed to the tightening of client relationship for the Company.

1.4.2Talent Development

1.4.2.1 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", "Anti-Money Laundering and Countering the Financing of Terrorism Training", "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 1,137 persons have attended the training in 2020�
(2) Professional Training and Statutory Programs: 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 business operations and job levels. The Company, in the meantime, has assigned its internal auditors, compliance personnel, anti-money laundering and countering the financing of terrorism personnel, accountants and labor safety personnel to attend relevant external training to meet the statutory requirements. A total of 396 employees have attended the external training in 2020.
1.4.2.2 On an ongoing basis, the Company encourages its employees to obtain professional licenses for their jobs. So far, a total of 65 employees have acquired domestic or international licenses on non-life/life insurance and financial management.
(1) Non-life Insurance Underwriters: 24
(2) Non-life Insurance Claim Adjusters: 8
(3) Life Insurance Underwriters: 5
(4) Life Insurance Claim Adjusters: 3

Central Reinsurance Corporation Annual Report 2020 7

(5) Fellow of the Actuarial Institute of the R. O. C.: 2
(6) International Certificates: CPCU 7 persons, ACII 1 persons, SOA ASA 2 persons, CAS ACAS 1 person, FALU 1 person, FLMI 3 persons, ALMI 1 person, LOMA ACS 2 persons, LOMA AAPA 1 person, LOMA ARA 1 person, FRM 1 person, ARM 1 person, CFA 1 person.
1.4.2.3 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 Company’s human resources strategies. Therefore, during the year, the Company has recruited 8 new employees, arranged job transfer for 2 employees and promoted 18 employees.

1.5 Summary of the 2021 Business Plan

Based on competitive market, regulatory influence and business environment, the Company has established its 2021 business plan as follows:

1.5.1 Business Strategies

1.5.1.1 Strengthen corporate governance culture and enhance corporate sustainable value

Fulfill ethical management, ensure corporate social responsibilities, increase information transparency of corporate governance, continuously enhance the compliance system, establish thorough internal controls and improve operational effectiveness of the board of directors.

1.5.1.2 Strengthen capital structure management; enhance the effectiveness of fund utilization.
(1) Solidify capital base, improve financial strength, expand underwriting capacity and elevate risk tolerance to support sustainable development.
(2) Conduct proper assessment on risk-return relationship, exercise caution in asset allocation to improve the effectiveness of capital utilization and create shareholder value.
(3) Prudently develop international business, pursue a balanced business portfolio to achieve geographic diversification and enhance the effectiveness of fund utilization.

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1.5.1.3 Focus on customer demands and provide feedback to the insurance market.
(1) Grasp market trends and organize professional seminars timely, aiming to enhance customer service quality and strengthen customer relationship.
(2) Listen to customer needs to provide multifaceted and tailored reinsurance services, creating win-win cooperation opportunities.
(3) Actively participate in research programs relating to actuarial and statistics, insurance operations, risk management, product design and corporate governance, so as to facilitate the development of the local insurance market.
1.5.1.4 Deepen risk management capabilities and strengthen relevant systems.
(1) Implement risk management strategically; align business decisions with risk management policies.
(2) Build a business portfolio with equal emphasis on risk management and stable profitability.
(3) Closely track the development trend of emerging risks to ensure prudent control of catastrophe risk accumulation.
(4) Ensure the suitability of risk transactions undertaken; effectively implement risk control procedures.
(5) Instill a culture of risk awareness; incorporate risk management into daily routines.

1.5.2 Sales Forecast and Basis

Since the outbreak of COVID-19 from last year, the financial market has fluctuated significantly and the global economy has showed negative growth. With the implementation of pandemic measures and stimulus plans, the global economy is expected to recover significantly this year. However, there are still some uncertainties that may affect the growth of economy as well as the growth of insurance market.

In recent years, the global reinsurance market has encountered a number of major catastrophe events mainly caused by climate change. In addition to catastrophe loss, the impact from COVID-19 has also affected the profitability of reinsurers

Central Reinsurance Corporation Annual Report 2020 9

as well as the fulfillment of cost of capital target. Although the reinsurance terms and rates have improved recently, the capital level in the market has not weakened; therefore, as a whole, the reinsurance market remains competitive. Besides continuing to deepen domestic market, the Company has been prudently developing international business to enhance the diversification of its business portfolio. Based on the market environment and the macroeconomic trend, the Company expects a slightly growth in reinsurance premium income this year. Meanwhile, the Company will continue to follow up the impact of COVID-19 on insurance market.

1.5.3 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.

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1.6 Future Development Strategies

The Company is committed to becoming the “The Best Professional Reinsurer in Asia”. The Company has established the following development strategies based on the changes in business environment and market trends:

Optimize the advantage of domestic establishment; provide professional services and continuously strengthen the breadth and depth of domestic market.
Steadily expand the international market; continuously elevate the operational standards; increase the geographic diversity of the business portfolio and strengthen accumulated risk control and ensure pricing adequacy to enhance the quantity and quality of our overseas business.
Develop suitable reinsurance programs to increase underwriting capacity and minimize performance volatility.
Regard customer needs and increase service effectiveness to improve 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.
Pay close attention to risk management as well as the development trend of emerging risks.
Instill compliance and internal audit/control procedures; focus on risk management; strengthen corporate governance.
Fulfill corporate social responsibilities; achieve sound ethical corporate management to facilitate the continuous development of the insurance market.
Reinforce talent development and improve professions to widen the breadth of business development.

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

1.7.1 External Competition

As at the end of 2020, 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.

1.7.2 Regulatory Environment

1.7.2.1 Insurance Act

To give consideration to both human dignity and the prevention of moral risk, the competent authority amended Article 107 of the Insurance Act on June 10, 2020, specifying the funeral expense benefit in life insurance contracts of people under 15 years of age involved in fatal incidents can only be satisfied by limited amount not exceeding the half of funeral expense deduction for estate tax, nevertheless, other agreed death benefits remain unaltered that the payment shall take effect on the date the insured reaches 15 years of age.

1.7.2.2 Regulations Governing Transactions Other Than Loans between Insurance Enterprises and Interested Parties

To ensure consistent supervisory treatment of financial institutions under its jurisdiction, the competent authority amended Articles 3 and 4 of the aforesaid Regulations on April 28, 2020 to synchronize with official interpretation of Article 45 of the Financial Holding Company Act stipulated on April 12, 2019. A summary of the amendments is provided below:

(1) The scope of the “person” of “third parties having a relationship” includes both juristic persons and natural persons. In addition, if an interested party of insurance enterprise has not been directly involved in any transaction between the insurer and such third party, and if the two transactions are executed under different contracts, the aforementioned

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Regulations do not apply to the interested party. (Amendment of Article 3)

(2) When an insurer acquires or disposes of exchange traded notes (ETNs) issued by an interested party, the insurer may do so by means of a general authorization; also, when an interested party of an insurer is a company that “concurrently operates” a securities investment trust enterprise (SITE) or a securities investment consulting enterprise (SICE), transactions that it conducts using assets under management in accordance with the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises may be handled pursuant to regulations that apply when the interested party is a SITE or SICE, i.e. the managing department is granted a general authorization to engage in those transactions. (Amendment of Article 4)

Based on the aforementioned regulations, the Company has revised relevant internal rules to ensure compliance.

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

To enhance insurers’ capability of legal compliance, the competent authority on August 20, 2020 issued an amendment to Articles 30 and 41 of the aforementioned Regulations. Key points of the amendments include the following:

(1) A head office chief compliance officer must hold only this one position and shall not take any concurrent positions other than those which are specifically allowed and do not pose any conflict of interest (i.e. the head office chief compliance officer of an insurance enterprise having assets of NT$1 trillion or more may act concurrently as the supervisor of the AML/CFT compliance unit, and the head office chief compliance officer of any other insurance enterprise may act concurrently as the supervisor of the legal affairs unit or the AML/CFT compliance unit). (Amendment of Article 30)
(2) This amendment may require adjustments involving head office chief

Central Reinsurance Corporation Annual Report 2020 13

compliance officers, and will therefore not be implemented until December 31, 2020. (Amendment of Article 41)

Based on the aforementioned regulations, the Company has revised relevant internal rules to ensure compliance.

1.7.2.4 Regulations Governing Required Qualifications for Responsible Persons of Insurance Enterprises

To strengthen insurers’ corporate governance, and to improve the professionalism and stability of boards of directors, and also to promote the employment of cross-field personnel for financial institutions, the competent authority amended the aforementioned Regulations on February 20, 2020 and October 28, 2020. The key points of the amended provisions are as follows:

(1) If it is found that any disqualification criterion set out in these Regulations applies to a person already serving as a responsible person of an insurance enterprise, that fact shall constitute ipso facto cause for dismissal. (Amendment of Article 3)
(2) The insurance enterprises shall manage the concurrent position of responsible persons, so as to ensure the concurrent holding of positions are subject to the principle that the responsibilities of the principal position and those positions are effectively discharged without any conflict of interests. (Amendment of Article 5)
(3) Implementation of non-competition: When a natural person or a juristic person acts as a director (or supervisor) of an insurance enterprise, if that party or a related party thereof concurrently acts as a director (or supervisor) of another financial institution, a conflict of interest shall in principle be presumed to exist. However, this shall not apply in cases where there exists a relationship of control or subordination as set out in the Company Act, or where the concurrent positions are held in compliance with the provisions of these Regulations. (Amendment of Article 6)
(4) The vice general manager, assistant vice general manager, manager of an

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insurance enterprise, or those with equivalent duties must have leadership and the ability to effectively manage an insurance enterprise, and considered to be qualified by having 10 or more years of professional experience in the field of information science, technology, law, e-commerce, digital economy, financial accounting, or human resources, or there is other factual evidence sufficient to prove that the person has professional qualification requirements and having received a prior approval of the competent authority for such appointment. The person possess the qualifications above may only serve in a position related to his or her area of professional area(s) of expertise. (Amendment of Article 8-1)

1.7.3 Macro Environment

According to updated data released by international institutions such as the International Monetary Fund (IMF), Organization for Economic Cooperation and Development (OECD) and HIS Markit, with ongoing implementation of COVID-19 vaccine as well as economic stimulus measures, the outlook of global economy is expected to show gradual recovery. Due to the premise of low base period from last year, the global economy will grow by more than 5% this year. However, there are still some uncertainties that may affect economic development, including the progress of vaccine supply, the control of pandemic, the follow-up of Sino-US trade war and technology conflict, and the effectiveness of national fiscal and monetary policies.

According to the National Development Commission’s reference on economic forecast released by IHS Markit in late February, the global economy is expected to grow by 5%, with US 5.7%, EU 3.7%, Japan 2.2% and China 7.6%. Due to proper control on epidemic, according to Directorate-General of Budget, Accounting and Statistics, Taiwan achieved a growth of 3.1% last year in contrast to global economic decline. The economic growth in Taiwan is expected to show 4.6% this year; however, the growth rate may still be affected by global economic development as well as financial market fluctuations.

As a whole, the pace of global economic growth is strongly linked to the level of potential risks. The insurance industry, in term, is susceptible to changes in economic environment. As far as the reinsurance industry is concerned, the

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impact of climate change, the increase in catastrophe loss, and the loss and uncertainty brought by COVID-19 have continuously affected underwriting profits of reinsurers. The renewal results of this year demonstrate that reinsurers have become more stringent, terms have improved, and rates have shown an upward trend. However, due to sufficient capacity in the market, the overall rate increase does not meet the expectation of reinsurers. Facing these challenges, the Company will continue to uphold the principles of stability and sustainability, commit to its core business and enhance capital management to achieve its business objectives.

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2. COMPANY PROFILE

2.1 Date of Incorporation

October 31, 1968

2.2 Company History

1968~1999	On October 31, 1968, the Company was founded with a capital contribution of NT$15 million by the Ministry of Finance (MOF) and based on experience from the Reinsurance Department of the Central Trust of China. Using Central Reinsurance Corporation as its full name, the Company is the sole domestic professional reinsurance company in Taiwan. On November 24, 1972, the Central Reinsurance Corporation Act was enacted and promulgated. Since then, the Company has gone through capital injections several times. By the end of 1999, the capital was increased to NT$3,000 million, among which, 87.04% came from the Ministry of Finance and 12.96%came from the domestic insurance industry.
July 2000	On July 6, 2000, the Company’s stocks were officially listed on Taiwan Stock Exchange. The Ministry of Finance allocated NT$45 million shares for public underwriting, completing the first phase of stock release with the percentage of shareholdingbythe Ministryof Finance beingdropped from 87.04%to71.27%.
April 2002	The Taiwan Residential Earthquake Insurance Program was officially implemented on April 1, 2002. The Ministry of Finance appointed the Company as the manager of the residentialearthquakeinsurance pool.
July 2002	On July 11, 2002, the Ministry of Finance began the second phase of stock release, with the percentage of government shareholding falling to 48.12%. Since then, the companyhas gone private.
August 2003	On August 7, 2003, the Company increased its cash capital by NT$600 million and paid-in capital from NT$3,000 million to NT$3,600 million. Evergreen Group became the largest shareholder of the Company. On behalf of the Taiwan Residential Earthquake Insurance Fund, the Company issued catastrophe bonds in the U.S., and successfully completed fundraising in New York, U.S. on August 25, 2003. This is the first time that our country has issued catastrophe bonds in the international market, with a total issuance amount of US$100 million and a tenor of 3 years. By doing so, it not only further protects our country's residential earthquake insurance but also suggests that our insurance industry is more in line with the international capital market.
June 2004	On June 23, 2004, the abolition of the “Central Reinsurance Corporation Act” was announced by the Presidential Decree Hua-Zong-Yi-Yi-Zi No. 09300118321.
November 2004	On November 4, 2004, the Company increased its cash capital by NT$600 million and paid-incapital from NT$3,600 million toNT$4,200 million.
August 2005	On August 31, 2005, the Company increased its cash capital by NT$800 million and paid-incapital from NT$4,200 million toNT$5,000 million.
September 2005	On September 26, 2005, the Company was awarded the "Reinsurance Industry Contribution Award" in the 9th Asia Insurance Industry Awards by Asia Insurance Review.
October 2005	On October 26, 2005, the Amendment to the Company’s Articles of Incorporation was approved by the special shareholders’ meeting to reduce the number of directors from 9 to 7; meanwhile, directors and supervisors were re-elected, and the number of directors representingEvergreen InternationalCorporation increased to 5.
October 2006	On October 20, 2006, the international credit rating agency Standard & Poor's and the domestic Taiwan Ratings Corporation upgraded the Company's financial strength ratings to A- and tw AA+, respectively. The aforementioned rating maintained the same from 2007to 2012.

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August 2007	On August 21, 2007, the Company increased its capital by NT$250 million from retained earnings and paid-in capital from NT$5,000 million to NT$5,250 million.
June 2008	On June 13, 2008, the regular meeting of shareholders re-elected directors and supervisors. After the re-election, there were two independent directors among the sevendirectors.
August 2008	On August 22, 2008, the Company increased its capital by NT$262.5 million from retained earnings and paid-in capital from NT$5,250 million to NT$5,512.5 million.
June 2010	On June 10, 2010, the international credit rating agency A.M. Best upgraded the Company's financial strength ratings to A. The rating has been maintained up until now.
June 2013	On June 10, 2013, the international credit rating agency Standard & Poor’s upgraded the Company's financial strength ratings to A. The rating has been maintained up until now.
July 2013	On July 29, 2013, the Company increased its capital by NT$110.25 million from retained earnings and paid-in capital from NT$5,512.5 million to NT$5,622.75 million.
June 2014	On June 11, 2014, the Annual General shareholders’ meeting re-elected directors. After the re-election, there were three independent directors among the nine directors. In themeantime,theAuditCommitteeis setuptoreplacethe supervisor.
January 2016	On September 8, 2015, the Company acquired the Financial Supervision Commission's approval to its application for the establishment permission of the Offshore Insurance Unit. The Offshore Insurance Unit started the business on January 1,2016.
July 2018	On July 31, 2018, the Company increased its capital by NT$281.14 million from retained earnings and paid-in capital from NT$5,622.75 million to NT$5,903.89 million.

18 Central Reinsurance Corporation Annual Report 2020

3. CORPORATE GOVERNANCE REPORT

3.1 Organization

3.1.1Organizational Chart

Central Reinsurance Corporation Annual Report 2020

3.1.2Major Corporate Functions

Department Name	Department Responsibilities
Supervisory Division	Human Resources Department:Responsible for organizational structure and staffing, employee recruitment, appointment, dismissal, and transfer, assessment and promotion, education and training, salary and bonus, pension and severance, insurance and compensation, labor relations, and other matters assigned by superiors. General Affairs Department:Responsible for documents, seals, books, affairs, property custody, safety protection, and matters not specified in otherdepartmentsand offices.
Finance Division	Finance Department:The Finance Department is in charge of funding, investment risk control, cashing, securities settlement, custody and other back-office operations, revision of regulations related to corporate governance, etc. Accounting Department:Responsible for accounting, administrative duties relative to board meetings, share affairs management, and other services.
Investment Department	Responsible for the planning and use of funds.
Project Division	Responsible for operation planning such as analysis of the insurance market development trends, business operation planning, actuarial servicesand statistics, etc.
Property & Casualty Division	Responsible for treaty reinsurance in domestic non-life insurance and facultative reinsurance in domestic and overseas non-life insurance. Fire Department:Responsible for underwriting and related retrocession arrangement of fire reinsurance. Marine & Aviation Department:Responsible for underwriting and related retrocession arrangement of marine & aviation reinsurance. Motor Department:Responsible for underwriting and related retrocession arrangement of automobile reinsurance. Casualty Department:Responsible for underwriting and related retrocession arrangement of non-life reinsurance other than fire reinsurance,marine &aviation reinsurance,andautomobilereinsurance.
International Department	Responsible for underwriting and related retrocession arrangement of international non-life treatyreinsurance.
Life & Health Division	Responsible for domestic and overseas life treaty reinsurance and facultative reinsurance. Life & Health Department:Responsible for underwriting and related retrocession arrangement of life insurance and health insurance. PA & Actuarial Department:Responsible for underwriting and related retrocession arrangement of accident insurance and life insurance actuarialservicesand statistics, etc.
Computer Department	Responsible for planning, control, and security maintenance of information systems and computer operation and maintenance Under which there are two sections: (1) Information Security Section in charge of information security related services. (2) Computer Section in charge of information system development and computer facilitiesmaintenanceandmanagement.
Risk Management	Responsible for risk management matters such as the establishment and implementationof an integratedrisk managementsystem,the

20 Central Reinsurance Corporation Annual Report 2020

Department Name	Department Responsibilities
Department	establishment, analysis and application of risk quantification modules, and the control of catastrophe accumulation risk and risk tolerance, as well as actions required for anti-money laundering and countering the financing of terrorism.
Legal & Compliance Department	Responsible for legal affairs and regulatory compliance.
Claim Department	Responsible for reinsurance claims.

Central Reinsurance Corporation Annual Report 2020


Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Relation	-	-	-	-
	Name	-	-	-	-
	Title	-	-	-	-
Other Position		-	Director, The Non-Life Underwriters Society of The Republic of China Vice Chairman, Insurance Society of the Republic of China	-	Director & President, Evergreen International Corp. Director: Evergreen Marine Corp. (Taiwan) Ltd.
Experience & Education (Note 3)		-	President, Central Reinsurance Corp. Deputy Director General, Dept. of Insurance, Ministry of Finance, R.O.C. Adjunct Lecturer / Adjunct Associate Professor, Dept. of Risk Management and Insurance, National Chengchi University MBA, the College of Insurance, New York City	-	Executive Vice President, Legal Dept., Evergreen International Corp. Master of Maritime
Shareholding by Other Nominee	�	0	0	0	0
	Shares	0	0	0	0
Spouse & Dependents Shareholding	�	-	0	-	0
	Shares		0		0
Present Shareholding (Note 5)	�	35.13	0.18	35.13	0
	Shares	207,419,251	1,050,771	207,419,251	0
Shareholding when Elected	�	35.13	0	35.13	0
	Shares	207,419,251	0	207,419,251	0
Date of Initial Election, Appointment (Note 2)		2002.10.29	1993.09.29	2002.10.29	2014.06.11
Tenure (Years)		3 Years	3 Years	3 Years	3 Years
Date Elected		2020.05.28	2020.05.28	2020.05.28	2020.05.28
Gender		-	M	-	M
Name		Evergreen International Corp.	Representative: Yang, Cheng-Tui	Evergreen International Corp.	Representative: Tai, Jiin-Chyuan
Nationality or Place of Registration		Republic of China	Republic of China	Republic of China	Republic of China
Title (Note 1)			Chairman		Director

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Relation		-
	Name		-
	Title		-
Other Position		EVA Airways Corp. Evergreen International Storage &Transport Corp. Uni Airways Corp. Evergreen Sky Catering Corp. Evergreen Security Corp. Shun An Enterprise Corp. Taipei Port Container Terminal Corp. Evergreen Aviation Technologies Corp. Ever Ecove Corp. Super Max Engineering Enterprise Corp. Evergreen (Shanghai) Hotel Limited Evergreen International Hotel Property (Bangkok) Co., Ltd. Evergreen Insurance Co., Ltd. Colon Container Terminal S.A. Evergreen Container Terminal (Thailand) Ltd.	President, Central Reinsurance Corp.
Experience & Education (Note 3)		Law, National Taiwan Ocean University	Executive Vice President, Finance Div., Central Reinsurance Corp.
Shareholding by Other Nominee	�		0
	Shares		0
Spouse & Dependents Shareholding	�		0
	Shares		0
Present Shareholding (Note 5)	�		0.01
	Shares		35,422
Shareholding when Elected	�		0
	Shares		0
Date of Initial Election, Appointment (Note 2)			2020.05.28
Tenure (Years)			3 Years
Date Elected			2020.05.28
Gender			F
Name			Representative: Cheng, Ching-Fen
Nationality or Place of Registration			Republic of China
Title (Note 1)		Director

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Relation		-	-
	Name		-	-
	Title		-	-
Other Position			-	Director & Chief Executive Vice President, Evergreen Marine Corp. (Taiwan) Ltd. Director: Taipei Port Container Terminal Corp. Ningbo Yi Ning Terminals Ltd. Evergreen Marine (Hong Kong) Ltd. Italia Marittima S.P.A. Evergreen Agency (South Africa) (Proprietary) Limited Supervisor: UNI Airways Corp. Evergreen Security Corp. Taiwan Terminal Services Corp. Ltd. Charng Yang Development Co., Ltd. Hsiang-Li Investment Corp.
Experience & Education (Note 3)		MBA of Industrial Management, Chung Hua University	-	Executive Vice President, Finance Div., Evergreen Marine Corp. (Taiwan) Ltd. MBA, National Sun Yat- Sen University
Shareholding by Other Nominee	�		0	0
	Shares		0	0
Spouse & Dependents Shareholding	�		-	0
	Shares			0
Present Shareholding (Note 5)	�		8.45	0
	Shares		49,866,466	0
Shareholding when Elected	�		8.45	0
	Shares		49,866,466	0
Date of Initial Election, Appointment (Note 2)			2020.05.28	2003.10.29 (Note 6)
Tenure (Years)			3 Years	2.4 Years
Date Elected			2020.05.28	2021.01.01
Gender			-	M
Name			Evergreen Marine Corp. (Taiwan) Ltd.	Representative: Wu, Kuang-Hui
Nationality or Place of Registration			Republic of China	Republic of China
Title (Note 1)				Director

Other Managers, Directors or Supervisors Related by Marriage or Within Second-degree kinship of Each Other	Relation		-	-	-
	Name		-	-	-
	Title		-	-	-
Other Position		Evergreen (Shanghai)Hotel Limited Evergreen Shipping Agency (China) Co., Ltd. PT. Multi Bina Pura International VIP Greenport Joint Stock Company	-	Deputy Director General, Dept. of Planning, Ministry of Finance, R.O.C.	Director General, Dept. of Secretarial, Ministry of Finance, R.O.C.
Experience & Education (Note 3)			-	Senior Executive Officer, Dept. of Planning, Ministry of Finance, R.O.C. Master of Institute of Public Policy Science, College of Law & Commerce, National Chung Hsing University	Counselor, Ministry of Finance, R.O.C. Deputy Director General / Acting Director General, Training Institute, Ministry of Finance, R.O.C. Bachelor of Land Economics, National Chengchi University
Shareholding by Other Nominee	�		0	0	0
	Shares		0	0	0
Spouse & Dependents Shareholding	�		-	0	0
	Shares			0	0
Present Shareholding (Note 5)	�		19.27	0	0
	Shares		113,792,773	0	0
Shareholding when Elected	�		20.37	0	0
	Shares		120,239,773	0	0
Date of Initial Election, Appointment (Note 2)			1968.10.31	2011.06.15	2014.07.25
Tenure (Years)			3 Years	3 Years	3 Years
Date Elected			2020.05.28	2020.05.28	2020.05.28
Gender			-	F	M
Name			Ministry of Finance, R.O.C.	Representative: Lee, Yi-Fen	Representative: Chen, Kuan-Pao
Nationality or Place of Registration			Republic of China	Republic of China	Republic of China
Title (Note 1)				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 Accountants Independent Director: Axcen Photonics Corp., Acon Optics Corp.	Partner of Liu, Chang & Partners
Experience & Education (Note 3)		Vice President, Yuanta Futures Co., Ltd. Partner, Pricewaterhouse Coopers Adjunct Lecturer, Dept. of Business and Management, Ming Chi University of Technology Master of Accounting, University of Alabama	Partner of Baker & McKenzie Taipei Partner of K&L Gates, Partner of Preston Gates & Ellis LL.M., London School of Economics and Political Science (International Business Law)
Shareholding by Other Nominee	�	0	0
	Shares	0	0
Spouse & Dependents Shareholding	�	0	0
	Shares	0	0
Present Shareholding (Note 5)	�	0	0
	Shares	0	0
Shareholding when Elected	�	0	0
	Shares	0	0
Date of Initial Election, Appointment (Note 2)		2014.06.11	2020.05.28
Tenure (Years)		3 Years	3 Years
Date Elected		2020.05.28	2020.05.28
Gender		M	M
Name		Chou, Yu-Cheng	Chang, Bing-Huang
Nationality or Place of Registration		Republic of China	Republic of China
Title (Note 1)		Independent Director	Independent Director

3.2.1.1 Major Shareholders of Institutional Shareholders

March 30, 2021

3.2.1.1 Major	Shareholders of Institutional Shareholders March 30,2021	Shareholders of Institutional Shareholders March 30,2021
Name of Institutional Shareholders (Note 1)	Major Shareholders of the Institutional Shareholders(Note 2)
	Name	Percentage (%)
Evergreen International Corp.	Chang Yung-Fa Foundation	28.86%
	Sheng Shi Corp.	18.00%
	Chang, Kuo-Hua	12.90%
	Chang, Kuo-Ming	12.17%
	Lee, Yu-Mei	7.14%
	Chen, Hui-Chu	5.81%
	Chang Yung-Fa Charity Foundation	5.00%
	Chang, Yung-Fa	5.00%
	Yang, Mei-Chen	4.60%
	Scept Corp.	0.50%
Evergreen Marine Corp. (Taiwan) Ltd.	Evergreen International S.A.	7.43%
	Chang, Kuo-Hua	6.06%
	Evergreen International Corp.	4.98%
	Chang, Yung-Fa	3.43%
	Chang, Kuo-Ming	2.22%
	New Labor Pension Fund	1.22%
	Bank SinoPac as Custodian ALLY HOLDING LTD. Investment Account	0.98%
	J.P. Morgan Securities PLC	0.93%
	Yang, Mei-Chen	0.90%
	Chang, Kuo-Cheng	0.89%
Ministry of Finance, R.O.C.	Government	N/A

Note1: If the directors and supervisors are institutional shareholders, please disclose the name of institute.

Note2: The major shareholders of the institutional shareholder (for those holding more than 10% shares) and its shareholdings percentage should be disclosed. If the major shareholders of the institutional shareholders are institute, please fill in chart 2.

Note3: When the institutional shareholder is not company organization, the mentioned name of institution and its shareholding ratio, which shall be disclosed, are defined as name of endower and its endowment ratio.

Note4: Information is provided by institutional shareholders, Department of Commerce MOEA or Market Observation Post System (MOPS).

3.2.1.2 Major Shareholders of the Company’s major Institutional Shareholders

March 30, 2021

		March 30, 2021
Legal Entity (Note 1)	Name of Institutional Shareholders (Note 2)	Major Shareholders of the Institutional Shareholders(Note 3)
Evergreen International Corp.	Chang Yung-Fa Foundation(Note 6)	Chang ,Yung-Fa Chang, Shu-Hua Chang, Kuo-Hua Chang, Kuo-Ming Chang, Kuo-Cheng Evergreen International Corp. Evergreen Marine Corp. (Taiwan) Ltd. Everglory Transport Corp. Evergreen Investment Corp. Eversafty Container Terminal Corp. Evermaster Industrial Corp. Evergenius Computer Information Corp. Everlaural Trading Corp. Ltd. UnigloryMarine Corp.
	Sheng Shi Corp.	Chang, Kuo-Cheng (92.44%) Tseng, Chiung-Hui (7.56%)
	Chang Yung-Fa Charity Foundation(Note 7)	Chang, Yung-Fa (33.33%) Chang, Kuo-Hua(33.33%) Cheng,Shen-Chih(33.33%)
	Scept Corp.	Yang, Mei-Chen (97.31%) Chang,Sheng-En(2.69%)
Evergreen Marine Corp. (Taiwan) Ltd.	Evergreen International S.A.	Chang, Yung-Fa (20%) Chang, Kuo-Hua (20%) Chang, Kuo-Ming (20%) Chang, Kuo-Cheng (20%) Pieca Corp.(20%)
	Evergreen International Corp.	Chang Yung-Fa Foundation (28.86%) Sheng Shi Corp. (18.00%) Chang, Kuo-Hua (12.90%) Chang, Kuo-Ming (12.17%) Lee, Yu-Mei (7.14%) Chen, Hui-Chu (5.81%) Chang Yung-Fa Charity Foundation (5.00%) Chang, Yung-Fa (5.00%) Yang, Mei-Chen (4.60%) Scept Corp.(0.50%)
	New Labor Pension Fund	N/A
	Bank SinoPac as Custodian ALLY HOLDING LTD. Investment Account	N/A
	J.P. Morgan Securities PLC	N/A

Note 1: Name of the institutional shareholders of chart 1.

Note 1: Name of the institutional shareholders of chart 1. Note 2: Name of the major shareholder of institutional shareholders of chart 1.

28 Central Reinsurance Corporation Annual Report 2020

Note 3: The major shareholders of the institutional shareholder (for those holding more than 10% shares) and its shareholdings percentage should be disclosed.
Note 4:When the institutional shareholder is not company organization, the mentioned name of institution and its shareholding ratio, which shall be disclosed, are defined as name of endower and its endowment ratio.
Note 5: Information is provided by institutional shareholders, Department of Commerce MOEA or Market Observation Post System (MOPS).
Note 6:The endowers are the endowers listed in the Charter of Endowment of Chang Yung-Fa Foundation.
Note 7: The endowers are the endowers listed in the Charter of Endowment of Chang Yung-Fa Charity Foundation and their endowment as a percentage of endowment property endowed by endowers when Chang Yung-Fa Charity Foundation was established.

Central Reinsurance Corporation Annual Report 2020 29

3.2.1.3 Professional qualifications and independence analysis of directors

																March 30, 2021	March 30, 2021
		Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work					Independence				Criteria(Note)
			Experience
	Criteria	An Instructor or Higher Position in a	A Judge, Public Prosecutor, Attorney,	Have Work Experience in													Number of Other Public
		Department of	Certified Public	the Areas of													Companies in
		Commerce, Law,	Accountant, or Other	Commerce,													Which the
		Finance, Accounting,	Professional or	Law, Finance,													Individual is
		or Other Academic Department Related to	Technical Specialist Who has Passed a	or Accounting,	1	2	3	4	5	6	7	8	9	10	11	12	Concurrently Serving as an
Name		the Business Needs of	National Examination	or Otherwise													Independent
		the Company in a	and been Awarded a	Necessary for													Director
		Public or Private	Certificate in a	the Business
		Junior College,	Profession Necessary	of the
		College or University	for the Business of the	Company
			Company

	March 30, 2021	March 30, 2021	March 30, 2021	March 30, 2021	March 30, 2021	March 30, 2021	March 30, 2021	March 30, 2021	March 30, 2021	March 30, 2021	March 30, 2021	March 30, 2021	March 30, 2021	March 30, 2021	March 30, 2021	March 30, 2021
Criteria Name	Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience			Independence Criteria(Note)												Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director
	An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10	11	12
Yang, Cheng-Tui	�		�	�			�	�	�	�	�	�	�	�		0
Tai, Jiin-Chyuan			�			�	�		�	�			�	�		0
Cheng, Ching-Fen			�			�	�	�	�	�	�	�	�	�		0
Wu, Kuang-Hui			�	�		�	�		�	�	�	�	�	�		0
Lee, Yi-Fen			�	�		�	�		�	�	�	�	�	�		0
Chen, Kuan-Pao			�	�		�	�		�	�	�	�	�	�		0
Chou, Yu-Cheng	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	2
Chang, Bing-Huang		�	�	�	�	�	�	�	�	�	�	�	�	�	�	0

Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office.

1.Not an employee of the Company or any of its affiliates.
Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.
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 of 1% or more of the total number of issued 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 third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.
Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of issued shares of the Company, or that ranks among the top 5 in shareholdings, or that designates its representative to serve as a director or supervisor of the Company under Article 27, paragraph 1 or 2 of the Company Act. The same does not apply, however, in cases where the person is an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.
If a majority of the Company's director seats or voting shares and those of any other company are controlled by the same person: Not a director, supervisor, or employee of that other company. The same does not apply, however, in cases where the person is an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.
If the chairperson, general manager, or person holding an equivalent position of the Company and a person in any of those positions at another company or institution are the same person or are spouses: Not a director (or governor), supervisor, or employee of that other company or institution. The same does not apply, however, in cases where the person is an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.
Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution that has a financial or business relationship with the Company. The same does not apply, however, in cases where a specified company or institution holds 20% or more and no more than 50% of the total number of issued shares of the Company and the person is an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.
Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or

30 Central Reinsurance Corporation Annual Report 2020

institution that, provides auditing services to the Company or any affiliate of the Company, or that provides commercial, legal, financial, accounting or related services to the Company or any affiliate of the Company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.

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 Act.
Not a governmental, juridical person or its representative as defined in Article 27 of the Company Act.

Central Reinsurance Corporation Annual Report 2020

Spouse or Relatives within the Second Degree Holding Position as Manager	Relationship	None	None	None	None	None	None	None	None
	Name
	Title
Current Position(s) in Other Companies		None	None	None	None	None	None	None	None
Principal Work Experience and Academic Qualifications		1. Executive Vice President, Finance Division of Central Re 2. M.B.A., Chung Hua University	1. Senior Vice President, Risk Management Department of Central Re 2. M.S. in Chemical Engineering, National Cheng Kung University	1. Executive Vice President, Property & Casualty Division of Central Re 2. M.B.A., National Taipei University	1. Senior Vice President, Finance Division of Central Re 2. B.B.A., National Taiwan University	1. Executive Vice President, CDIB & Partners Investment Holding Corp. 2. M.S., National Central University	1. Deputy Senior Vice President, Project Division of Central Re 2. M.B.A. in Actuarial Science, Feng Chia University	1. Junior Vice President, Personnel Division of Evergreen International Corp. 2. B.L., National Chung Hsing University	1. Junior Vice President, Legal & Compliance Department of Central Re 2. B.S. in Banking and Insurance, Feng Chia University
Shareholding by Other Nominee	%	0	0	0	0	0	0	0	0
	Shares	0	0	0	0	0	0	0	0
Spouse & Dependents Shareholding	%	0	0	0	0	0	0	0	0
	Shares	0	0	0	0	0	0	0	0
Shareholding	%	0.01	0.00	0.01	0	0	0	0.00	0.00
	Shares	35,422	238	53,550	0	0	0	500	2,142
Date of Accession		2020.10.20	2016.07.01	2020.10.01	2021.01.01	2019.02.21	2016.01.01	2014.06.16	2020.01.01
Gender		F	M	M	F	F	M	M	M
Name		Cheng, Ching-Fen (Note 4)	Lin, Cheng-Yen	Chung, Chih-Hung	Chang, Yung-Ning	Fan Chiang, Chi-Hsiu	Lin, Yu-Te	Hsu, Tzu-Cheng	Wang, Cheng-Sung
Nationality		Republic of China	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	Executive Vice President (Financial Officer)	Chief Investment Officer	Appointed Actuary (Senior Vice President)	Deputy 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, Accounting Department of Central Re 2. B.B.A., Ming Chuan College of Management	1. Junior Vice President, Motor Department of Central Re 2. M.B.A., National Chengchi University	1. Junior Vice President, International Department of Central Re 2. M.B.A., in Insurance, Hartford University	1. Junior Vice President, Project Division of Central Re 2. M.A.S. in Actuarial Science, Georgia State University
Shareholding by Other Nominee	%	0	0	0	0
	Shares	0	0	0	0
Spouse & Dependents Shareholding	%	0	0	0	0
	Shares	0	0	0	0
Shareholding	%	0	0.01	0	0
	Shares	0	51,404	0	0
Date of Accession		2018.01.01	2019.01.01	2020.01.01	2018.12.01
Gender		F	M	M	F
Name		Liao, Min-Ju	Wang, Jui-Ching	Liao, Chieh-Chun	Wang, Mei-Erh
Nationality		Republic of China	Republic of China	Republic of China	Republic of China
Title		Deputy Senior Vice President (Principal Accounting Officer)	Deputy Senior Vice President	Deputy Senior Vice President	Deputy Senior Vice President

Remuneration received from an invested company other than the company’s subsidiary or parent company (Note 11)	Remuneration received from an invested company other than the company’s subsidiary or parent company (Note 11)	Remuneration received from an invested company other than the company’s subsidiary or parent company (Note 11)	Remuneration received from an invested company other than the company’s subsidiary or parent company (Note 11)	11,765	11,765	11,765	11,765	11,765	11,765	11,765	11,765	0	0
Percentage of the total remuneration (A+B+C+D+E+F+G) accounted for net income (Note 10)		�� �� (Note 7)		1.39%								0.22%
				1.39%								0.22%
		The Company

Relevant remuneration received by directors who are also employees	Compensation to employees (Note 6)	�� �� (Note 7)	Stock	0								0
			Amount
				262								0
			Cash

		The Company		0								0
			Stock
			Amount

				262								0
			Cash

	Severance (F)	�� �� (Note 7)		3,244								0
				3,244								0
		The Company

	Salary, bonus, allowance (E) (Note 5)	�� �� (Note 7)		2,357								0
				2,357								0
		The Company

Percentage of the total remuneration (A+B+C+D) accounted for net income (Note 10)		�� �� (Note 7)		1.00%								0.22%
				1.00%								0.22%
		The Company

Remuneration to directors	Allowance (D) (Note 4)	�� �� (Note 7)		1,033								210
				1,033								210
		The Company

	Compensation to Directors (C) (Note 3)	�� �� (Note 7)		4,850								0
				4,850								0
		The Company

	Severance (B)	�� �� (Note 7)		2,800								0
				2,800								0
		The Company

	Compensation (A) (Note 2)	�� �� (Note 7)		6,470								3,081
				6,470								3,081
		The Company

		Name		Evergreen International Corp. Representative: Yang, Cheng-Tui	Evergreen International Corp. Representative: Chang, Kuo-Cheng	Evergreen International Corp. Representative: Cheng, Ching-Fen	Ministry of Finance, R.O.C. Representative: Lee, Yi-Fen	Ministry of Finance, R.O.C. Representative: Chen, Kuan-Pao	Evergreen Marine Corp.(Taiwan) Ltd. Representative: Chang, Kuo-Hua	Evergreen International Corp. Representative: Tai, Jiin-Chyuan	Evergreen International Corp. Representative: Chang, Kuo-Ming	Chou, Ker-Kaoo	Chou, Yu-Cheng
		Title						Directors				Independent director

Remuneration received from an invested company other than the company’s subsidiary or parent company (Note 11)	Remuneration received from an invested company other than the company’s subsidiary or parent company (Note 11)	Remuneration received from an invested company other than the company’s subsidiary or parent company (Note 11)	Remuneration received from an invested company other than the company’s subsidiary or parent company (Note 11)
Percentage of the total remuneration (A+B+C+D+E+F+G) accounted for net income (Note 10)		�� �� (Note 7)

		The Company

Relevant remuneration received by directors who are also employees	Compensation to employees (Note 6)	�� �� (Note 7)	Stock
			Amount

			Cash

		The Company
			Stock
			Amount


			Cash

	Severance (F)	�� �� (Note 7)

		The Company

	Salary, bonus, allowance (E) (Note 5)	�� �� (Note 7)

		The Company

Percentage of the total remuneration (A+B+C+D) accounted for net income (Note 10)		�� �� (Note 7)

		The Company

Remuneration to directors	Allowance (D) (Note 4)	�� �� (Note 7)

		The Company

	Compensation to Directors (C) (Note 3)	�� �� (Note 7)

		The Company

	Severance (B)	�� �� (Note 7)

		The Company

	Compensation (A) (Note 2)	�� �� (Note 7)

		The Company

		Name		Yau, Sea-Wain	Chang, Bing-Huang	Tsai, Li-Hsueh
		Title

Total remuneration (A+B+C+D+E+F+G)	Parent Company and All Reinvested Companies. (Note 9� Note 11) (I)	Lee, Yi-Fen�Chen, Kuan-Pao�Chang, Kuo-Ming�Chou, Ker-Kaoo�Yau, Sea-Wain�Chang, Bing-Huang�Tsai, Li-Hsueh	Chou, Yu-Cheng	Chang, Kuo-Hua		Yang, Cheng-Tui� Chang, Kuo-Cheng� Cheng, Ching-Fen�Tai, Jiin-Chyuan
	The Company (Note 8)	Lee, Yi-Fen�Chen, Kuan-Pao�Chang, Kuo-Ming�Chang, Kuo-Hua�Tai, Jiin-Chyuan�Chou, Ker-Kaoo�Yau, Sea-Wain�Chang, Bing-Huang�Tsai, Li-Hsueh	Chou, Yu-Cheng		Chang, Kuo-Cheng	Yang, Cheng-Tui� Cheng, Ching-Fen
Total remuneration (A+B+C+D)	Consolidated subsidiaries (Note 9) (H)	Lee, Yi-Fen�Chen, Kuan-Pao�Chang, Kuo-Ming�Chang, Kuo-Hua�Tai, Jiin-Chyuan�Cheng, Ching-Fen�Chou, Ker-Kaoo�Yau, Sea-Wain�Chang, Bing-Huang�Tsai, Li-Hsueh	Chou, Yu-Cheng		Chang, Kuo-Cheng	Yang, Cheng-Tui
	The Company (Note 8)	Lee, Yi-Fen�Chen, Kuan-Pao�Chang, Kuo-Ming�Chang, Kuo-Hua�Tai, Jiin-Chyuan�Cheng, Ching-Fen�Chou, Ker-Kaoo�Yau, Sea-Wain�Chang, Bing-Huang�Tsai, Li-Hsueh	Chou, Yu-Cheng		Chang, Kuo-Cheng	Yang, Cheng-Tui
	Range of Remuneration to Directors of the Company	Less than NT$1,000,000	NT$1,000,000 (inclusive) ~ NT$2,000,000 (exclusive)	NT$2,000,000 (inclusive) ~ NT$3,500,000 (exclusive)	NT$3,500,000 (inclusive) ~ NT$5,000,000 (exclusive)	NT$5,000,000 (inclusive) ~ NT$10,000,000 (exclusive)	NT$10,000,000 (inclusive) ~ NT$15,000,000 (exclusive)

36 Central Reinsurance Corporation Annual Report 2020

Total remuneration (A+B+C+D+E+F+G)	Parent Company and All Reinvested Companies. (Note 9� Note 11) (I)					13 persons
	The Company (Note 8)					13 persons
Total remuneration (A+B+C+D)	Consolidated subsidiaries (Note 9) (H)					13 persons
	The Company (Note 8)					13 persons
	Range of Remuneration to Directors of the Company	NT$15,000,000 (inclusive) ~ NT$30,000,000 (exclusive)	NT$30,000,000 (inclusive) ~ NT$50,000,000 (exclusive)	NT$50,000,000 (inclusive) ~ NT$100,000,000 (exclusive)	More than NT$100,000,000	Total

Central Reinsurance Corporation Annual Report 2020 37

Central Reinsurance Corporation Annual Report 2020

Remuneration received from an invested company other than the company’s subsidiary or parent company (Note 9)	Remuneration received from an invested company other than the company’s subsidiary or parent company (Note 9)	Remuneration received from an invested company other than the company’s subsidiary or parent company (Note 9)	1,056	1,056	1,056
	Consolidated subsidiaries (Note 5)		1.27%
Percentage of the total remuneration (A+B+C+D) accounted for net income (Note 8)
	The Company		1.27%

Amount ofEmployee Compensation (Note 4)	Consolidated subsidiaries (Note 5)	Stock Amount	0
		Cash	1,118
	The Company	Stock Amount	0
			1,118
		Cash

Bonus and Special Disbursement (C) (Note 3)	Consolidated subsidiaries (Note 5)		3,428
	The Company		3,428
Severance (B)	Consolidated subsidiaries (Note 5)		6,747
	The Company		6,747
Salary (A) (Note 2)	Consolidated subsidiaries (Note 5)		7,978
	The Company		7,978
Name			Tsai, Bai-Long	Cheng, Ching-Fen	Lin, Cheng-Yen	Chung, Chih-Hung
Title			President	President	Executive Vice President	Executive Vice President

Central Reinsurance Corporation Annual Report 2020 39

Name of President and Executive Vice President	Parent Company and All Reinvested Companies. (Note 7) (E)	Chung, Chih-Hung			Lin, Cheng-Yen	Tsai, Bai-Long�Cheng, Ching-Fen						4 persons	Note1: The names of general managers and assistant general managers should be listed separately, with the disclosure in aggregate of the paid amounts. Where the director concurrently serves as the general manager or assistant general manager, this table, general manager and assistant general manager remuneration table, and remuneration range table should be provided. Note2: It refers to the salary, allowance, severance paid to general managers and assistant general managers for 2020. Note3: It refers to bonuses, incentives, travel allowance, special disbursement, various allowances, housing, company car, other physical supplies, and other compensation received by general managers and assistant general managers for 2020. Where the housing, cars, other vehicles, or specific personal expenditure are provided, the nature and cost of the assets provided, the actual value or the fair market value of rent, gasoline, and other payments should be disclosed. If equipped with a driver, please indicate in the note the relevant compensation paid by the Company to the driver, which shall not be included in the remuneration. The salary expense recognized in accordance with IFRS2 “Share-Based Payment” such as acquiring employee share subscription warrants, restricted stock awards, new restricted employee shares, and participating in capital increase by cash with subscription rights should be included in the remuneration. Note4: It refers to the amount of employee compensation (including shares and cash) for the year of 2020 approved for distribution by the board of directors on March 18, 2021. If an estimate is not possible, the proposed distribution amount for this year should be calculated based on the actual distribution amount last year and the names of the managerial officers receiving employee compensation and the distribution table. Note5: The total amount of remuneration paid to the general managers and assistant general managers of the Company by all the companies (including the Company) in the consolidated financial statements should be disclosed. Note6: The total amount of remuneration paid to the general managers and assistant general managers by the Company. The names of general managers and assistant general managers should be disclosed in the corresponding aggregate remuneration range. Note7: The total amount of remuneration paid to the general managers and assistant general managers of the Company by all the companies (including the Company) in the consolidated financial statements should be disclosed. The names of general managers and assistant general managers should be disclosed in the range for the corresponding aggregate remuneration.
	The Company (Note 6)	Chung, Chih-Hung			Lin, Cheng-Yen	Tsai, Bai-Long�Cheng, Ching-Fen						4 persons
	Range of Remuneration to President and Executive Vice President of the Company	Less than NT$1,000,000	NT$1,000,000 (inclusive) ~ NT$2,000,000 (exclusive)	NT$2,000,000 (inclusive) ~ NT$3,500,000 (exclusive)	NT$3,500,000 (inclusive) ~ NT$5,000,000 (exclusive)	NT$5,000,000 (inclusive) ~ NT$10,000,000 (exclusive)	NT$10,000,000 (inclusive) ~ NT$15,000,000 (exclusive)	NT$15,000,000 (inclusive) ~ NT$30,000,000 (exclusive)	NT$30,000,000 (inclusive) ~ NT$50,000,000 (exclusive)	NT$50,000,000 (inclusive) ~ NT$100,000,000 (exclusive)	More than NT$100,000,000	Total

Central Reinsurance Corporation Annual Report 2020

3.2.3.3 Comparison of Remuneration for Directors, President and Executive Vice Presidents in the most recent two fiscal years and Remuneration Policy for Directors, President and Executive Vice Presidents
(1) Analysis of the total remuneration, as a percentage of net income stated in the parent company only financial reports or individual financial reports, as paid during the past 2 fiscal years to directors, President and Executive Vice Presidents

2020		2019
Directors	1.22%	Directors	1.61%
President and Vice Presidents	1.27%	President and Vice Presidents	1.04%

An explanation for the relevance and reasonableness of the profit or loss after tax and changes in remuneration:

According to the Articles of Incorporation, after the deduction of accumulated losses from current year profit, the surplus, if any, should be distributed as remuneration no less than 0.5% to employees and no more than 1% to directors. The remuneration percentage for directors in 2020 complies with the Articles of Incorporation. Due to the increase in after-tax income, the total remuneration as a percentage of after-tax income in 2020 decreases from the previous year.

(2) Remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure:
Remuneration to directors includes the items as below:
- A. Compensation: The total remuneration of directors is allocated in accordance with the Company's Articles of Incorporation, and within the total compensation to directors, the remuneration of each director is allocated in consideration of the participation of each director in the Company's operations and value of the contribution.
- B. Return: Including salary and bonuses, based on the participation of directors in the Company's operations and value of contribution as well as the circumstances of a similar business.
- C. Severance
- D. Allowance: travel allowance, other allowances, company car�

Directors’ participation and contribution to the Company’s operations is

42 Central Reinsurance Corporation Annual Report 2020

determined by Directors’ self-performance and the performance appraisal on Board of Directors (including Directors’ records of attendance in meetings and training courses, the participation in the Company’s operation, and the communication with the management team, et al.).

Remuneration to Directors, President and Executive Vice Presidents includes the items as below:
A. Fixed remuneration: including salary and allowances, which are set to deliver according to the Company’s salary structure and standards for ranks and levels.
B. Variable remuneration: year-end bonus and employee compensation
C. Severance or pension
- Adjustments to the fixed remuneration and variable remuneration are determined by the results of performance evaluation by the regular annual review.
Procedure for determining remuneration

The remuneration paid to Directors, President and Executive Vice Presidents of the Company is in accordance with the Company’s Articles of Incorporation and relevant remuneration regulations. In consideration of future risks and circumstances of similar business, the distribution method is proposed and reported to the Compensation Committee for its approval and resolved by the board of directors.

Central Reinsurance Corporation Annual Report 2020 43

3.2.4 Employee’s Compensation of the Management Team

March 30, 2021 Unit: thousands of NT$; %

						Percentage (%)
						of the total
	Title	Name	Stock	Cash
					Total	amount
	(Note 1)	(Note 1)	Amount	Amount
						accounted for

						net income
Managerial Officer	President	Tsai, Bai-Long	0	3,717	3,717	0.25%
	President	Cheng, Ching-Fen
	Chief Auditor	Lin, Cheng-Yen
	Executive Vice President	Chung, Chih-Hung
	Executive Vice President	Chang, Yung-Ning
	Chief Investment officer	Fan Chiang, Chi-Hsiu
	Appointed Actuary	Lin, Yu-Te
	Deputy Senior Vice President	Hsu, Tzu-Cheng
	Deputy Senior Vice President	Wang, Cheng-Sung
	Deputy Senior Vice President	Liao, Min-Ju
	Deputy Senior Vice President	Wang, Jui-Ching
	Deputy Senior Vice President	Liao, Chieh-Chun
	Deputy Senior Vice President	Wang, Mei-Erh

Note 1: Individual name and title should be disclosed. However, the profit distribution can be disclosed with aggregate amounts.

Note 2: It refers to the amount of employee compensation (including shares and cash) for the year of 2020 approved for distribution by the board of directors on March 18, 2021. If an estimate is not possible, the proposed distribution amount for this year should be calculated based on the actual distribution amount last year. Net income refers to the net income after tax for 2020. Where the International Financial Reporting Standards have been adopted, it refers to the net income stated in the parent company only financial reports or individual financial reports for the most recent year.

Note 3: To whom a managerial officer can apply, in accordance with Letter No. Tai-Tsai-Zheng-III-Zi-0920001301 dated March 27, 2003 of the Securities and Futures Commission, Ministry of Finance, are listed as follows:

(1) President and anyone who has an equivalent position

(2) Executive Vice President and anyone who has an equivalent position

(3) Senior Vice President and anyone who has an equivalent position

(4) Chief Financial Officer and anyone who has an equivalent position

(5) Chief Accounting Officer and anyone who has an equivalent position

(6) Other who has involved in company management and authority to sign off

Note 4: Where directors, President, or Executive Vice President receive employee compensation (including shares and cash), their distribution should be provided in this table in addition to remuneration disclosure. Note 5: President Tsai, Bai-Long retired on October 1, 2020.

44 Central Reinsurance Corporation Annual Report 2020

3.3 Implementation of Corporate Governance

3.3.1 The Composition and Operations of the Board of Directors

In 2020, a total 4 (A) meetings of the Board of Directors were held before the election of directors at Annual General Shareholders’ Meeting on May 28, 2020, and a total 6 (A) meetings of the Board of Directors were held after the election

of directors. The attendance of directors is as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate in Person (%) �B/A�	Remarks
Current Directors
Chairman	Evergreen International Corp. Representative : Yang, Cheng-Tui	6	0	100%	Reelected on May 28, 2020.
Director	Evergreen Marine Corp. (Taiwan) Ltd. Representative : Chang,Kuo-Hua	6	0	100%	Newly elected on May 28, 2020.
Director	Evergreen International Corp. Representative: Tai, Jiin-Chyuan	6	0	100%	Reelected on May 28, 2020.
Director	Evergreen International Corp. Representative: Cheng,Ching-Fen	6	0	100%	Newly elected on May 28, 2020.
Director	Ministry of Finance, R.O.C. Representative: Lee,Yi-Fen	6	0	100%	Reelected on May 28, 2020.
Director	Ministry of Finance, R.O.C. Representative: Chen,Kuan-Pao	6	0	100%
Independent Director	Chou, Yu-Cheng	6	0	100%
Independent Director	Chang, Bing-Huang	6	0	100%	Newly elected on May28,2020�
Independent Director	Tsai, Li-Hsueh	5	0	100%	Newly elected on May 28, 2020. Resigned on Nov. 6, 2020. Required numbers of attendance:5

Central Reinsurance Corporation Annual Report 2020 45

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate in Person (%) �B/A�	Remarks
Former Directors
Chairman	Evergreen International Corp. Representative: Yang, Cheng-Tui	4	0	100%	Required numbers of attendance: 4
Vice Chairman	Evergreen International Corp. Representative: Chang, Kuo-Cheng	0	3	0%	Term ceased on May 28, 2020. Required numbers of attendance: 4
Director	Evergreen International Corp. Representative: Chang,Kuo-Ming	2	0	50%
Director	Evergreen International Corp. Representative: Tai, Jiin-Chyuan	4	0	100%	Required numbers of attendance: 4
Director	Ministry of Finance, R.O.C. Representative: Lee,Yi-Fen	4	0	100%
Director	Ministry of Finance, R.O.C. Representative: Chen,Kuan-Pao	4	0	100%
Independent Director	Chou, Yu-Cheng	4	0	100%
Independent Director	Yau, Sea-Wain	4	0	100%	Term ceased on May 28, 2020 Required numbers of attendance: 4
Independent Director	Chow, Ker-Kaoo	4	0	100%
Other mentionable items: 1. Please illustrate the dates of the Board Meetings, period, agenda and all independent directors’ opinions and the Company’s responses if one of following situation occurred during the Board Meetings: (1) The items listed in Article 14-3 of Securities and Exchange Act: Not applicable as the Company has established the Audit Committee. For more information about the items listed in Article 14-5 of Securities and Exchange Act, please refer to page 103 to 112(Material Resolutions of Board of Directors, Audit Committee and Remuneration Committee). (2) Except for theproposal mentioned above,other literallyrecorded resolutions

46 Central Reinsurance Corporation Annual Report 2020

which are opposed or have qualified opinion by independent directors: None.

If the directors have personal interest conflicts to the proposal and are required for recusal, please specify the name of the directors, proposal, reason and the resolution: Please refer to page 103 to 112 for more information.
The 2020 self-evaluation of the performance of the Board of Directors: Please refer to 3.3.2
The evaluation to strengthen the functionality of Board of Directors in recent years(ex. establish Audit Committee or enhance information transparency):
(1) The Company has purchased liability insurance for directors in order to disperse the risk of legal responsibility and improve the ability of corporate governance.
(2) To enhance the professional ability of directors as well as implement corporate governance, the Company has invited lecturers for directors to attend training courses in 2020 and 2021.
(3)The Company has 3 independent directors and has stipulated the “Rules Governing the Duties of Independent Directors”. To enhance the functionality of Board of Directors, the Company has established the Audit Committee, the Remuneration Committee and the Enterprise Risk Management Committee.
(4) The Company was ranked in the range of top 6% to 20% of all selected listed companies of the 1[st ] ~ 7[th] corporate governance evaluation, which illustrated the Company had good performance during operation.
(5) To enhance the information transparency, the Company voluntarily publishes important resolutions of Board Meetings and establishes social responsibility page, stakeholders’ interest page, and corporate governance page on the Company’s official website.
Note 1: For directors and supervisors who are legal entities, both the names of the legal entity and the representative should be disclosed.
Note 2: (1) If any of the directors or supervisors resigns before the end of the year, it is required to specify the date of his/her resignation in the remarks column. The actual attendance rate (%) should be calculated by the actual number of meetings he/she attended during his/her term at the Board of the Directors.
- (2) If there is any re-election of the Board before the end of the year, both the information of current and former directors and supervisors should be filled in the table, and the status and the re-election date should also be specified in the remarks column. The actual attendance rate (%) should be calculated by the actual number of meetings he/she attended during his/her term at the Board of the Directors.

Central Reinsurance Corporation Annual Report 2020 47

3.3.2 Execution status of evaluation of Board of Directors

Evaluation Cycle	Once ayear
Evaluation Period	From Jan. 1,2020 to Dec. 31,2020
Evaluation Scope	The Board as a whole, individual directors, and functional committees.
Evaluation Method	Self-evaluation and peer evaluation were conducted by the way of Directors fillingoutquestionnaires.
Evaluation Indexes	1. Self-evaluation of directors: The evaluation of self-performance of each director including attending and participating in discussion of Board meetings, awareness of the industry and management team of the Company, improving corporate governance continuously, and Internal control. 2. Peer evaluation of Board of Directors: The evaluation of performance of the Board as a whole including evaluating other directors attendance and participation in discussion of the Board meetings, awareness of the industry and management team of the Company, improving corporate governance continuously, internal control, and operations of the Board and functional committees. 3. Self-evaluation of functional committees: The evaluation of performance of functional committees including committee members’ participation in the operation of the Company and awareness of the duties of the functional committee, the quality of decisions made by the functional committee, the composition of the functional committee and election of its members,and Internal control.
Evaluation Result (Full score: 100)	1. Self-evaluation of directors: Excellent, the average score is 94.08. 2. Peer evaluation of Board of Directors: Excellent, the average score is 95.83. 3. Self-evaluation of functional committees: Excellent, the average score is 94.88.

Note 1� To specify the cycle of appraisal on the Board of Directors, e.g. once per year.

Note 2: To specify the period for which the appraisal on the Board of Directors will persist, e.g. the performance appraisal on the Board of Directors persisting from January 1, 2020 to December 31, 2020.

Note 3: The scope of appraisal covers the performance appraisal on the Board of Directors, individual Board members, and functional committees.

48 Central Reinsurance Corporation Annual Report 2020

Note 4: The method of appraisal includes Board of Directors self-assessment, Board members’ self-assessment, peer assessment, external professional organization’s assessment, and performance appraisal by experts or in any other adequate manners.
Note 5: The contents of appraisal shall consist of, at least, the following elements, subject to the scope of appraisal:
(1) Performance appraisal on Board of Directors: To cover, at least, degree of participation in the Company’s operation, Quality of the Board of Directors’ decision making, formation and structure of the Board of Directors, election and continuing education of directors, and internal control, et al..
(2) Performance appraisal on individual Board member: To cover, at least, alignment with the Company’s goals and mission, awareness toward director’s responsibilities and duties, degree of participation in the Company’s operation, management of internal relations and communication, expertise and continuing education of directors, and internal control, et al..
(3) Performance appraisal on functional committees: degree of participation in the Company’s operation, awareness toward functional committees’ responsibilities and duties, quality of the functional decision making, formation of the functional committees and election of members, and internal control, et al.

Central Reinsurance Corporation Annual Report 2020 49

3.3.3 Annual Tasks and Implementation Status of the Audit Committee

3.3.3.1 The Audit Committee of the Company is composed of three independent directors, whose major duties are to supervise and review the financial reports, accounting and internal control system, the major asset transactions, endorsements and guarantees, and the offering or issuance of securities.

Note: Independent director Tsai, Li-Hsueh, has resigned on Nov. 6, 2020 for personal reasons. Thus, the Company would by-elect one independent director at 2021 Annual General Meeting of Shareholders.

3.3.3.2 Annual Tasks of the Audit Committee in 2020:
(1) Review financial reports:

The Company’s annual business report, financial reports, and surplus distribution proposals were all reviewed by the Audit Committee and submitted to the Board for discussion. After being approved by the Board, the proposals were presented to the annual general meeting of shareholders for acknowledgement.

(2) Assess the effectiveness of internal control system:
The self-assessment of internal control systems and the implementation of the Company are completed by the internal units every year. And the audit unit reports the audit results to Audit Committee on a regular basis and submits the amendment of internal control system and internal control system statement to Audit Committee for confirmation. Besides, the Audit Committee and the audit unit have several closed-door meetings every year to enable the Committee to understand the financial status, operational effectiveness, risk management, information security, the compliance with regulations, and evaluate the effectiveness of internal control system of the Company.
(3) Appoint the Company’s Certified Public Accountants. The Audit Committee annually assesses the professionalism, independence, and the reasonableness of fees of CPAs. The proposal to appoint Ms. Chen Hsien-I and Ms. Lee, Hsiu-Ling, the CPAs of PricewaterhouseCoopers (hereinafter referred to as “PwC”), as the Company’s CPAs for 2021 was reviewed by Audit Committee and approved by the Board of Directors on Dec. 23, 2020. Besides, CPAs have several closed-door meetings with the Audit Committee every year to communicate matters related to financial reports.

50 Central Reinsurance Corporation Annual Report 2020

3.3.3.3 A total of 7 (A) meetings of the Audit Committee were held in 2020. The

attendance of independent directors is as follows.

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate (%)�B/A�	Remark
Convener	Chou, Yu-Cheng	7	0	100%	Reelected on May 28, 2020� Required numbers of attendance:7
Committee Member	Chang, Bing-Huang	4	0	100%	Newly elected on May 28, 2020� Required numbers of attendance:4
Committee Member	Tsai, Li-Hsueh	3	0	100%	Newly elected on May 28, 2020� Resigned on Nov. 6, 2020. Required numbers of attendance:3
Committee Member	Yau, Sea-Wain	3	0	100 %	Term ceased on May 28, 2020� Required numbers of attendance: 3
Committee Member	Chow, Ker-Kaoo	3	0	100 %
Other mentionable items: 1. If any of the following circumstances occurs, the dates of meetings, sessions, contents of motion, resolutions of the Audit Committee and the Company’s response to the Audit Committee’s opinion should be specified: (1) The items listed in Article 14-5 of Securities and Exchange Act: Please refer to page 103 to 112(Material Resolutions of Board of Directors, Audit Committee and Remuneration Committee). (2) Except for the proposal mentioned above, other resolutions which are not approved by Audit Committee but are approved by two-third of directors: None. 2. If there are independent directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: Please refer to page 103 to 112(Material Resolutions of Board of Directors, Audit Committee and Remuneration Committee). 3. Communication between independent directors and internal auditors/CPAs (1) Between independent directors and internal auditors Communication method The independent directors communicated with the internal audit supervisors through at least four closed-door communication meetings each year. In 2020, the Independent directors and internal audit supervisors had held six meetings

Central Reinsurance Corporation Annual Report 2020 51

in total, the chief auditor reports on the Company's internal audit implementation status and internal control operations. With the presence of all directors, a meeting reviewing the findings and improvement of deficiencies in internal control system was held annually. The progress of improvements in findings were continuously followed up by audit unit and reported to the audit committee and the board of directors.

The summaries of Communication in 2020

Date	Communication Content	The Company’s Response
2020/3/25	1. Report on the execution of audit business as of February 2020. 2. Review of the Company's 2019 Internal Control System Statement.	1. Agreed and submitted to board of directors meeting. 2. Approved and the proposal was submitted to board of directors meetingfor a resolution.
2020/5/6	1. Report on the execution of audit business as of April 15, 2020. 2. Report on fault found in inspections of InternalControl in 2019.	1. Agreed and submitted to board of directors meeting. 2. .Agreed and submitted to board of directors meeting.
2020/8/12	Report on the execution of audit businessas ofJuly2020.	Agreed and submitted to board of directorsmeeting.
2020/9/23	To amend the Internal audit system.	Approved and the proposal was submitted to board of directors meetingfor a resolution.
2020/11/4	Report on the execution of audit business as of October 2020.	Agreed and submitted to board of directors meeting.
2020/12/23	1. Report on the execution of audit business as of November 2020. 2. Review of the Company's 2021 Annual Audit Plan.	1. Agreed and submitted to board of directors meeting. 2. Approved and the proposal was submitted to board of directors meetingfor a resolution.

(2) Between independent directors and CPAs

Communication method

The Independent Directors and CPAs would hold a closed-door communication meeting at least four times each year. A meeting will be called at any time in case of significant abnormal events. In 2020, the Independent Directors and CPAs held four meetings in total. CPAs will report the financial position of the Company together with the conclusion of audit (or review) to the Independent Directors, as well as fully discuss whether there is any material adjusting entries or any impact of legislation amendments on accounts.

52 Central Reinsurance Corporation Annual Report 2020



	Date	Subject Matter of Communication	Result of Action
2020/3/25		1. Certified Public Accountant’s Report: The audit scope and results of the financial report for the 4th quarter of 2019. 2. The CPAs had discussions and communication on the questions from independent directors.	No opinion.
2020/4/1		The CPAs sent a letter to the independent directors on the audit planning and subject matters of communication of the 2020 financial report.	The independent director replied to the Certified Public Accountant that the letter was acknowledged without any other opinions.
2020/5/6		1. Certified Public Accountant’s Report: The review scope and results of the financial report for the 1st quarter of 2020. 2. The CPAs had discussions and communication on the questions from independent directors.	No opinion.
2020/8/12		1. Certified Public Accountant’s Report: The audit scope and results of the financial report for the 2nd quarter of 2020. 2. The CPAs had discussions and communication on the questions from independent directors.	No opinion.
2020/11/4		1. Certified Public Accountant’s Report: The review scope and results of the financial report for the 3rd quarter of 2020. 2. The CPAs had discussions and communication on the questions from independent directors.	No opinion.

Note: (1) If any of the independent directors resigns before the end of the year, it is required to specify the date of his/her resignation in the remarks column. The actual attendance rate (%) should be calculated by the actual number of committee meetings he/she attended during his/her term at the Audit Committee.

(2) If there is any re-election of the independent director before the end of the year, both the information of current and former independent directors should be filled in the table, and the status and the re-election date should also be specified in the remarks column. The actual attendance rate (%) should be calculated by the actual number of committee meetings he/she attended during his/her term at the Audit Committee.

Central Reinsurance Corporation Annual Report 2020 53

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 official website and MOPS.	(1) The dedicated personnel of the Company handles stock affairs including shareholders’ suggestions, doubts, disputes and litigations according to the existing procedure. For more information, please refer to stakeholder and investor section on the Company’s official 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. The Company also obtains the shareholder register on the suspension period for roster's registration to master the list of major shareholders.
	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?

54 Central Reinsurance Corporation Annual Report 2020

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	(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. To enable the directors and managers of the Company to fully understand the relevant rules and penalties of “internal trading” in time, the Company forwards the information of insider trading prevention from time to time. Moreover, the Company hold the Directors training course containing information of insider trading prevention, e.g., the reasons for causing the insider trading, examples description, and criminal responsibilities.	(1) In accordance with paragraph 3 of Article 22 of “Corporate Governance Best Practice Principles” of the Company,
	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

Central Reinsurance Corporation Annual Report 2020 55

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
Implementation Status1	Brief Explanation	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 Directors of the Company have expertise in different fields, which can improve the professionalism of the Board decision and help the development and operation of the Company. Gender equality in the board members’ composition is also deeply concerned by the Company, and the goal of female rate in board members is 20%. The current board of directors consists of 8 directors and 2 of whom is female, which accounts for 25% of the board. The Skill Matrix of the Board members is as follows:
	No
	Yes
	Evaluation Item	members?

56 Central Reinsurance Corporation Annual Report 2020

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 Business Manage- ment Risk Manage- ment Finance & Insurance Financial & Accounting Law Asset Manage- ment Chairman Yang, Cheng-Tui M ✓ ✓ ✓ Director Tai, Jiin-Chyuan M ✓ ✓ Director Cheng, Ching-Fen F ✓ ✓ ✓ Director Wu, Kuang-Hui M ✓ ✓ Director Lee, Yi-Fen F ✓ ✓ Director Chen, Kuan-Pao M ✓ ✓ Independent Director Chou, Yu-Cheng M ✓ ✓ ✓ Independent Director Chang, Bing-Huang M ✓ ✓ ✓ (2) For sound supervision and reinforcement of risk 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) a.The Company established the “Regulations Governing the Board Performance Evaluation”, and disclosed it through the Company’s official website and the Market Observation Post
	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 annually, report the results of the

Central Reinsurance Corporation Annual Report 2020 57

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
Implementation Status1	Brief Explanation	System (MOPS). b.The Company shall conduct an internal board performance evaluation at least once a year. In addition, the Company’s board performance evaluation may be conducted by an external independent professional institution or a panel of external experts and scholars at least once every three years. c.The annual Evaluation results of the performance of the Board of Directors are also the basis for individual director’s remuneration and nomination of directors. d.The 2020 evaluation results of the performance of the Board of directors are as follows and was reported to the board meeting dated March 18, 2021. The details please refer to the Company’s official website.		Average score (Full score: 100) 94.08 95.83 94.88 Evaluation Results Excellent Excellent Excellent
			Self-evaluation of functional committees	94.88	Excellent
			Peer evaluation of Board of Directors	95.83	Excellent
			Self-evaluation of directors	94.08	Excellent
				Average score (Full score: 100)	Evaluation Results

	No
	Yes
	Evaluation Item	performance evaluation to the Board, and use it as a reference for individual directors' remuneration and nomination?

58 Central Reinsurance Corporation Annual Report 2020

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	(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 2021 have been approved by the Board of Directors on December 23, 2020. The CPAs appointed by the Company are in compliance with the Company's independent evaluation standards and are eligible for auditing the Company.2	1. The chief corporate governance officer of the Company used to be Mr. Hsu, Tzu-Cheng, the Deputy Senior Vice President of Supervisory Division. Due to the adjustment of the departments’ duties, the Board of Directors has reappointed Ms. Chang, Yung-Ning, the Executive Vice President of Finance Division, as the new chief corporate governance officer of the Company from Mar. 1, 2021. The Company is staffed with sufficient professional corporate governance personnel to protect shareholders' rights and strengthen the board functions. Ms. Chang, Yung-Ning, who has been as the Company’s Finance
	No
	Yes	○	○
	Evaluation Item	(4) Does the company regularly evaluate the independence of CPAs?	4. Does the TWSE/TPEx Listed Companies have an adequate number of corporate governance personnel with appropriate qualifications and appoint a chief corporate governance officer to deal with corporate governance business (including but not limited to provide directors and supervisors necessary information, assist directors and supervisors with legal compliance, hold Board Meeting or Annual General Meeting, company registration and change

Central Reinsurance Corporation Annual Report 2020 59

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
Implementation Status1	Brief Explanation	Officer for over 3 years, is eligible for the chief corporate governance officer. 2.The main duties of the chief corporate governance officer of the Company are as follows: (1) To handle matters relating to board meetings and shareholders meetings according to laws. (2) To produce minutes of board meetings and shareholders meetings. (3) To assist in onboarding and continuous development of directors. (4) To furnish information required for business execution by directors. (5) To assist Directors with legal compliance. 3. The business execution in 2020 are as follows: (1) To furnish Directors with relevant information and regulations to perform their duty and hold the Directors training courses: a. To furnish Directors with the latest regulations of corporate governance irregularly. b. To furnish Directors with the information to perform their duties and maintain smooth communication between Directors and managers.
	No
	Yes
	Evaluation Item	registration of company and Minutes of Board of Directors meeting and Annual General Meeting preparation) ?

60 Central Reinsurance Corporation Annual Report 2020

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
Implementation Status1	Brief Explanation	c. To arrange more than four closed-door meetings to enable independent directors to have face-to-face communication with the chief internal auditor and CPAs to deeply understand the Company’s audit and financial status. d. To hold two Directors training courses.(3 hours each time) (2) To handle matters relating to functional committees, board meetings and shareholders meetings according to laws: a. To notify the meeting agendas to each director at least seven days in advance, provide the materials, remind the director not to participate in discussion or voting on the agenda item if he is an interested party with it, and distributed the minutes to each director within 20 days after the meeting. b. To assist to announce the material information after board meeting, ensure the legality and correctness of material information to protect information equivalence of investor transaction. c. To register the date of the shareholders’ meeting in accordance with laws, and produce meeting notices, handbooks and minutes within the legal period. 4. Chief corporate governance officer training records in 2020 please refer to note 3.
	No
	Yes
	Evaluation Item

Central Reinsurance Corporation Annual Report 2020 61

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	Whereas stock affair is managed by the Company itself, the Shareholders’ Meeting is conducted following government regulation and the Articles of Incorporation of the Company to ensure its lawfulness, effectiveness and safeness.
Implementation Status1	Brief Explanation	The Company has established grievance-handling procedures and channels for grievance, and appoints dedicated personnel to communicate with stakeholders, please refer to the Company’s official website for details. The “Communication with stakeholders” is reported to the board of directors on a regular basis once a year. The Company has also established corporate governance and corporate social responsibilities area on the Company’s official website to provide relevant information.	The Company does not assign any outside agency to be in charge of its shareholder affairs.
	No		○
	Yes	○
	Evaluation Item	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?	6. Does the company appoint a professional shareholder service agency to deal with shareholder affairs?

62 Central Reinsurance Corporation Annual Report 2020

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 The company has complied with “Securities and Exchange Act”and “Regulations Governing the Preparation of Financial Reports by Insurance
Implementation Status1	Brief Explanation	(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 held two investor conferences on Apr. 22, 2020 and Nov. 9, 2020. (3) The company doesn’t publicly announce and register the financial reports within two months after the end of fiscal year.
	No	○
	Yes	○ ○
	Evaluation Item	7. Information Disclosure (1) Does the company have a corporate website to disclose both financial standings and the status of corporate governance? (2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)? (3) Does the company publicly announce and register the financial reports within two months after the end of the fiscal year, as well as publicly announce and register the first, second and third quarter financial reports and the monthly operating status ahead of the prescribed period?

Central Reinsurance Corporation Annual Report 2020 63

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None
Implementation Status1	Brief Explanation	Please refer to the details as follows:
	No
	Yes	○
	Evaluation Item	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)?

Central Reinsurance Corporation Annual Report 2020

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) Status of employee rights and employee wellness: A. Employee rights and employee wellness: The Company has established personnel policies (for example, work rules) and has organized the Employee Welfare Committee and Labor Pension Fund Monitoring Committee according to the regulations. Please refer to page 150 “Labor Relations” for more information. B. Investor relations: The Company has also provided a dedicated web-page on the Company’s official website which provides investors reference about operation and financial information. C. Supplier relations, rights of stakeholders: The Company has also provided a dedicated web-page on the Company’s official website enabling interested parties and investors to consult or file complaints. Please refer to “3. Corporate Governance Report” for more information. (2) The directors of the Company have completed the training in accordance with the “ Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies” in 2020. The training records of directors please refer to the Market Observation Post System (MOPS). (3) Managerial officers’ continuing education and training: The Company’s managerial officers (persons at Vice Director level or above) take professional off-the-Job training courses on insurance, risk management, and finance and accounting on a non-regular basis to improve managerial officers' comprehensive skills. In 2020, there were a total of 65 person-times of managerial officers, a total of 235.9 hours of off-the-Job training. (4) Execution of risk management policies and risk measurement criteria: The Company has established a Risk Management Committee under the board of directors. The committee is composed of the independent directors, the president, and the senior managers of business units. The committee meeting is convened by the independent director(s). There were held five committee meetings in 2020. As required by regulation, the meeting minutes have been submitted to the board of directors for reporting. According to the “Risk Management Committee Charter”, the Company has also established various guidelines for daily risk management, including Risk Management Policies, Risk Management Operational Procedures, Risk Management Mechanisms, and Own Risk and Solvency Assessment (ORSA) Policies. The Company
Implementation Status1	Brief Explanation
	No
	Yes
	Evaluation Item

Central Reinsurance Corporation Annual Report 2020 65

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 continuous terms of current independent directors are not more than three terms. (2) The Company’s corporate social responsibility report of the year 2020 would commission the British Standards Institution (BSI) to conduct a third-party verification. (3) The directors of the Company have completed the training in accordance with the “ Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies” in 2020, and the Company will continually encourage directors to attend training courses.
Implementation Status1	Brief Explanation
	No
	Yes
	Evaluation Item	9. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures.

66 Central Reinsurance Corporation Annual Report 2020

Evaluation Item Evaluation Result Whether to meet independence or not 1. Whether the CPA is currently employed by the Company to perform routine work for which he or she receives a fixed salary No Yes 2. Whether the CPA has previously served for the Company as an employee and has been separated from the position for less than two years No Yes 3. Whether the CPA is a spouse, lineal relative, a direct relative by marriage, or a sibling of Chairperson or General Manager of the Company. No Yes 4. Whether the CPA or the spouse thereof, has invested in the Company, or shares in financial gains therewith. No Yes 5. Whether the CPA or the spouse thereof, is an interested part of a director, supervisor, managerial officer, employee, shareholder, etc. of the Company or its affiliated enterprise. No Yes Note 3: Chief Corporate Governance Officer’s continuing education and training:	Evaluation Item Evaluation Result Whether to meet independence or not 1. Whether the CPA is currently employed by the Company to perform routine work for which he or she receives a fixed salary No Yes 2. Whether the CPA has previously served for the Company as an employee and has been separated from the position for less than two years No Yes 3. Whether the CPA is a spouse, lineal relative, a direct relative by marriage, or a sibling of Chairperson or General Manager of the Company. No Yes 4. Whether the CPA or the spouse thereof, has invested in the Company, or shares in financial gains therewith. No Yes 5. Whether the CPA or the spouse thereof, is an interested part of a director, supervisor, managerial officer, employee, shareholder, etc. of the Company or its affiliated enterprise. No Yes Note 3: Chief Corporate Governance Officer’s continuing education and training:	Evaluation Item Evaluation Result Whether to meet independence or not 1. Whether the CPA is currently employed by the Company to perform routine work for which he or she receives a fixed salary No Yes 2. Whether the CPA has previously served for the Company as an employee and has been separated from the position for less than two years No Yes 3. Whether the CPA is a spouse, lineal relative, a direct relative by marriage, or a sibling of Chairperson or General Manager of the Company. No Yes 4. Whether the CPA or the spouse thereof, has invested in the Company, or shares in financial gains therewith. No Yes 5. Whether the CPA or the spouse thereof, is an interested part of a director, supervisor, managerial officer, employee, shareholder, etc. of the Company or its affiliated enterprise. No Yes Note 3: Chief Corporate Governance Officer’s continuing education and training:	Evaluation Item Evaluation Result Whether to meet independence or not 1. Whether the CPA is currently employed by the Company to perform routine work for which he or she receives a fixed salary No Yes 2. Whether the CPA has previously served for the Company as an employee and has been separated from the position for less than two years No Yes 3. Whether the CPA is a spouse, lineal relative, a direct relative by marriage, or a sibling of Chairperson or General Manager of the Company. No Yes 4. Whether the CPA or the spouse thereof, has invested in the Company, or shares in financial gains therewith. No Yes 5. Whether the CPA or the spouse thereof, is an interested part of a director, supervisor, managerial officer, employee, shareholder, etc. of the Company or its affiliated enterprise. No Yes Note 3: Chief Corporate Governance Officer’s continuing education and training:	Evaluation Item Evaluation Result Whether to meet independence or not 1. Whether the CPA is currently employed by the Company to perform routine work for which he or she receives a fixed salary No Yes 2. Whether the CPA has previously served for the Company as an employee and has been separated from the position for less than two years No Yes 3. Whether the CPA is a spouse, lineal relative, a direct relative by marriage, or a sibling of Chairperson or General Manager of the Company. No Yes 4. Whether the CPA or the spouse thereof, has invested in the Company, or shares in financial gains therewith. No Yes 5. Whether the CPA or the spouse thereof, is an interested part of a director, supervisor, managerial officer, employee, shareholder, etc. of the Company or its affiliated enterprise. No Yes Note 3: Chief Corporate Governance Officer’s continuing education and training:	Evaluation Item Evaluation Result Whether to meet independence or not 1. Whether the CPA is currently employed by the Company to perform routine work for which he or she receives a fixed salary No Yes 2. Whether the CPA has previously served for the Company as an employee and has been separated from the position for less than two years No Yes 3. Whether the CPA is a spouse, lineal relative, a direct relative by marriage, or a sibling of Chairperson or General Manager of the Company. No Yes 4. Whether the CPA or the spouse thereof, has invested in the Company, or shares in financial gains therewith. No Yes 5. Whether the CPA or the spouse thereof, is an interested part of a director, supervisor, managerial officer, employee, shareholder, etc. of the Company or its affiliated enterprise. No Yes Note 3: Chief Corporate Governance Officer’s continuing education and training:		3	3	3	5.5	3	3	20.5
						Education/Training Hours

						Course Name	Discussion on Corporate Fraudulent Financial Statements	Board Corporate Governance New Popular Research Topic - Advance Deployment and Practice of Information and Cyber Security	2020 Prevention of Insider Trading and Insider Equity Trading Promotion Seminar	2020 Insurance Industry Corporate Governance Seminar	Discussion on Corporate Governance Roadmap 3.0 and Directors' Responsibilities	Impact of IFRS 17 on the insurance business strategies	Total Education/Training Hours in 2020
	Yes	Yes	Yes	Yes	Yes
Whether to meet independence or not

Evaluation Result	No	No	No	No	No
						Organizer	Taiwan Corporate Governance Association	Taiwan Corporate Governance Association	Securities and Futures Institute	Insurance Bureau, Financial Supervisory Commission	Taiwan Corporate Governance Association	Taiwan Insurance Institute
Evaluation Item	1. Whether the CPA is currently employed by the Company to perform routine work for which he or she receives a fixed salary	2. Whether the CPA has previously served for the Company as an employee and has been separated from the position for less than two years	3. Whether the CPA is a spouse, lineal relative, a direct relative by marriage, or a sibling of Chairperson or General Manager of the Company.	4. Whether the CPA or the spouse thereof, has invested in the Company, or shares in financial gains therewith.	5. Whether the CPA or the spouse thereof, is an interested part of a director, supervisor, managerial officer, employee, shareholder, etc. of the Company or its affiliated enterprise.
						Name	Hsu, Tzu-Cheng	Hsu, Tzu-Cheng	Hsu, Tzu-Cheng	Hsu, Tzu-Cheng	Hsu, Tzu-Cheng	Hsu, Tzu-Cheng
							June 19, 2020	July 31, 2020	September 24, 2020	September 30, 2020	October 07, 2020	November 16, 2020
						Education /Training Date

Central Reinsurance Corporation Annual Report 2020 67

3.3.5 The Composition and Operations of the Remuneration Committee

3.3.5.1 Professional Qualifications and Independence Analysis of Remuneration

Committee Members

Title (Note1)	Criteria Name	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Number of Other Public Companies in Which the Individual is Concurrently Serving as an Remuneratio n Committee Member	Note
		An instructor or higher position in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the Company in a public or private junior college, college or university	A judge, public prosecutor, attorney, Certified Public Accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of theCompany	Has work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the Company	1	2	3	4	5	6	7	8	9	10
Independent Director	Chou, Yu-Cheng	�	�	�	�	�	�	�	�	�	�	�	�	�	2	~~-~~
Independent Director	Chang, Bing-Huang		�	�	�	�	�	�	�	�	�	�	�	�	0	~~-~~
Committee Member	Hung, Shu-Hui		�	�	�	�	�	�	�	�	�	�	�	�	0	~~-~~

Note 1: Please fill in the blank with director, independent director or others.

Note 2: Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) 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. The same does not apply, however, in cases where the person is an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.
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 of 1% or more of the total number of issued 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 third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.
Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of issued shares of the Company, or that ranks among the top 5 in shareholdings, or that designates its representative to serve as a director or supervisor of the Company under Article 27, paragraph 1 or 2 of the Company Act. The same does not apply, however, in cases where the person is an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.
If a majority of the Company's director seats or voting shares and those of any other company are controlled by the same person: Not a director, supervisor, or employee of that other company. The same does not apply, however, in cases where the person is an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.
If the chairperson, general manager, or person holding an equivalent position of the Company and a person in any of those positions at another company or institution are the same person or are spouses: Not a director (or governor), supervisor, or employee of that other company or institution. The same does not apply, however, in cases where the person is an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.
Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution that has a financial or business relationship with the Company. The same does not apply, however, in cases where a specified company or institution holds 20% or more and no more than 50% of the total number of issued shares of the Company and the person is an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.
Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the Company or any affiliate of the Company, or that provides commercial, legal, financial, accounting or related services to the Company or any affiliate of the Company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
Not been a person of any conditions defined in Article 30 of the Company Act.

68 Central Reinsurance Corporation Annual Report 2020

3.3.5.2 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 managers.
(2) Periodically evaluate and establish the remuneration of directors and managers.
3.3.5.3 Attendance of Members at Remuneration Committee Meetings
(1) The Remuneration Committee is composed of three members.
(2) The term of office of current Remuneration Committee is from May 28, 2020 to May 27, 2023.
(3) A total of 6(A) meetings were held in 2020. Please refer to page 103 to 112 for resolutions made by the Remuneration Committee and the attendance of Committee member is as follows:

Title	Name	Attendance in Person(B)	By Proxy	Attendance Rate (%)�B/A�	Remarks
Convener	Chang, Bing-Huang	4	0	100%	Newly-appointed on May 28, 2020. Required numbers of attendance:4
Committee Member	Chou, Yu-Cheng	6	0	100%	Re-appointed on May 28, 2020. Required numbers of attendance: 6
Committee Member	Hung, Shu-Hui	0	0	N/A	Newly appointed on Feb. 3, 2021. Required numbers of attendance: 0
Committee Member	Tsai, Li-Hsueh	3	0	100%	Newly-appointed on May 28, 2020. Resigned on Nov. 6, 2020. Required numbers of attendance:3
Committee Member	Yau, Sea-Wain	2	0	100%	Term ceased on May 28, 2020. Required numbers of attendance: 2
Committee Member	Chow, Ker-Kaoo	2	0	100%
Other mentionable items: 1.If theBoard of Directors declinetoadoptor modifya recommendationof theremuneration

Central Reinsurance Corporation Annual Report 2020 69

committee, it should specify the date of the meeting, session, content of the motion, resolution by the Board of Directors, and the Company’s response to the remuneration committee’s opinion (e.g. the remuneration passed by the Board of Directors exceed the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified): None.
Resolutions of the remuneration committee objected to by members or subject to a qualified opinion and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified: None.
Note:
(1) If any of the Compensation Committee members has resigned before the end of the year, the date of his/her resignation should be stated in the remarks column. The actual attendance rate (%) should be based on the number of committee meetings held during his/her tenure and the actual number of his/her attendance.
(2) If any of the Compensation Committee members has been re-elected before the end of the year, both the information of current and former members should be filled in the table, and the status and the re-election date should also be specified in the remarks column. The actual attendance rate (%) should be based on the number of committee meetings held during his/her tenure and the actual number of his/her attendance.

70 Central Reinsurance Corporation Annual Report 2020

Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None	None
Implementation Status(Note1)	Brief Explanation(Note 2)	In regard to the materiality of corporate social responsibility, the Company has conducted risk assessments on important issues and established relevant risk management policies or plans based on the assessed risks (see page 84 for this table no(3) of Item 7). (Please refer to the “Corporate Social Responsibility” section of the Company’s official website or Corporate Social Responsibility Report for details)	Under the leadership of the President and focusing on the four major aspects of “implementing corporate governance”, “developing sustainable environment”, “preserving public welfare” and “enhancing information disclosure”, the Company has designated Project Division to coordinate and facilitate all related business units and related CSR projects based on the annual operating plan. Business units involved include Supervisory Division, Risk Management Department, Legal and Compliance Department, Finance Division, Investment Department, Property & Casualty Division, Life & Health Division and International
	No
	Yes	○	○
	Evaluation Item	1. Has the Company, in accordance with materiality principle, conducted risk assessments on environmental, social and corporate governance issues related to the Company’s operations? Has the Company established relevant risk management policies or plans? (Note 3)	2. 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?

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Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons		None None
Implementation Status(Note1)	Brief Explanation(Note 2)	Department. The implementation status and achievements are incorporated into the Company’s “Corporate Social Responsibility Report”, which will be presented to the board of directors annually.	(1) The Company is a professional reinsurer, not within significant pollution and energy intensive industries.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. (2) 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.
	No
	Yes		○ ○
	Evaluation Item		3. Environmental issues (1) Has the Company established suitable environmental management system based on the characteristics of the industry? (2) Is the Company devoted to improving the efficiency in resource utilization? Does it use reusable material with low environmental impact?

Central Reinsurance Corporation Annual Report 2020

Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None None
Implementation Status(Note1)	Brief Explanation(Note 2)	(3) Bringing possible impacts on environment and economic as well as companies’ sustainability, the issue of climate change has become one of the major risks the insurance industry faced. Therefore, in regard to climate change, the Company has established “Risk Management Mechanism” and assessed the potential risks and opportunities (see page 87 for this table no(4) of Item 7). Meanwhile, the Company has taken the climate change risk into consideration while planning business strategy and making decision. Moreover, the Company has established the “Central Reinsurance Corporation – Guidelines for Promoting Energy Conservation/Carbon Reduction” to actively take measures on energy saving and carbon reduction in order to mitigate the impact climate change may bring to operations. (Please refer to the “Corporate Governance/Risk Management Information” section of the Company’s official website or Corporate Social Responsibility Report for details) (4) The company surveys and calculates greenhouse gas emissions and total water�waste consumption every year (Please refer to the CSR report) and established the "Central Reinsurance Corporation - Guidelines for Promoting Energy Conservation/Carbon Reduction" for all colleagues to follow up�
	No
	Yes	○ ○
	Evaluation Item	(3) Has the Company assessed potential risks and opportunities of climate change to the Company of the present and future? Has the Company taken measures to address climate related issues? (4) Has the company made statistics of greenhouse gas emissions, water consumption and total weight of waste in the past two years? Also, has the company formulated policies for energy

Central Reinsurance Corporation Annual Report 2020 73

Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Implementation Status(Note1)	Brief Explanation(Note 2)	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. In 2006, the Company implemented the government’s electronic documentation exchange system, which not only enabled more efficient document exchange, but also saved the time for document processing and delivery, and significantly reduced the consumption of paper and relevant resources. 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
	No
	Yes
	Evaluation Item	conservation and carbon reduction, greenhouse gas reduction, water use reduction or waste management?

74 Central Reinsurance Corporation Annual Report 2020

Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons		None None
Implementation Status(Note1)	Brief Explanation(Note 2)	by bicycle�	(1) The Company supports the internationally recognized human rights standards and shall never be involved in any abuse or disregard for human rights. Relevant programs have been implemented to ensure all employees and interested parties are treated with fairness and respect. Based on the business characteristics, the Company has established its “Human Rights Policies” which have been resolved in the board meeting on November 7, 2018 and announced on the website of the Company for implementation. (2) In accordance with the Labor Standards Law and the Act of Gender Equality in Employment, the Company has established and executed the employee benefit policies. In the Company’s “Articles of Incorporation”, “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.
	No
	Yes		○ ○
	Evaluation Item		4. Social issues (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 and executed reasonable employee benefit policies including salary and rewards, leave policies and so on? Has the Company appropriately reflected the business performance in the employee remuneration?

Central Reinsurance Corporation Annual Report 2020 75

Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None None
Implementation Status(Note1)	Brief Explanation(Note 2)	(3) In order to provide a safe and healthy working environment to employees, the Company is committed to accident prevention and environmental hygiene. In addition to routine inspections on water quality and carbon dioxide level in the office area, the Company also organizes employee safety training and fire drills. An office access control system is in place. Employee physical examinations are offered on a regular basis. In addition, the Company contracts medical personnel to conduct health management and health promotion to ensure the health and protection of our employees. (4) 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 2020, there were 396 attendances to attend related domestic courses including finance and reinsurance. The Company also organizes various internal professional training, and encourages employees to acquire various professional certificates to improve their competitiveness.
	No
	Yes	○ ○
	Evaluation Item	(3) Has the company provide a safe and healthy working environment for its employees as well as relevant training on a regular basis? (4) Has the Company established effective competency development plans for its employees?

76 Central Reinsurance Corporation Annual Report 2020

Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None None
Implementation Status(Note1)	Brief Explanation(Note 2)	(5) This item is not applicable, since Central Re is a reinsurance company. However, the process of our business processing complies with the relevant requirements of the Personal Data Protection Law, and has formulated privacy protection policies and other specifications, as well as posting the company's complaint and whistleblower operation procedures and complaint channels on the company's website to protect the rights of customers and parties. (6) The company and contractors are dedicated to fulfill corporate social responsibility, promote sustainable development of the environment and protect basic human rights. The selection indicators of contractors include labor and human rights, health and safety, environmental protection and ethics. The supplier implements the specifications of the case, and requires the main suppliers to follow the contract and other relevant specifications before and after signing the contract. The purchasing unit will also set individual evaluation standards according to the different types of procurement cases to ensure that suppliers meet the requirements. In 2020, there’s no report about violation of human rights or labor issue of the company’s suppliers. In order to ensure that all contractors can understand the relevant
	No
	Yes	○ ○
	Evaluation Item	(5) With regard to the customer healthy and safety, customer privacy, marketing and labeling of its products and services, has the Company followed relevant regulations and international standards? Has the Company established relevant protection consumers’ right policies and grievance procedures? (6) Has the company formulated a supplier management policy that requires suppliers to follow relevant regulations in areas of environmental protection, occupational safety and health, or labor rights, etc., and monitor its implementation?

Central Reinsurance Corporation Annual Report 2020 77

Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Implementation Status(Note1)	Brief Explanation(Note 2)	regulations on safety, health and environmental protection in advance, the company will require contractors to select the person who is responsible for site safety and health coordination, supervision and prevention of hazards for new real estate installations and conversions matters. The company will also require contractors to survey the environment of construction site before the contract so that they are aware of the potential hazards of the workplace environment to facilitate their preparation of construction safety plans and environmental hazard prevention measures, and confirm that they can fully understand of the working environment and potential hazards of operations. In order to respond to global climate change and reduce the negative impact on the environment, the company has stipulated the "Key Points of the Central Reinsurance Energy Conservation and Carbon Reduction Measures." When purchasing energy equipment, suppliers are required to provide products which meet the relevant standard, and using green building materials for office repair project to strengthen suppliers' environmental maintenance responsibilities, and hope to work with suppliers to promote environmental protection and reduce environmental impact to achieve sustainable corporate environment.
	No
	Yes
	Evaluation Item

78 Central Reinsurance Corporation Annual Report 2020

Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None
Implementation Status(Note1)	Brief Explanation(Note 2)	In 2020, the Company prepared the “2019 Corporate Social Responsibility Report” with reference to GRI Standards on disclosing implementation and achievements of corporate social responsibility. Also, the Company completed the disclosure of relevant declarations in accordance with “Taiwan Stock Exchange Corporation Rules Governing Information Filling by Companies with TWSE Listed Securities and Offshore Fund Institutions with TWSE Listed Offshore Exchange-Traded Funds”. The information and statistical data disclosed in the report were self-calculated. Part of financial information was adopted from publicly published information affirmed by the accountant. Non-financial information was not validated by third-party verification.
	No
	Yes	○
	Evaluation Item	5. Has the Company prepared corporate social responsibility report or non-financial information disclosure in accordance with the international standards or guidelines? Did the Company obtain third-party verification for past reports?

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Deviations from “the Corporate Social	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons				Actively participate in assisting the development of insurance market The Company actively participates in insurance-related organizations, such as The Non-Life Insurance Association of the Republic of China, etc., pays attention to various topics in insurance industry and support the development of domestic insurance industry and actuarial field. The Company sponsored the following seminars with total of NT$276,000: "Annual General Meeting of Actuarial Society", "2021 Economic and Insurance Development Forum" and "2020 AICT/CAS Joint Property/Casualty and Health Actuarial Seminar".
		Achievements	To meet the demand for coverage against climate change, environmental change and catastrophe events, the Company provides underwriting capacity to the market of direct insurers so that they can offer reliable life and non-life coverage, including earthquake, typhoon, flood, business interruption and personal accident insurance products, to the customers and consumers.	In order to fulfill CSR and implement ESG, the Company has always participated in and provided underwriting capacity for insurance or measures initiated by the government, such as "Compulsory Automobile Liability Insurance", "Residential Earthquake Insurance" and green energy insurance. In future, within its risk appetite, the Company will continue to support the development of business initiated by the government.	The Company actively participates in insurance-related organizations, such as The Non-Life Insurance Association of the Republic of China, etc., pays attention to various topics in insurance industry and support the development of domestic insurance industry and actuarial field. The Company sponsored the following seminars with total of NT$276,000: "Annual General Meeting of Actuarial Society", "2021 Economic and Insurance Development Forum" and "2020 AICT/CAS Joint Property/Casualty and Health Actuarial Seminar".
Implementation Status(Note1)	Brief Explanation(Note 2)
	No
	Yes
	Evaluation Item
		The major implementation plan	Providing underwriting capacity to direct writing insurers	Supporting the development and operation of insurance products initiated by the government	Actively participate in assisting the development of insurance market

80 Central Reinsurance Corporation Annual Report 2020

Achievements	The Company provided seven exclusive sessions of underwriting and claims training for clients, with a total attendance of 515 persons. Although the impact of COVID-19 has reduced the opportunities for face-to-face communication, the Company continued to provide information, such as domestic and foreign insurance market, reinsurance market and technology development, for clients through remote format.	(1) The Company sponsored the charity activities for the underprivileged: � The “Love Elder Welcome Reunion” charity project held by Huashan Social Welfare Foundation – Donation: 100 New Year dishes baskets, worth NT$70,000. � “Indigenous Students After-School Support Program” held by Tainan Indigenous Peoples Sustainable Development Association – 56 students benefited, worth NT$100,000. � Kaohsiung Namasa Junior High School Remedial Teaching Dinner Subsidy Plan – 76 students benefited, worth NT$100,000. � Sponsorship for Angels with Broken Wings – 10 Students benefited, worth NT$100,000. � “Lasting Nutrition Program” held by Hualien County Youth Academy of Christian Rehabilitation Fellowship – 25 persons benefited, worth NT$100,000. � Mennoite Christian Hospital – Vision care center: provides 10 vision screening service events for residents of rural areas in the east, 250 persons benefited, worth NT$100,000. (2) "Financial Services Industry Education Charity Fund" – to encourage hard-working students and contribute to the society, the Company has been, collaboratively with other financial institutions, donating NT$80,000 each year as scholarship for seven consecutive years. (3) To show its care to the underprivileged and encourage social participation, the Company has invited the visually-impaired massage therapists from Blind People Welfare Association of New Taipei City to provide massage service at the site of its customer networking event, aiming to create employment opportunities for the underprivileged.
The major implementation plan	Create opportunities for professional exchange within the insurance industry; contribute to the sound development of the insurance market	Supporting public welfare and contributing to the society

Central Reinsurance Corporation Annual Report 2020 81

Achievements	(4) The Company purchased 139 eggroll gift boxes from Syin-Lu Social Welfare Foundation for its employees and a charity gift of 202 cookie boxes for its clients. (5) The Company has hired visually impaired masseurs to provide services to employees, increasing job opportunities and stabilizing salaries for people with physical and mental disabilities.	(1) 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. As a professional reinsurance service provider, the Company is devoted to supporting the insurance firms when accommodating the insurance requirements of the public against natural catastrophes and man-made disasters. An integrated risk management system is also important for the Company to cope with its overall operating risks and maintaining adequate solvency, thereby safeguarding the rights and interests of its customers and all interested. (2) 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 responsible to execute the risk management policies set forth by the board of directors and to provide regular reports thereto. A total of five committee meetings were held in 2020. (3) In response to uncertain impact from COVID-19, the Company has launched its remote working and work from home procedures in March 2020 to ensure its normal operations.	(1) Government: � Revised the Company's "Corporate Social Responsibility Best Practice Principles" to implement the promotion of corporate social responsibility. � Completed the signing of the "Stewardship Principles" and declared as scheduled. � Disclosed the stewardship Report. � Participated in 6 seminars organized by government, undertook more than 88 official letters from government, and completed more than 12 questionnaires from the Taiwan Stock Exchange.
The major implementation plan		Implement strict risk control measures to safeguard the rights and interests of our customers and all interested parties	Communication with stakeholders

82 Central Reinsurance Corporation Annual Report 2020

Achievements	(2) Shareholders and investors: � The report of COVID-19 on the Company's operation was submitted to the board of directors in March 2020. � The Company made 20 major announcements in Chinese and English and held 1 shareholders' meeting and 2 investor conferences. � Annual report and monthly revenue were announced on the Company's website on time for shareholders and investors to read. (3) Employees: A total of 4 labor-management meetings were held, 5 resolutions were passed, and 62 major topics were announced on the Company's internal website. (4) Clients: The Company held 7 seminars and 2 networking events. Through mutual exchange opportunities, the Company was able to understand customer needs, meanwhile conveying business philosophy. (5) Suppliers: � Regularly disclosing or updating relevant information in regards to corporate governance and corporate social responsibility on official website, the Company continues to work with suppliers to comply with the commitment to fulfill corporate social responsibility. � Prioritizing products with environmental protection and energy saving labels, the Company continues to work with suppliers for corporate sustainability.	(1) The Company is committed to accident prevention and environmental hygiene. An automatic air exchange system has been installed in the office area to ensure adequate fresh air intake and improve indoor air quality. (2) Routine inspections on water quality and carbon dioxide level are conducted twice a year. (3) Employee safety training and fire drills are organized on a yearly basis. (4) To provide its employees’ health consultation services, the Company arranged on-site services for physicians twice a year and nurses twice a month. (5) To reduce the burden of employees on childcare, the Company signs with external childcare organizations to provide employees with childcare tuition reductions and exemptions. (6) Held the annual employee physical examination.
The major implementation plan		Providing a safe and healthy working environment

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Risk Management Policy or Plan	1. Established “Promotion of Energy Conservation and Carbon Reduction”. 2. Aligning itself with the government’s energy-saving and carbon-reduction policies, the Company has aimed to not increase the total carbon emissions each year. 3. Checked the greenhouse gas emissions annually and disclosed in its corporate social responsibility report.	1. Established “Human Rights Policy” to ensure that both internal employees and stakeholders are treated fairly and respectfully.	2. Abiding by the Labor Standards Law, Gender Work Equality Law and other related labor laws and regulations, the Company has implemented an equal employment environment and labor relations, protected the labor rights and interests of all employees and maintained benign labor-management relations. 3. Established the Salaries and Remuneration Commission to regularly review and evaluate the policies, standard and structure of the management’s salary and compensation.	4. Evaluating twice a year, the Company rewards outstanding employees with promotion or salary raise based on the results of their performance evaluations.
Risk Assessment	Environmental Management and Energy Conservation and Carbon Reduction	Talent Development	Employee Salary and Benefits	Healthy and Friendly Workplace Environment
Major Issues	Environmental (E)	Social (S)

84 Central Reinsurance Corporation Annual Report 2020

Risk Management Policy or Plan	1. Established personal data protection group. 2. Established “Personal Data Management Policy Statement”, “Privacy Policy Statement”, “Management Policies and Objectives on Personal Data and Information Security” and “Central Reinsurance Co., Ltd. Personal Data File Security Maintenance Plan and Personal Data Processing Method after Business Termination”.	1. Established “Corporate Social Responsibility Policy” and “Corporate Social Responsibility Best Practice Principles”. 2. Disclosed the implementation and results in “Corporate Social Responsibility Report” annually.	1. Established “Corporate Social Responsibility Policy” and “Corporate Social Responsibility Best Practice Principles”. 2. Disclosed the implementation and results in “Corporate Social Responsibility Report” annually.	1. Established “Corporate Social Responsibility Policy” and “Corporate Social Responsibility Best Practice Principles”. 2. Disclosed the implementation and results in “Corporate Social Responsibility Report” annually.	Annual investment policy.	Established “Corporate Governance Best Practice Principles”, “Ethical Corporate Management Best Practice Principles”, “Ethical Management Policy”, “Code of Ethical Conducts”, and “Procedures for Ethical Management and Guidelines for Conduct”.	Established “Corporate Governance Best Practice Principles”, “Ethical Corporate Management Best Practice Principles”, “Ethical Management Policy”, “Code of Ethical Conducts”, and “Procedures for Ethical Management and Guidelines for Conduct”.	Established “Corporate Governance Best Practice Principles”, “Ethical Corporate Management Best Practice Principles”, “Ethical Management Policy”, “Code of Ethical Conducts”, and “Procedures for Ethical Management and Guidelines for Conduct”.	1. Under board of directors, established the “Risk Management Committee” to implement corporate governance and improve risk management system. 2. Established “Risk Management Policy”, “Risk Management Procedures” and “Risk Management Mechanism”.
Risk Assessment	Information Security and Personal Data Protection	Product Social Responsibility	Inclusive Financial Goods and Services	Social Welfare Participation	Responsible Investment	Corporate Governance	Ethical Corporate Management	Economic performance	Risk Management
Major Issues	Social (S)					Governance (G)

Central Reinsurance Corporation Annual Report 2020 85

Risk Management Policy or Plan	1. Compliance is an important part of the Company’s internal control system. In order to endure the effective implementation of compliance, the Company has established Legal and Compliance Department, which is responsible for the planning, management and implementation of the compliance system. 2. Formulated annual regulatory compliance plan.	3. Formulated regulatory compliance system and amended laws/regulations timely. 4. Established plans, policies, standard operating procedures and matters in regard to “Anti-Money Laundering and Countering the Financing of Terrorism”.
Risk Assessment	Anti-Money Laundering and Countering the Financing of Terrorism	Compliance
Major Issues	Governance (G)

Central Reinsurance Corporation Annual Report 2020


Response Plans	1. Properly arrange pro rata retrocession to transfer the assumed catastrophe risk, thereby expanding underwriting capacity and reducing the retrocession cost of our catastrophe cover. 2. Strictly monitor the accumulated risks and ensure that business has sufficient risk-return consideration to build a geographically diversified portfolio with quality.	1. Develop an emergency response plan, off-site backup and business continuity plan. 2. Purchase commercial fire insurance, including earthquake, explosion and public accident liability insurance.
Objectives	1. Strive to maintain strong capital adequacy ratio and good solvency in order to mitigate the impact of catastrophe claims on the Company’s finances. 2. Strictly follow the underwriting discipline and manage catastrophe risk accumulation to ensure stable underwriting profit.	Establish complete contingency handling procedures to deal with emergency accidents or material abnormal situations in
Impact on the Company’s Operations	Catastrophe events may lead to an increase in the number of reinsurance payment and the amount of claims.	Causing major loss or interruption to the operational headquarters may raise the risk of operating loss.
Explanations	Affected by global warming and extreme climate change, the number of catastrophe events has increased recently, which will affect clients’ life and property security.	Emergency incidents caused by extreme climate change may result in business interruption.
Climate Change Risks	Increase of operational risk	Loss on operating equipment

Central Reinsurance Corporation Annual Report 2020 87


	1. Established “Promotion of Energy Conservation and Carbon Reduction”. 2. Regularly encourage water and energy conservation. 3. The air conditioners, set between 26-28 degrees Celsius, are regularly cleaned and maintained to improve energy efficiency. 4. The Company has replaced traditional lighting fixtures with T5 lights; meanwhile, the Company turns off the light for one hour at noon in response to Earth Hour. 5. Adopting the government electronic exchange system helps the Company improve work efficiency and greatly reduce the consumption of paper and other resources. 6. The fax is displayed as picture instead of printed, thereby reducing paper and toner usage.
real time and ensure all management levels can take appropriate countermeasures.	Even though the Company is a low-pollution enterprise and has limited contribution on energy saving and carbon reduction, it still follows the environmental regulations and relevant international standards to properly protect the natural environment. While implementing operational activities and internal management, the Company takes environmental sustainability into consideration.
	If the future is affected by the emission control and emission trading scheme, the operating costs may increase.
	In response to the global trend of reducing carbon emissions, the pressure on energy prices and equipment efficiency will affect energy usage.
	Increase cost of energy use

88 Central Reinsurance Corporation Annual Report 2020

Increase of market risk Climate change will increase the fluctuation of business operations and affect the development strategy of enterprises. Economic activities will be emphasized on the requirements of environmental protection and low carbon emission. Identify the risks of financial commodity investment, underwriting business and other business operations in order to manage the risk profile. Promote the development of green energy industry to reduce investment risks caused by climate change. Pay attention to the development of green energy-related industries to seek potential investment opportunities. 2. Opportunities of climate change Climate Change Opportunities Explanations Response Plans Increasing environmental awareness The impact of climate change has aroused humans’ attention to environmental protection. 1. Established “Promotion of Energy Conservation and Carbon Reduction”. 2. The Company has aimed to reduce water and energy consumption by 0.5% year-on-year. 3. The Company turns off the light for one hour at noon in response to Earth Hour. 4. The air conditioners, set between 26-28 degrees Celsius, are regularly cleaned and maintained to improve energy efficiency.
	Response Plans	1. Established “Promotion of Energy Conservation and Carbon Reduction”. 2. The Company has aimed to reduce water and energy consumption by 0.5% year-on-year. 3. The Company turns off the light for one hour at noon in response to Earth Hour. 4. The air conditioners, set between 26-28 degrees Celsius, are regularly cleaned and maintained to improve energy efficiency.
	Explanations	The impact of climate change has aroused humans’ attention to environmental protection.
	Climate Change Opportunities	Increasing environmental awareness

Central Reinsurance Corporation Annual Report 2020 89


5. Encourage employees to take public transportations or bicycles to work.	Purchase electrical products with energy-saving labels to achieve the goal of energy saving and carbon reduction as well as greenhouse gas reduction.	1. Taking risk-return into consideration, the Company has provided underwriting capacity directly to the insurance market to support the catastrophe products in response to climate change. 2. In additional to underwriting considerations, the Company has evaluated the accumulated risk and performed stress test to estimate the impact major events may bring to its finances, business and solvency.	Continuously evaluate the development stage of green energy industry, increase the investment proportion of green energy related and support the development of green energy industry to mitigate the impact of climate change.
	Use products with environmental protection labels to reduce the impact of corporate operations on the environment.	Climate change has become major risk and opportunity currently faced by the insurance industry. Its significant impact has increased the insurance coverage ratio and the demand for catastrophe insurance.	Policy and promotion of green energy investment.
	Green procurement	Extreme climate events	Green energy investment

90 Central Reinsurance Corporation Annual Report 2020

Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None None
Implementation Status (Note 1)	Brief Illustration	(1) The “Ethical Management Policy” of the Company have been reviewed by its Audit Committee, approved by the Board of Directors and reported to the shareholders on August 7th,2019. The Company has disclosed the Policy on its website 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) In accordance with Article 7 of the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”, the Company has established the risk assessment mechanism against unethical conduct. Focusing on business activities carrying a higher risk of being involved in an unethical conducts. According to the results of the company's 2020 risk assessment
	No
	Yes	○ ○
	Evaluation Item	1. Establish the ethical corporate management policy and programs (1) Has the company established the ethical corporate management policy which have been approved by the Board of Directors and 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 a risk assessment mechanism against unethical conduct, analyzed and assessed on a regular basis business activities within their business scope which are at a higher risk of being involved in unethical conduct, and established

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Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None
Implementation Status (Note 1)	Brief Illustration	mechanism, the risk levels of dishonesty behaviors within the business scope were all below 2, and the probability of occurrence was low or extremely low. Also, there were no incidents of wrongdoing or corruption. In addition, relevant departments have formulated relevant internal control systems, including "Investment Risk Management Operational Guidelines ", " Regulations Governing Donations", "Guidelines for Entertainment Expenses Reimbursement ", "Personnel Administration Procedures" and other requirements, and the endorsement of "Stewardship Principles for Institutional Investors" has been accomplished to prevent company’s personnel from offering bribes and receiving bribes, providing illegal political donations, made improper donations to non-interested parties, providing or accepting unreasonable or other improper benefits, and engaging in unfair competition, violating trade secret and so on. (3) 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	prevention programs accordingly which the assessment mechanism should be prescribed in paragraph 2, Article 7 of the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”? (3) Has the Company described the procedures, code of conducts, disciplinary rules and appeal systems against violations in the programs of

92 Central Reinsurance Corporation Annual Report 2020

Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons		None None
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.	(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.
	No
	Yes		○ ○
	Evaluation Item	forestall unethical conduct? Have these been practically implemented and reviewed on a regular basis?	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 business unit to facilitate matters on ethical corporate management, which is subordinate to

Central Reinsurance Corporation Annual Report 2020 93

Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None
Implementation Status (Note 1)	Brief Illustration	The Auditing Division shall be responsible to audit and evaluate whether the preventive measures established for ethical corporate management have been effectively implemented. The Auditing Division shall also review the compliance status on relevant business operations on a regular basis. (3) With regard to the transactions with interested parties, the Company has provided specific mechanisms and procedures in its “Policies and Procedures for Conducting Non-loan Transactions with Interested parties” and “Internal Procedural Guidelines for Conducting Non-loan Transactions with Interested parties”. It is stipulated in the “Regulations Governing Procedures for Board of Directors’ Meetings” of the Company that, if any director, manager or other interested party attending the meeting has a stake with any agenda item, the person shall state the important aspects of the interested party relationship at the respective meeting. The person may not participate in the discussion or voting process, and further, shall enter recusal during the discussion and voting. To enhance the management of financial transactions between
	No
	Yes	○
	Evaluation Item	the board of directors and provides regular updates thereto (at least once a year)? (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?

94 Central Reinsurance Corporation Annual Report 2020

Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None
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” (hereinafter the mechanisms). This year, in accordance with Article 16 of the “Regulations Governing Procedure for Board of Directors Meetings of Public Companies” and Article 206 of the “ Company Act”, the Company has amended Article 13 of the mechanisms which has been approved by the Audit Committee and the Board meeting on December 23,2020. (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 Human Resources Department of the Supervisory Division will regularly report the implementation status of ethical management and the result of risk assessment of dishonest behavior to the board of directors each year. According to the
	No
	Yes	○
	Evaluation Item	(4) Has the Company built up effective accounting and internal control systems to ensure ethical corporate management? Has the internal audit units shall, based on the results of assessment of the risk of involvement in unethical conduct, devise relevant audit plans and examine accordingly the compliance with the prevention

Central Reinsurance Corporation Annual Report 2020 95

Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None
Implementation Status (Note 1)	Brief Illustration	results above, the Company’s Auditing Division will prepare the audit plans on an annual basis and will execute it. 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 every year, while the accountant audit and certify the Company’s financial report. The results of the company's 2020 risk assessment mechanism had been provided to the Company’s Auditing Division. (5) The Company has disclosed on its official website the ”Ethical Management Policy”, “Ethical Corporate Management Best Practice Principles” and “Procedures for Ethical Corporate Management and Guidelines for Conduct” of the Company to notify employee. Related trainings are provided each year to eliminate dishonest behaviors. On October, 2020, the Company had held the training to promote the importance of ethical corporate management and staff confidentiality. The training
	No
	Yes	○
	Evaluation Item	programs or outsourced CPAs to carry out the audit? (5) Does the Company provide internal or external training on ethical corporate management on a regular basis?

96 Central Reinsurance Corporation Annual Report 2020

Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons		None None
Implementation Status (Note 1)	Brief Illustration	includes prevention of bribery, improper interests and unfair competition, infringement of business secrets, insider trading, etc. A total 123 employees have attended the training. 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.	(1) The Company has amended its “Whistle-blowing Procedures” which have been reviewed by its Audit Committee and approved by the Board of Directors on December 26, 2018. 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 thereto. (2) It is specifically stipulated the whistle-blowing processes and
	No
	Yes		○ ○
	Evaluation Item		3. Implementation of Whistle-blowing System within the Company (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

Central Reinsurance Corporation Annual Report 2020 97

Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None	None
Implementation Status (Note 1)	Brief Illustration	protective measures in the “Whistle-blowing Procedures” of the Company. The follow-up measures after the completion of the investigation include reviewing the relevant internal control systems and operating procedures, proposing improvement measures, and reporting to the board of directors. If it is found by investigation to be a major incident or illegal case, the Company will take the initiative to notify or inform the relevant authorities. 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.	The Company’s ”Ethical Management Policy”, “Ethical Corporate Management Best Practice Principles”, “Procedures for Ethical
	No
	Yes	○	○
	Evaluation Item	investigating the reported case, follow-up measures after investigating, as well as relevant confidentiality mechanisms? (3) Has the Company adopted measures to protect the whistle-blower against any inadequate treatment caused thereby?	4. Strengthen Information Disclosure Has the Company announced on its website and the Market Observation Post System its Principles for Ethical Corporate

98 Central Reinsurance Corporation Annual Report 2020

Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Implementation Status (Note 1)	Brief Illustration	Corporate Management and Guidelines for Conduct” have been disclosed on the official website of the Company and the Market Observation Post System. The implementation status for the year has been disclosed on the official website of the Company, the Market Observation Post System and the annual report.
	No
	Yes
	Evaluation Item	Management and its achievements in implementing the Principles?

Central Reinsurance Corporation Annual Report 2020 99

3.3.8 If the company has established "corporate governance best-practice principles" or related guidelines, references to such principles must be disclosed:
The Company’s Articles of Incorporation, Rules for Procedure of The Shareholders’ Meeting, Meeting Rules of Order of the Board of Directors, Corporate Governance Principles, Ethical Corporate Management Best Practice Principles, Codes of Ethical Conduct, Procedures for Handling Material Inside Information, and so on are disclosed on the Market Observation Post System (http://mops.twse.com.tw) and the Company’s website (http://www.centralre.com) for reference by shareholders and other interested parties.
3.3.9 Important information in understanding corporate governance management:
The Company sets up a corporate governance section, investor section, corporate social responsibility section, and interested party section on the company’s website to disclose the Company’s organizational structure, finance, business, credit rating, and important information for reference by shareholders and other interested parties.
The Company was ranked in the range of top 20% of all selected listed companies in the 1st to 7th Corporate Governance Evaluation, which demonstrates the excellent performance of the Company in corporate governance implementation.
In accordance with the letter from the Insurance Bureau of the Financial Regulatory Commission: The insurance enterprises shall provide the full-year and half-year checklist for articles with “shall” of the Corporate Governance Best Practice Principles for Insurance Enterprises before every February and August starting from 2015. When providing the full-year checklist, the supporting information and the Regulatory Compliance Statement shall be submitted at the same time. Starting from 2020, the relevant activities related to the review on the checklist for articles with “shall” of the Corporate Governance Best Practice Principles for Insurance Enterprises shall be self-regulated and monitored by each unit.

3.3.10 Disclosures relating to the execution of internal control system:

100 Central Reinsurance Corporation Annual Report 2020

Internal Control System Statement (please refer to page 262 to 263).
If the internal control system was reviewed by an external CPA, the result of such review must be disclosed (please refer to page 265 to 266). According to Article 26 of the Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises: “If the annual financial report of an insurance enterprise is audited and certified by an accountant, the enterprise should also appoint the accountant to conduct an audit on its internal control system.”, the company is in the insurance industry, in accordance with the above regulations ,the accountant is requested to check the internal control system.
3.3.11 In the most recent year and up to the publication date of this annual report, if there were penalties imposed against the Company for regulatory violation, or penalties against employees for violation of internal control system, that may significantly impact shareholders' interest or security price; should describe details of the penalty, major faults and relevant correction actions: None.

Central Reinsurance Corporation Annual Report 2020 101

3.3.12 Material Resolutions of Shareholders’ Meeting and Board of Directors Meeting

1. Major Resolutions of Shareholders’ Meeting

1. Major R	esolutions ofShareholders’	Meeting
Date	Major Resolutions	Execution
May 28, 2020	To approve 2020 earnings distribution: Cash dividends to common shareholders is NTD 0.9 per share with total NTD 531,349,875.	(1) The Board of Directors resolved June 24, 2020 as the ex-dividend date and July 17, 2020 as the payment date for the cash dividend distribution. (2) The cash dividend was distributed on July 17, 2020.
	To elect nine Directors (including three Independent Directors) according to the “Articles of Incorporation”.	The new directors have performed their duties 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.

102 Central Reinsurance Corporation Annual Report 2020

The Company’s response to the opinions of Audit Committee or Remuneration Committee	None	None	�	None
Session, Date & Resolution of Audit Committee or Remuneration Committee	Approved unanimously by Audit Committee members on the 1st meeting of 2020 dated Jan. 15, 2020	Approved unanimously by Remuneration Committee members on the 1stmeeting of 2020 dated Jan. 15, 2020	�	Approved unanimously by Audit Committee members on the 2nd meeting of 2020 dated
Major Proposals	1. To engage consulting firm for implementing International Financial Reporting Standard No. 17 "Insurance Contracts" Project Services. 2. To amend the "Anti-Money Laundering and Countering the Financing of Terrorism Programs" and the "Internal Control System and Internal Audit Implementation Rules".	3. To approve the 2019 year-end bonus to managers. 4. To approve the 2019 year-end bonus to the chairman and vice chairman. Recusalof Directors and voting situation of Board of Directors � Chairman Yang, Cheng-Tui, Vice Chairman Chang, Kuo-Cheng, and Director Chang, Kuo-Ming have direct personal interest conflicts to the proposal. � Except for directors who recused themselves from the discussion and resolution, all 6 attendances agreed and approved the proposal.	5. To make proposal on 2020 Annual General Shareholders’ Meeting to elect new director. 6. To make proposal on 2020 Annual General Shareholders’ Meeting to release restrictions of competitive activities of newly elected directors. 7. To convene 2020 Annual General Shareholders’ Meeting.	1. To approve the Business Report of the year 2019. 2. To approve the Financial Report of the year 2019. 3. To approve the distribution of earnings of the year 2019.
The Board of Directors Meeting Date & Session		Jan. 15, 2020 (The 20thMeeting of the 17thBoard of Directors)		Mar. 25,2020 (The 21stMeeting of the 17thBoard of

Central Reinsurance Corporation Annual Report 2020 103

The Company’s response to the opinions of Audit Committee or Remuneration Committee		None	�	�
Session, Date & Resolution of Audit Committee or Remuneration Committee	Mar. 25, 2020	Approved unanimously by Remuneration Committee members on the 2ndmeeting of 2020 dated Mar. 25, 2020	�	�
Major Proposals	4. To amend the Internal Control System and Internal Audit Implementation Rules. 5. To amend the Accounting System. 6. To amend the "Relevant Transaction Procedures and Risk Management Measures in the Mainland China Area". 7. To amend the "Corporate Social Responsibility Best Practice Principles". 8. To approve the audit report of financial derivative transactions of the fourth quarter of 2019. 9. To approve the 2019 Internal Control Statement. 10. To approve the Internal Control Statement of Anti-Money Laundering and Countering the Financing of Terrorism. 11. To approve the Information Security Overall Implementation Statement. 12. To amend the "Audit Committee Charter". 13. To amend the "Corporate Governance Best Practice Principles".	14. To approve the 2019 Employees' Compensation. 15. To approve the 2019 Directors’ Remuneration. 16. To amend the "Remuneration Committee Charter".	17. To amend the "Meeting Rules of order of the Board of Directors". 18. To amend the "Work Rules of the Company".	To review the roster of 9 director candidates (include 3 independent directors) nominated by the shareholders.
The Board of Directors Meeting Date & Session	Directors )			Apr 15, 2020 (The 22ndMeeting of

104 Central Reinsurance Corporation Annual Report 2020

The Company’s response to the opinions of Audit Committee or Remuneration Committee		None	�	�	None
Session, Date & Resolution of Audit Committee or Remuneration Committee		Approved unanimously by Audit Committee members on the 3rd meeting of 2020 dated May 6, 2020	�	�	Approved unanimously by Remuneration Committee members on the 3rdmeeting of 2020 dated Jun. 10, 2020
Major Proposals		1. To amend the Accounting System. 2. To approve the audit report of financial derivative transactions of the first quarter of 2020. 3. To amend the "Own Risk and Solvency Assessment Policy". 4. To amend the Internal Control System and Internal Audit Implementation Rules.	5. To amend the "Meeting Rules of order of the Board of Directors".	1. To re-elect the chairman of the Board of Directors. 2. To appoint the members of the 4thRemuneration Committee. 3. To appoint independent director Tsai, Li-Hsueh as the Convener of Risk Management Committee. 4. To approve the Own Risk and Solvency Assessment Report of 2020. 5. To resolve the record date and payment date for distribution of cash dividends.	1. To approve the former vice chairman's separation pay. Recusalof Directors and voting situation of Board of Directors � Director Chang, Kuo-Hua has direct personal interest conflicts to the proposal because Mr. Chang, Kuo-Cheng is his brother. � Except for the director who recused himself from the discussion and resolution, all 8 attendances agreed and approved the proposal. 2. To approve 2020 remuneration for the chairman.
The Board of Directors Meeting Date & Session	the 17thBoard of Directors )	May 6, 2020 (The 23rdMeeting of the 17thBoard of Directors )		May 28, 2020 (The 1stMeeting of the 18thBoard of Directors )	Jun. 10, 2020 (The 2ndMeeting of the 18thBoard of Directors)

Central Reinsurance Corporation Annual Report 2020 105

The Company’s response to the opinions of Audit Committee or Remuneration Committee		None
Session, Date & Resolution of Audit Committee or Remuneration Committee		Approved unanimously by Audit Committee members on the 4th meeting of 2020 dated Aug. 12, 2020
Major Proposals	Recusalof Directors and voting situation of Board of Directors � Chairman Yang, Cheng-Tui has direct personal interest conflicts to the proposal. � Except for the director who recused himself from the discussion and resolution, all 8 attendances agreed and approved the proposal. 3. To approve transportation allowances for the current directors (except chairman and independent directors). 4. To approve the current independent directors' remuneration and transportation allowances for attending meetings of functional committees. Recusalof Directors and voting situation of Board of Directors � Independent director Chou, Yu-Cheng, Independent director Chang, Bing-Huang, and Independent director Tsai, Li-Hsueh have direct personal interest conflicts to the proposal. � Except for Independent directors who recused themselves from the discussion and resolution, all 6 attendances agreed and approved the proposal.	1. To approve the Financial Report of the first half of 2020. 2. To amend the Internal Control System and Internal Audit Implementation Rules. 3. To approve the audit report of financial derivative transactions of the second quarter of 2020. 4. To engage PwC as consulting firm for implementing International Financial Reporting Standard No. 17 "Insurance Contracts" Project Services.
The Board of Directors Meeting Date & Session		Aug. 12, 2020 (The 3rdMeeting of the 18thBoard of Directors)

106 Central Reinsurance Corporation Annual Report 2020

The Company’s response to the opinions of Audit Committee or Remuneration Committee		None	None
Session, Date & Resolution of Audit Committee or Remuneration Committee		Approved unanimously by Remuneration Committee members on the 4thmeeting of 2020 dated Aug. 12, 2020	Approved unanimously by Audit Committee members on the 5th meeting of 2020 dated Sep. 23, 2020
Major Proposals	5. To amend the "Risk Management Operational Procedure". 6. To amend the "Policies and Procedures for Transactions Other Than Loans with Interested Parties" and "Internal Operational Rules for Transactions Other Than Loans with Interested Parties".	7. To appoint the new president and approve the new president's remuneration. Recusalof Directors and voting situation of Board of Directors � Director Cheng, Ching-Fen has direct personal interest conflicts to the proposal. � Except for the director who recused herself from the discussion and resolution, all 8 attendances agreed and approved the proposal. 8. To approve the promotion of senior vice president of Property & Casualty Division to the executive vice president and his remuneration.	1. To amend the Internal Control System and Internal Audit Implementation Rules. 2. To amend the Regulatory Compliance System. 3. To change the financial officer. 4. To appoint the new manager of the Offshore Insurance Unit. Recusalof Directors and voting situation of Board of Directors � Director Cheng, Ching-Fen has direct personal interest conflicts to the proposal. � Except for the director who recused herself from the discussion and resolution, all 8 attendances agreed and approved the proposal.
The Board of Directors Meeting Date & Session			Sep. 23, 2020 (The 4thMeeting of the 18thBoard of Directors)

Central Reinsurance Corporation Annual Report 2020 107

The Company’s response to the opinions of Audit Committee or Remuneration Committee	None	None	None
Session, Date & Resolution of Audit Committee or Remuneration Committee	Approved unanimously by Remuneration Committee members on the 5thmeeting of 2020 dated Sep. 23, 2020	Approved unanimously by Audit Committee members on the 6th meeting of 2020 dated Nov. 4, 2020	Approved unanimously by Audit Committee members on the 7th meeting of 2020 dated Dec. 23, 2020
Major Proposals	5. To approve the former president's pension and separation pay.	1. To amend the Procedures for Discretionary Investment , and the Investment Outsourcing Process of the Internal Control System and Internal Audit Implementation Rules. 2. To approve the audit report of financial derivative transactions of the third quarter of 2020. 3. To amend the Internal Control System and Internal Audit Implementation Rules.	1. To appoint the Company's Certified Public Accountants and approve the remuneration of the year 2021. 2. To amend the Internal Control System and Internal Audit Implementation Rules. 3. To approve the Annual Regulatory Compliance Plan of 2021. 4. To amend the Details of Evaluation and Procedures for Evaluating Regulatory Compliance 5. To amend the "Corporate Governance Best Practice Principles". 6. To amend the "Codes of Ethical Conduct". 7. To approve the 2021 Annual Audit Plan. Recusalof Directors and voting situation of Board of Directors � To maintain the independence of the internal audit, Director Cheng,
The Board of Directors Meeting Date & Session		Nov. 4, 2020 (The 5thMeeting of the 18thBoard of Directors)	Dec. 23, 2020 (The 6thMeeting of the 18thBoard of Directors)

108 Central Reinsurance Corporation Annual Report 2020

The Company’s response to the opinions of Audit Committee or Remuneration Committee		None	�
Session, Date & Resolution of Audit Committee or Remuneration Committee		Approved unanimously by Remuneration Committee members on the 6thmeeting of 2020 dated Dec. 23, 2020	�
Major Proposals	Ching-Fen, who is also the president of the Company, recused herself from the discussion and resolution of the proposal. � Except for the director who recused herself from the discussion and resolution, all 7 attendances agreed and approved the proposal.	8. To review the "Regulation of Payment for Managers". 9. To review the "Regulation of Payment for Directors". 10. To approve the 2021 remuneration for managers. Recusalof Directors and voting situation of Board of Directors � Director Cheng, Ching-Fen, who is also the president of the Company, has direct personal interest conflicts to the proposal. � Except for the director who recused herself from the discussion and resolution, all 7 attendances agreed and approved the proposal. 11. To approve the 2021 remuneration for the chairman. Recusalof Directors and voting situation of Board of Directors � Chairman Yang, Cheng-Tui has direct personal interest conflicts to the proposal. � Except for the director who recused himself from the discussion and resolution, all 7 attendances agreed and approved the proposal.	12.To approve the Business Plan and Budget of the year 2021. 13. To approve the 2021 Investment Policy. 14. To appoint independent director Chou, Yu-Chen as the Convener of Risk Management Committee.
The Board of Directors Meeting Date & Session

Central Reinsurance Corporation Annual Report 2020 109

The Company’s response to the opinions of Audit Committee or Remuneration Committee	None	None
Session, Date & Resolution of Audit Committee or Remuneration Committee	Approved unanimously by Audit Committee members on the 1st meeting of 2021 dated Feb. 3, 2021	Approved unanimously byRemuneration Committee members on the 1stmeeting of 2021 dated Feb. 3, 2021
Major Proposals	1. To approve the audit report of financial derivative transactions of the fourth quarter of 2020. 2. To amend the Internal Control System and Internal Audit Implementation Rules. 3. To amend the "Corporate Governance Best Practice Principles". 4. To amend the 2021 Annual Audit Plan. Recusalof Directors and voting situation of Board of Directors � To maintain the independence of the internal audit, Director Cheng, Ching-Fen, who is also the president of the Company, recused herself from the discussion and resolution of the proposal. � Except for the director who recused herself from the discussion and resolution, all 7 attendances agreed and approved the proposal.	5. To amend the "Regulations Governing the Board Performance Evaluation". 6. To approve the 2020 year-end bonus to managers. Recusalof Directors and voting situation of Board of Directors � Director Cheng, Ching-Fen, who is also the president of the Company, has direct personal interest conflicts to the proposal. � Except for the director who recused herself from the discussion and resolution, all 7 attendances agreed and approved the proposal. 7. To approve the 2020 year-end bonus to the chairman. Recusalof Directors and voting situation of Board of Directors � Chairman Yang, Cheng-Tui has direct personal interest conflicts to the proposal. � Except for the director who recused himself from the discussion and
The Board of Directors Meeting Date & Session	Feb. 3, 2021 (The 7thMeeting of the 18thBoard of Directors)

110 Central Reinsurance Corporation Annual Report 2020

The Company’s response to the opinions of Audit Committee or Remuneration Committee		�	None	None
Session, Date & Resolution of Audit Committee or Remuneration Committee		�	Approved unanimously by Audit Committee members on the 2nd meeting of 2021 dated Mar. 18, 2021	Approved unanimously
Major Proposals	resolution, all 7 attendances agreed and approved the proposal.	8. To approve the Risk Appetite and Risk Tolerance of 2021. 9. To amend the "Risk Management Committee Charter". 10. To amend the "Meeting Rules of order of the Board of Directors". 11. To amend the "Standard Operating Procedures for Handling Requests Made by Directors". 12. To change the corporate governance officer. 13. To appoint a new Remuneration Committee member. 14. To make proposal on 2021 Annual General Shareholders’ Meeting to by-elect one independent director. 15. To convene the 2021 Annual General Shareholders’ Meeting.	1. To approve the Business Report of the year 2020. 2. To approve the Financial Report of the year 2020. 3. To approve the distribution of earnings of the year 2020. 4. To approve the International Financial Reporting Standard No. 17 "Insurance Contracts" adjustment schedule. 5. To approve the 2020 Internal Control Statement. 6. To amend the "Risk Management Policies". 7. To amend the "Risk Management Operational Procedure". 8. To approve the Internal Control Statement of Anti-Money Laundering and Countering the Financing of Terrorism. 9. To approve the Information Security Overall Implementation Statement of 2020. 10. To amend the Internal Control System and Internal Audit Implementation Rules.	11. To approve the 2020 Employees' Compensation.
The Board of Directors Meeting Date & Session			Mar. 18,2021 (The 8stMeeting of the 18thBoard of Directors )

Central Reinsurance Corporation Annual Report 2020 111

The Company’s response to the opinions of Audit Committee or Remuneration Committee		�
Session, Date & Resolution of Audit Committee or Remuneration Committee	byRemuneration Committee members on the 2ndmeeting of 2021 dated Mar. 18, 2021	�
Major Proposals	12.To approve the 2020 Directors'Remuneration.	13. To amend the "Rules for Procedure of the Shareholders’ meeting". 14. To make proposal on 2021 Annual General Shareholders’ Meeting to release restrictions of competitive activities of the newly elected independent director. 15. To amend the agenda of the 2021 Annual General Shareholders’ Meeting.
The Board of Directors Meeting Date & Session

112 Central Reinsurance Corporation Annual Report 2020

3.3.13 Major Issues of Record or Written Statements Made by Any Director Dissenting to Important Resolutions Passed by the Board of Directors: None.
3.3.14 Resignation or Dismissal of the company’s Key Individuals, Including the Chairman, President, and Heads of Accounting, Finance, Internal Audit, Chief Corporate Governance Officer and R&D:

March 30, 2021

Title	Name	On-the-job date	Dismissal date	Reasons for resignation or dismissal
President	Tsai, Bai-Long	2017.10.01	2020.10.01	Retired
Executive Vice President (Financial Officer)	Cheng, Ching-Fen	2006.01.01	2020.09.30	Job adjustment
Deputy Senior Vice President (Chief Corporate Governance Officer)	Hsu, Tzu-Cheng	2019.06.12	2021.02.28	Job adjustment

Central Reinsurance Corporation Annual Report 2020 113

3.4 Information on CPA Professional Fees

NT$ thousands

									NT$thousands
Accounting Firm Pricewaterhouse Coopers, Taiwan	Name of CPA Chen, Hsien-I	Audit Fee 4,838	Non-audit Fee					Period Covered by CPA’s Audit 2020/01/01 ~ 2020/12/31	Remarks Non-supervisory employee salary inspection expenses.
			System of Design -	Company Registration -	Human Resource -	Others 30	Subtotal 30
	Lee, Hsiu-Ling

Note�

If the Company has changed CPA or Accounting Firm during the current fiscal year, the Company shall report the information regarding the audit period covered by each CPA and the replacement reason. Disclose the information such as audit fee and non-audit fee paid in order.
Non-audit fee are listed separately according to service items, if the "other" of the non-audit fee reaches 25% of the total non-audit fee, the Company shall report the information of service content.
3.4.1 When non-audit fees paid to the CPA, to the accounting firm of the certified public accountant, and/or to any affiliated enterprise of such accounting firm are 1/4 or more of the audit fees paid thereto, the amounts of both audit and non-audit fees as well as details of non-audit services shall be disclosed: None.
3.4.2 When the company changes its accounting firm and the audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year, the amounts of the audit fees before and after the change and the reasons shall be disclosed: None.
3.4.3 When the audit fees paid for the current fiscal year are lower than those for the previous fiscal year by 10% or more, the reduction in the amount of audit fees, reduction percentage, and reason(s) therefor shall be disclosed: None.
The aforementioned audit fee for auditing services referred to in the preceding item means the professional fees paid by the company to a certified public accountant for auditing, review, and secondary reviews of financial reports, financial forecast reviews, and tax certification.

3.5 Replacement of CPA

3.5.1 Regarding the former CPA

Replacement Date	December 18, 2019 (Date of the Board of Directors Resolution)	December 18, 2019 (Date of the Board of Directors Resolution)	December 18, 2019 (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

114 Central Reinsurance Corporation Annual Report 2020

Other issues (except for unqualified issues) in the audit reports within the last two years	None
Differences with the company	Yes	-	Accounting principles orpractices
		-	Disclosure of Financial Statements
		-	Audit scope or steps
		-	Others
	None	V
	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, 2020.

3.5.2 Regarding the successor CPA

5.2 Regardingthe successorCPA
Name of accountingfirm	PricewaterhouseCoopers,Taiwan
Name of CPA	Chen,Hsien-I and Lee,Hsiu-Ling
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, 2020.

3.5.3 Reply of the Previous Accountant: None.
3.6 The company's chairman, president, or any managerial officer in

charge of finance or accounting matters has held a position at its CPA’s accounting firm or at an affiliated enterprise in the most recent year

None.

3.7 Changes in Shareholding of Directors, Managers and Major

Shareholders and Information of Stock Transfer or Stock Pledge

3.7.1Changes in Shareholding of Directors, Managers and Major Shareholders

Central Reinsurance Corporation Annual Report 2020 115

Title (Note 1)	Name	2020	2020	As of March 30, 2021	As of March 30, 2021
		Increase (Decrease) In Shareholding	Increase (Decrease) Share Pledged	Increase (Decrease) In Shareholding	Increase (Decrease) Share Pledged
Chairman	Evergreen International Corp.	0	0	0	0
	Representative: Yang, Cheng-Tui	0	0	0	0
Independent Director	Chou, Yu-Cheng	0	0	0	0
Independent Director	Chang, Bing-Huang	0	0	0	0
Director	Ministry of Finance, R.O.C.	0 (3,042,000)	0	0 (3,560,000)	0
	Representative: Lee, Yi-Fen	0	0	0	0
	Representative: Chen, Kuan-Pao	0	0	0	0
Director	Evergreen International Corp.	0	0	0	0
	Representative: Tai, Jiin-Chyuan	0	0	0	0
	Representative: Cheng, Ching-Fen	0	0	0	0
Director	Evergreen Marine Corp. (Taiwan) Ltd.	0	0	0	0
	Representative: Wu, Kuang-Hui (Note 3)	0	0	0	0
President	Cheng, Ching-Fen	0	0	0	0
Major Shareholder	Ministry of Finance, R.O.C.	0 (3,042,000)	0	0 (3,560,000)	0
Major Shareholder	Evergreen International Corp.	0	0	0	0
Chief Auditor (Executive Vice President)	Lin, Cheng-Yen	0	0	0	0
Executive Vice President	Chung, Chih-Hung	0	0	0	0

116 Central Reinsurance Corporation Annual Report 2020

Title (Note 1)	Name	2020	2020	As of March 30, 2021	As of March 30, 2021
		Increase (Decrease) In Shareholding	Increase (Decrease) Share Pledged	Increase (Decrease) In Shareholding	Increase (Decrease) Share Pledged
Executive Vice President (Financial Officer)	Chang, Yung-Ning	0	0	0	0
Chief Investment Officer	Fan Chiang, Chi-Hsiu	0	0	0	0
Appointed Actuary (Senior Vice President)	Lin, Yu-Te	0	0	0	0
Deputy Senior Vice President	Hsu, Tzu-Cheng	0 (72,000)	0	0	0
Deputy Senior Vice President	Wang, Cheng-Sung	0	0	0	0
Deputy Senior Vice President (Principal Accounting Officer)	Liao, Min-Ju	0	0	0	0
Deputy Senior Vice President	Wang, Jui-Ching	0	0	0	0
Deputy Senior Vice President	Liao, Chieh-Chun	0	0	0	0
Deputy Senior Vice President	Wang, Mei-Erh	0	0	0	0

Note 1: The major shareholders that holds more than 10% shares of the Company should be disclosed separately. Note 2: If the shares were traded with related parties, the information on share transfers and pledge changes should be disclosed.

Note 3: Mr. Wu, Kuang-Hui was appointed as the representative of Evergreen Marine Corp. (Taiwan) Ltd. on Jun, 1 2021.

Note 4: The Company has established the Audit Committee instead of supervisors.

3.7.2Information of Stock Transfer: None.

3.7.3Information of Stock Pledged: None.

Central Reinsurance Corporation Annual Report 2020 117

3.8 Relationship among the Top Ten Shareholders

Name (Note 1)	Present Shareholdings	Present Shareholdings	Shares Held by Spouses & Dependents	Shares Held by Spouses & Dependents	Shares Held by Third Parties	Shares Held by Third Parties	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees(Note 3)	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees(Note 3)	Remark
	Shares	%	Shares	%	Share s	%	Title (or Name)	Relationship
Evergreen International Corp.	207,419,251	35.13	-		0	0	Evergreen International Storage & Transport Corp.	Evergreen International Corp. designates representative to serve as the director of Evergreen International Storage & Transport Corp.	-
							Evergreen Marine Corp. (Taiwan) Ltd.	Major shareholder of Evergreen International Corp. reinvest the company
							EVA Airways Corp.	Evergreen International Corp. designates representative to serve as the director of EVA Airways Corp.
Representative: Ko, Lee-Ching	0	0	0		0	0	Evergreen Marine Corp. (Taiwan)Ltd.	Director of Evergreen Marine Corp. (Taiwan)Ltd.	-
							Evergreen International Storage & Transport Corp.	Director of Evergreen International Storage & Transport Corp.
							EVA Airways Corp.	Director of EVA Airways Corp.
Ministry of Finance, R.O.C.	113,792,773	19.27	-		0	0	-	-	-
Evergreen International Storage & Transport Corp.	51,228,414	8.68	-		0	0	Evergreen International Corp.	Evergreen International Corp. designates representative to serve as the director of Evergreen International Storage & Transport Corp.	-
							Evergreen Marine Corp. (Taiwan) Ltd.	Invested Company evaluated by equity method of Evergreen Marine Corp. (Taiwan)Ltd.

118 Central Reinsurance Corporation Annual Report 2020

Name (Note 1)	Present Shareholdings	Present Shareholdings	Shares Held by Spouses & Dependents	Shares Held by Spouses & Dependents	Shares Held by Third Parties	Shares Held by Third Parties	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees(Note 3)	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees(Note 3)	Remark
	Shares	%	Shares	%	Share s	%	Title (or Name)	Relationship
							EVA Airways Corp.	Major corporate shareholder of Evergreen International Storage & Transport Corp. reinvest the company
							Ko,Lee-Ching	Director of Evergreen International Storage & Transport Corp.
							Chang, Yen-I
Representative: Chen, Yih-Jong	0	0	0		0	0	-	-	-
Evergreen Marine Corp. (Taiwan) Ltd. Representative: Chang, Yen-I	49,866,466	8.45	-		0	0	Evergreen International Corp.	Major shareholders of Evergreen Marine Corp. (Taiwan) Ltd. reinvest the company	-
							Evergreen International Storage & Transport Corp.	Invested Company evaluated by equity method of Evergreen Marine Corp. (Taiwan)Ltd.
							EVA Airways Corp.	Invested Company evaluated by equity method of Evergreen Marine Corp. (Taiwan)Ltd.
							Ko, Lee-Ching	Director of Evergreen Marine Corp. (Taiwan)Ltd.	-
	0	0	0	0	0	0	Evergreen International Storage & Transport Corp.	Director of Evergreen International Storage & Transport Corp.	-
EVA Airways Corp.	35,203,008	5.96	-		0	0	Evergreen International Corp.	Evergreen International Corp. designates representative to serve as the director of EVA Airways Corp.	-
							Evergreen International Storage & Transport Corp.	Major corporate shareholder of EVA Airways Corp. reinvest the company
							Evergreen Marine Corp. (Taiwan) Ltd.	Invested Company evaluated by equity method of Evergreen

Central Reinsurance Corporation Annual Report 2020 119

Name (Note 1)	Present Shareholdings	Present Shareholdings	Shares Held by Spouses & Dependents	Shares Held by Spouses & Dependents	Shares Held by Third Parties	Shares Held by Third Parties	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees(Note 3)	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees(Note 3)	Remark
	Shares	%	Shares	%	Share s	%	Title (or Name)	Relationship
Representative: Lin, Bou-Shiu								Marine Corp. (Taiwan) Ltd.
							Hsiang-Li Investment Corp.	EVA Airways Corp. is the parent company of Hsiang-Li Investment Corp.
							Ko, Lee-Ching	Director of EVA Airways Corp.
	0	0	0	0	0	0	Hsiang-Li Investment Corp.	Chairman of Hsiang-Li Investment Corp.	-
Chang, Kuo-Cheng	6,868,993	1.16	0	0	0	0	-	-	-
Boams Capital Ltd.	4,021,500	0.68	-		0	0	-	-	-
RD Capital Co., Ltd. Representative: Kuo,Mei-e	3,500,000	0.59	-		0	0	-	-	-
	0	0	0	0	0	0	-	-	-
Hsiang-Li Investment Corp.	2,740,542	0.46	-		0	0	EVA Airways Corp.	EVA Airways Corp. is the parent company of Hsiang-Li Investment Corp.	-
Representative: Lin, Bou-Shiu	0	0	0	0	0	0	EVA Airways Corp.	Chairman of EVA Airways Corp.	-
Zhi Jun Ltd. Representative: Kao, Tzu-Chun	2,600,000	0.44	-		0	0	-	-	-
	1,220,000	0.21	0	0	0	0	-	-	0

Note1: All the top 10 shareholders should be disclosed. If any of them is an institute shareholder, the name of the institute and its representatives should be disclosed separately.

Note2: Shareholding percentage is calculated by the shares owned by the shareholders himself/ herself, spouse and dependents or by third parties separately.

Note3: The relationship of the shareholders (including institute and natural person) should be disclosed according to Regulations Governing Information to be published in Annual Reports of Public Companies.

3.9 The total number of shares and total equity stake held in any single

enterprise by the company, its directors, managerial officers, and any companies controlled either directly or indirectly by the company

None.

120 Central Reinsurance Corporation Annual Report 2020

4. CAPITAL OVERVIEW

4.1 Capital and Shares

4.1.1 Source of Capital Stock

thousand shares / NT$ thousands

						thousand shares / NT$ thousands	thousand shares / NT$ thousands
Month/ Year	Par Value (NTD)	Authorized Capital		Paid-in Capital		Remark
		Shares	Amount	Shares	Amount	Sources of Capital	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
07/2018	10	600,000	6,000,000	590,389	5,903,888	Capitalization of retained earnings 281,138	None

Note 1: Information is presented up till the publication date of this annual report. Note 2: Date and document reference of effected (approved) incremental capital have been presented. Note 3: Shares issued at prices lower than face value have been labeled in a visible manner.

Note 4: In-kind capital payments such as monetary debt and technology are described separately with details on the types and amounts of contribution provided.

Note 5: Private placements have been highlighted in a visible manner

Type of Stock

				Shares
Share Type		Authorized Capital		Remarks
	Issued Shares	Un-issued Shares	Total Shares
Common Shares	590,388,750	9,611,250	600,000,000	Based on Total Shares Outstanding as of March 30,2021

Information relevant to the aggregate reporting policy�None.

Central Reinsurance Corporation Annual Report 2020 121

4.1.2 Shareholders Structure

As of March 30, 2021

(Shareholders’ meeting book closure date)

Item	Government Agencies	Financial Institutions	Other Juridical Person	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total
Number of Shareholders	1	4	62	11,851	53	11,971
Shareholding (shares)	113,792,773	281,000	360,980,433	103,376,875	11,957,669	590,388,750
Percentage	19.27%	0.05%	61.14%	17.51%	2.03%	100%
Note: All TWSE/TPEx/Emerging Stock Market companies listing for the first time are required to disclose Mainland investors' holding interests. A Mainland investor refers to an individual, corporation, organization, or institution of Mainland origin, or any company owned by the above party in a foreign location,as defined in Article 3 of RegulationGoverningMainland Residents' Investment in Taiwan.

4.1.3 Diffusion of Ownership and List of Principal Shareholders

Diffusion of Ownership (Common Shares)

As of March 30, 2021 (Shareholders’ meeting book closure date)

Range of Shareholdings	Number of Shareholders	Number of Shares	Holding (%)
1 - 999	3,268	458,249	0.08
1,000 - 5,000	5,794	12,467,487	2.11
5,001 - 10,000	1,183	8,865,456	1.50
10,001 - 15,000	575	6,929,573	1.17
15,001 - 20,000	273	4,893,873	0.83
20,001 - 30,000	287	7,006,826	1.19
30,001 - 50,000	239	9,268,088	1.57
50,001 - 100,000	182	12,641,263	2.14
100,001 - 200,000	94	13,121,286	2.22
200,001 - 400,000	39	11,180,692	1.89
400,001 - 600,000	8	3,824,413	0.65
600,001 - 800,000	4	2,746,124	0.47
800,001 - 1,000,000	3	2,782,326	0.47
1,000,001 and above	22	494,203,094	83.71
Total	11,971	590,388,750	100

�Preferred shares: None.

122 Central Reinsurance Corporation Annual Report 2020

4.1.4 List of Principal Shareholders

	As of March 30, 2021 (Shareholders’ meetingbook closure date)	As of March 30, 2021 (Shareholders’ meetingbook closure date)
Shareholding Entity	Number of Shares	Holding (%)
Evergreen International Corp.	207,419,251	35.13
Ministry of Finance, R.O.C.	113,792,773	19.27
Evergreen International Storage & Transport Corp.	51,228,414	8.68
Evergreen Marine Corp. (Taiwan) Ltd.	49,866,466	8.45
EVA Airways Corp.	35,203,008	5.96
Chang, Kuo-Cheng	6,868,993	1.16
Boams Capital Ltd.	4,021,500	0.68
RD Capital Co., Ltd.	3,500,000	0.59
Hsiang-Li Investment Corp.	2,740,542	0.46
Zhi Jun Ltd..	2,600,000	0.44

4.1.5 Disclosure of the Share Prices and Related Information for the Past Two

Fiscal Years

NT$	NT$	NT$	NT$	NT$
Year Items		2020	2019	01/01/2021~ 03/30/2021 (Note 8)
Market Prices per Share (Note 1) Highest Before Adjustment 22.90 19.95 24.70 After Adjustment (Note 9) 19.95 - Lowest Before Adjustment 15.35 16.85 21.10 After Adjustment (Note 9) 16.85 - Average 19.77 18.25 23.22
	After Adjustment Before Adjustment	(Note 9) 15.35	19.95 16.85	- 21.10
		(Note 9) 19.77	16.85 18.25	- 23.22
Net Worth per Share (Note 2)
Before Distribution		22.71	20.37	NA
After Distribution		(Note 9)	19.47	NA
Earnings per Share
Weighted Average Shares		590,388,750	590,388,750	NA
Earnings per Share (Note 3) Before Adjustment 2.57 1.87 NA After Adjustment (Note 9) 1.87 NA Dividends per Share	Before Adjustment	2.57	1.87	NA

Central Reinsurance Corporation Annual Report 2020 123

Year Items	Year Items	2020	2019	01/01/2021~ 03/30/2021 (Note 8)
Cash Dividends	Before Adjustment	(Note 9)	0.90	NA
	After Adjustment	(Note 9)	-	NA
Stock Dividends	Dividends from Retained Earnings	(Note 9)	-	NA
	Dividends from Capital Surplus	(Note 9)	-	NA
Accumulated Undistributed Dividends (Note 4)		(Note 9)	-	NA
Return on Investment
Price/Earnings Ratio(Note 5)		7.69	9.70	NA
Price/Dividend Ratio(Note 6)		(Note 9)	20.14	NA
Cash Dividend Yield Rate(Note 7)		(Note 9)	4.96%	NA

� If surplus or capital reserve is used to increase capital and allotment of shares, the market price and cash dividend information adjusted retrospectively according to the number of shares issued should be disclosed. Note 1: Setting forth the highest and lowest market price per share of common stock for each fiscal year, and calculating each fiscal year's average market price based upon each fiscal year's actual transaction prices and volume.

Note 2: Using the number of the outstanding issued shares at year-end as the basis to calculate and the result of distribution resolved by the shareholders’ meeting for the next year.
Note 3: If any retroactive adjustment is necessary due to circumstances such as dividend distributions, the earnings per share before after adjustments should be listed.
Note 4: If the terms and conditions of the issuance of equity securities indicate that the dividends not distributed in the current year can be accumulated until the year when there is a surplus and then distributed, any cumulated and unpaid dividends up to the current year their amount shall be disclosed separately.

Note 5: Price-earnings (P/E) ratio = Average closing price per share for the current year / Earnings per share Note 6: Price-dividend (P/D) ratio = Average closing price per share for the current year / Cash dividends per share Note 7: Cash dividend yield = Cash dividends per share / Average closing price per share for the current year

Note 8: Net value per share and earnings per share refer to the information during the most recent quarter up to the date of publication of the annual report audited (reviewed) and attested by a CPA. The remaining fields should be filled with information during the current fiscal year up to the date of publication of the annual report.

Note 9: Earnings distribution for the year 2020 has not yet been ratified at the stockholders’ meeting as of the reporting date.

4.1.6 Dividend Policy and Earnings Distribution Implementation Status

4.1.6.1 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.

124 Central Reinsurance Corporation Annual Report 2020

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.

4.1.6.2 Earnings Distribution Implementation Status

On March 18, 2021, the Board of Directors proposed that cash dividends for the distribution of earnings 2020 was $1.3 in dollars per share. Earnings distribution for the year 2020 will be submitted to the general meeting of shareholders on May 28, 2021 for discussion.

4.1.6.3 When a major change in the dividend policy is expected, it should be explained: None
4.1.7 The effect of the dividend distributions proposed by the Company’s shareholders’ meeting upon the Company’s business performance and earnings per share:

The Company has not prepared the 2021 financial forecast, so it does not apply.

4.1.8 Compensation of employees and directors:

4.1.8.1 The percentages or ranges with respect to employee and director compensation, as set forth in the Company's Articles of Incorporation
According to the Articles of Incorporation, minimum 0.5% of profit of the current year distributable as employees’ compensation and not exceed 1% of profit of the current year distributable as remuneration of Directors shall be distributed when the Company have profit. However, the Company’s accumulated losses shall have been covered before distributing employees’ compensation and remuneration of Directors by the aforementioned principles. Employees’ compensation may be distributed in the form of shares or in cash; Remuneration of Directors shall be distributed in the form of cash only.

The profit set out in the first Paragraph is meaning thereto income before income tax of the current year including the profit of employees’ compensation and remuneration of Directors.

The amount of payment of the employees’ compensation and the remuneration of Directors and the distribution manner of the employees’

Central Reinsurance Corporation Annual Report 2020 125

compensation shall be adopted by a majority vote at a meeting of the Board of Directors attended by two-third of the total number of directors and then to be reported to the shareholders meeting.

4.1.8.2 The basis for estimating the amount of employee and director compensation, calculating the number of shares to be distributed as employee compensation, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure the current period.
(1) The amount of the employees’ compensation of the Company for the year of 2020 is within the range specified in the Articles of Association, based on the profit and a certain ratio of previous distribution, estimated at NT$ 16,287,969, and the amount of the directors’ compensation is based on the profit and the previous distribution experience during the tenure, estimated at NT$ 4,850,000. If there is a discrepancy between the actual amount and the estimated amount, it shall be listed as the profit or loss for the year of distribution.
(2) The basis for calculating the number of shares to be distributed as employee compensation: None.
4.1.8.3 Information on any approval by the board of directors of distribution of compensation:
(1) The amount of any employee compensation distributed in cash or stocks and compensation for directors, and, if there is any discrepancy between that amount and the estimated figure for the fiscal year, these expenses are recognized, the discrepancy, its cause, and the status of treatment shall be disclosed.

The Company’s resolution adopted by the 8th meeting of the 18th board of directors on March 18, 2021 was that the employees' compensation for the year of 2020 was NT$ 16,287,969 and directors' compensation was NT$ 4,850,000 and that both were distributed in cash. There is no discrepancy between the aforementioned amounts resolved by the board of directors and the amount recognized in the 2020 financial reports.

126 Central Reinsurance Corporation Annual Report 2020

(2) The amount of any employee compensation distributed in stocks and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee compensation: None.
4.1.8.4 The actual distribution of employee and director compensation for the previous fiscal year (with an indication of the number of shares, monetary amount, and stock price, of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized employee or director compensation, additionally the discrepancy, cause, and how it is treated.

The Company’s actual distribution in cash for the fiscal year of 2019 was NT$11,727,864 for employees’ compensation and NT$3,900,000 directors’ compensation. There is no discrepancy between the distributed amount and the amount resolved by the board of directors.

4.1.9 Status of a company repurchasing its own shares: None.

4.2 Corporate Bonds

None.

4.3 Preferred Stock

None.

4.4 Global Depository Receipts

None.

4.5 Employee Stock Options

None.

4.6 Employee Restricted Stock

None.

4.7 Status of New Shares Issuance in Connection with Mergers and

Acquisitions

None.

Central Reinsurance Corporation Annual Report 2020 127

4.8 Financing Plans and Implementation

As of the quarter preceding the date of publication of the annual report, for each uncompleted public issue or private placement of securities, and for such issues and placements that were completed in the most recent 3 years but have not yet fully yielded the planned benefits: None.

128 Central Reinsurance Corporation Annual Report 2020

5. BUSINESS OPERATIONS OVERVIEW

5.1 Business Activities

5.1.1 Business Scope

According to Article 2 of the Company’s Articles of Incorporation, the Company’s business type is listed as "H501031 Reinsurance Industry".

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
Year Item	2020		2019
	Amount	Percentage (%)	Amount	Percentage (%)
Domestic Non-Life Business	11,665,768	63.38	10,596,666	63.25
Domestic Life Business	2,939,848	15.96	2,924,982	17.45
Subtotal	14,605,616	79.34	13,521,648	80.70
International Non-Life Business	3,745,210	20.35	3,168,119	18.91
International Life Business	57,029	0.31	65,761	0.39
Subtotal	3,802,239	20.66	3,233,880	19.30
Total	18,407,855	100.00	16,755,528	100.00

5.1.1.2 Breakdown by Line

NT$ thousands

5.1.1.2 Breakdown by Line NT$thousands	5.1.1.2 Breakdown by Line NT$thousands	5.1.1.2 Breakdown by Line NT$thousands	5.1.1.2 Breakdown by Line NT$thousands	5.1.1.2 Breakdown by Line NT$thousands
Gross Premium Written
Year Line	2020		2019
	Amount	Percentage (%)	Amount	Percentage (%)
Automobile	5,058,767	27.48	4,637,663	27.67
Compulsory Automobile Liability	1,530,607	8.31	1,515,417	9.04
Compulsory Motorcycle liability	1,069,570	5.81	1,056,176	6.30
Fire	3,780,347	20.54	2,932,013	17.50
Residential Earthquake	70,526	0.38	68,333	0.41
Marine Cargo	485,040	2.63	538,743	3.22
Marine Hull	361,929	1.97	309,117	1.84
Fish Vessel	84,064	0.46	88,452	0.53
Aviation	19,965	0.11	23,226	0.14
Miscellaneous Casualty	2,412,122	13.10	2,145,618	12.81
Engineering	538,041	2.92	450,027	2.69
Life	2,279,334	12.38	2,292,926	13.68

Central Reinsurance Corporation Annual Report 2020 129

Gross Premium Written

Gross Premium Written	Gross Premium Written	Gross Premium Written	Gross Premium Written	Gross Premium Written
Year Line	2020		2019
	Amount	Percentage (%)	Amount	Percentage (%)
Personal Accident	170,900	0.93	160,130	0.96
Health	546,643	2.97	537,687	3.21
Total	18,407,855	100.00	16,755,528	100.00

5.1.1.3 New Products, Potential Customers and Markets

Domestic Non-Life Business

The government has been actively encouraging the non-life insurers to develop new policies and underwrite the risk on agriculture insurance. Non-life insurers also diligently develop new personal insurance products to remain competitive. To facilitate its business development, the Company will also provide timely services to its clients in various aspects including new product design, underwriting techniques training and claim consultancy services.

Domestic Life Business

The protection product policy enhanced by the authority, aging population and low birth rate in the country will drive up the demand for protection life products, medical and long-term care insurance products. Product development and sales for related life and 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� providing information on incidence rates, etc.

International Non-life Business

For International business, China, Japan, South Korea and Europe are its core markets and the Company prudently expands business in ASEAN, U.S. and India markets. On the other hand, the Company keeps exploring other potential market to diversify and optimize its portfolio.

130 Central Reinsurance Corporation Annual Report 2020

5.1.2 Industry Overview

5.1.2.1 Current status and development of the industry

Market Player

According to statistics released by the Insurance Bureau at the end of 2020 (Table 1), there were 53 insurance companies in Taiwan, of which 27 were life insurance companies, 23 were non-life insurance companies and 3 were reinsurance companies. Out of the 27 life insurance companies, 23 were domestic companies while 4 were branches of foreign companies. The 23 non-life insurance companies include 17 domestic and 6 foreign companies.

Table 1: Number of Insurance Companies in Taiwan over the Past Five Years

companies.	companies.	companies.	companies.	companies.	companies.	companies.	companies.	companies.	companies.	companies.	companies.	companies.	companies.
Table 1: Number of Insurance Companies in Taiwan over the Past Five Years
Year	Total	Rein- surance	OIU*		Non-Life Insurance					Life Insurance
					Local		Foreign			Local		Foreign
				Headquarter	Branch	Offshore Branch	Branch in Taiwan	Liaison Office in Taiwan	Headquarter	Branch	Offshore Branch	Branch in Taiwan	Liaison Office in Taiwan
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
2018	55	3	20	17	167	8	7	7	23	125	12	5	1
2019	54	3	20	17	168	8	7	7	23	125	12	4	1
2020	53	3	20	17	165	7	6	7	23	120	12	4	1

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

Gross Premium Written

The gross premium written of the domestic insurance industry during 2020 was NT$3,352,076 million, 8.01% less than 2019. Non-life insurance gross premium written accounted for NT$188,111 million, a growth of 6.20%. Total life insurance gross premium written was NT$3,163,965 million, 8.73% less than 2019.

NT$ millions

Table 2: Gross Premium Written over the Past Five Years

written was NT$3,163,965 million, 8.73% less than 2019. NT$ millions	written was NT$3,163,965 million, 8.73% less than 2019. NT$ millions	written was NT$3,163,965 million, 8.73% less than 2019. NT$ millions	written was NT$3,163,965 million, 8.73% less than 2019. NT$ millions	written was NT$3,163,965 million, 8.73% less than 2019. NT$ millions	written was NT$3,163,965 million, 8.73% less than 2019. NT$ millions	written was NT$3,163,965 million, 8.73% less than 2019. NT$ millions	written was NT$3,163,965 million, 8.73% less than 2019. NT$ millions
Table 2: Gross Premium Written over the Past Five Years
Year	Insurance Industry		Non-Life Insurance		Life Insurance		Premium Income: Non-Life vs. Life Insurance
	Amount	Growth Rate (%)	Amount	Growth Rate (%)	Amount	Growth Rate (%)
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
2018	3,677,170	2.80	165,611	5.68	3,511,559	2.67	1:21.2
2019	3,643,813	(0.91)	177,130	6.96	3,466,683	(1.28)	1:19.6
2020	3,352,076	(8.01)	188,111	6.20	3,163,965	(8.73)	1:16.8

Source: Taiwan Insurance Institute

Central Reinsurance Corporation Annual Report 2020 131

5.1.2.2 Relevance of the Upstream, Midstream and Downstream Industry

The upstream, midstream, and downstream segments of the insurance industry are reinsurance industry, insurance industry, and insured public, respectively. After non-life and life insurance companies obtain business, besides retaining business according to their own risk tolerance, they may purchase reinsurance from domestic and foreign reinsurance companies directly or through brokers to diversify the risks; therefore, reinsurance companies are the upstream segment of the insurance industry. Similarly, in order for reinsurance companies to diversify the risks and retain most of the business according to their own capacity, they may also purchase reinsurance from domestic and foreign insurance (or reinsurance) companies directly or through brokers. Therefore, retrocessionaires are the upstream segment of the reinsurance industry. The following diagram shows the relations between the upstream, midstream, and downstream segments of the professional reinsurance company (the Company) :

Relation Diagram between Upstream, Midstream, and Downstream Segments of the Professional Reinsurance Company

==> picture [303 x 269] intentionally omitted <==

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

Retrocessionaire Domestic and foreign insurance (or
reinsurance) companies that undertake
retrocession business
Central Reinsurance Corporation
Reinsurer
Other international reinsurance
companies
Domestic and foreign non-life and life
Insurer insurance companies
----- End of picture text -----

==> picture [195 x 149] intentionally omitted <==

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

Upstream Purchase retrocession directly
or through brokers
Midstream Purchase reinsurance
and directly or through brokers
Downstream
----- End of picture text -----

The Company is a professional reinsurance company and undertakes both

132 Central Reinsurance Corporation Annual Report 2020

non-life and life reinsurance business. Business mainly comes from direct insurance companies. Based on the principle of risk diversification, an insurance company reinsures the risks covered under its insurance business to diversify risks. In the event of an insured incident, the Company shares the loss together. Especially, given a great loss of catastrophe event, if reinsurance is not properly arranged, an insurance company may encounter operational concerns. Therefore, the reinsurance industry acts as a stabilizing force in the risk environment to safeguard the sound development of the insurance market.

5.1.2.3 Development trends and competition for the company's products

In view of the impact of the liberalization and internationalization trend of the insurance market, to improve their competitive advantages, all companies are keenly aiming to enhance service quality and reduce operating costs and form business strategies in response to market changes. As such, the developments of the non-life and life insurance policies and the reinsurance market in 2020 are described as follows:

Domestic Non-life insurance market:

In 2020, the written premium of non-life insurance policies was NT$188,111 million, an increase of 6.20% compared to the previous year (Table 3). Overall, the written premium of voluntary automobile insurance increased by NT$6,728 million or 8.79%, because of the stable sales of new cars and the rise of voluntary third party motor liability insurance premium rate caused by increased loss ratio. Secondly, the written premium of fire insurance increased by NT$3,214 million or 12.42%, mainly resulting from the changes in the insurance period of large-scale businesses. In addition, the written premium of miscellaneous property insurance increased by NT$967 million or 17.83%, mainly as a result of the growth of individual comprehensive insurance and mobile phone insurance. In respect of product market share, automobile insurance continued to account for the highest proportion of all classes of insurance. It accounted for 54% of the market share, in which voluntary automobile insurance accounted for 44.26%, and compulsory automobile liability insurance accounted for 9.74%. Secondly, miscellaneous casualty insurance (including engineering insurance, liability insurance, bond insurance, personal accident insurance, health insurance and miscellaneous property

Central Reinsurance Corporation Annual Report 2020 133

insurance, etc.) accounted for 26% of the market share. Fire insurance, marine insurance and aviation insurance accounted for 15.47%, 4.10% and 0.43% of the market share, respectively.

Table 3: Premium income, Growth rate, and market share of non-life insurance

		Unit: 100 million of NT$; %	Unit: 100 million of NT$; %	Unit: 100 million of NT$; %
Year		2020		2019


	Direct	Growth Rate	Market	Direct Written
	i
Type of Insurance	Wrtten	%	Share %	Premium
	Pi
	remum

Fire	290.96	12.42	15.47	258.82
Marine	77.10	8.26	4.10	71.22
Marine Cargo	47.72	(0.02)	2.54	47.73
Marine Hull	18.05	36.02	0.96	13.27
Fishing Vessel	11.33	10.86	0.60	10.22
Automobile	1,015.86	7.32	54.00	946.53
Voluntary Automobile	832.68	8.79	44.26	765.40
Compulsory Automobile	183.18	1.13	9.74	181.13
Aviation	8.08	14.12	0.43	7.08
Miscellaneous Casualty	489.11	0.30	26.00	487.65
Engineering	71.35	6.13	3.79	67.23
Liability	132.85	(1.73)	7.06	135.19
Bond & Credit	8.73	(6.43)	0.46	9.33
Miscellaneous Property	63.90	17.83	3.40	54.23
Personal Accident	184.97	(3.68)	9.84	192.04
Health	27.31	(7.83)	1.45	29.63
Total	1,881.11	6.20	100.00	1,771.30

Data source: Taiwan Insurance Institute

In terms of non-life insurance loss in the past two years, the total direct insurance loss amount of the non-life insurance industry in 2020 was NT$89,876 million, an increase of NT$1,868 million from NT$88,008 million in 2019 (Table 4); the direct loss ratio decreased to 47.78% from 49.69% in 2019. The increase in the loss amount was mainly due to the increase in the automobile insurance loss amount, which increased NT$2,244 million, from NT$45,327 million in 2019 to NT$47,571 million. Among all classes, fishing vessel insurance had the highest loss ratio 99.91%, followed by compulsory

134 Central Reinsurance Corporation Annual Report 2020

automobile insurance, 75.06%.

Table 4: Insurance claim, growth rate, and direct Loss Ratio of non-life insurance

			Unit: 100 million of NT$; % 2019 Direct Loss Ratio % Insurance Claim Direct Loss Ratio % 16.58 56.64 21.88 50.25 40.09 56.29 45.37 24.07 50.43 31.97 7.96 59.98 99.91 8.06 78.86 60.36 597.21 63.09 57.13 453.27 59.22 75.06 143.94 79.47 18.07 0.96 13.56 40.30 185.18 37.97 39.64 21.88 32.54 34.92 50.87 37.63 15.58 3.25 34.83 26.65 17.07 31.48 50.19 81.90 42.65 41.01 10.21 34.46 47.78 880.08 49.69	Unit: 100 million of NT$; % 2019 Direct Loss Ratio % Insurance Claim Direct Loss Ratio % 16.58 56.64 21.88 50.25 40.09 56.29 45.37 24.07 50.43 31.97 7.96 59.98 99.91 8.06 78.86 60.36 597.21 63.09 57.13 453.27 59.22 75.06 143.94 79.47 18.07 0.96 13.56 40.30 185.18 37.97 39.64 21.88 32.54 34.92 50.87 37.63 15.58 3.25 34.83 26.65 17.07 31.48 50.19 81.90 42.65 41.01 10.21 34.46 47.78 880.08 49.69	Unit: 100 million of NT$; % 2019 Direct Loss Ratio % Insurance Claim Direct Loss Ratio % 16.58 56.64 21.88 50.25 40.09 56.29 45.37 24.07 50.43 31.97 7.96 59.98 99.91 8.06 78.86 60.36 597.21 63.09 57.13 453.27 59.22 75.06 143.94 79.47 18.07 0.96 13.56 40.30 185.18 37.97 39.64 21.88 32.54 34.92 50.87 37.63 15.58 3.25 34.83 26.65 17.07 31.48 50.19 81.90 42.65 41.01 10.21 34.46 47.78 880.08 49.69
Year		2020
				2019



	Insurance	Growth Rate	Direct Loss	Insurance	Direct Loss
Type of Insurance
	Claim	%	Ratio %	Claim	Ratio %

Fire	48.25	(8.39)	16.58	56.64	21.88
Marine	38.74	(1.35)	50.25	40.09	56.29
Marine Cargo	21.65	(2.42)	45.37	24.07	50.43
Marine Hull	5.77	(2.19)	31.97	7.96	59.98
Fishing Vessel	11.32	3.26	99.91	8.06	78.86
Automobile	613.21	16.00	60.36	597.21	63.09
Voluntary Automobile	475.71	22.44	57.13	453.27	59.22
Compulsory Automobile	137.50	(6.44)	75.06	143.94	79.47
Aviation	1.46	0.50	18.07	0.96	13.56
Miscellaneous Casualty	197.10	11.92	40.30	185.18	37.97
Engineering	28.28	6.40	39.64	21.88	32.54
Liability	46.39	(4.48)	34.92	50.87	37.63
Bond& Credit	1.36	(1.89)	15.58	3.25	34.83
Miscellaneous Property	17.03	(0.04)	26.65	17.07	31.48
Personal Accident	92.84	10.94	50.19	81.90	42.65
Health	11.20	0.99	41.01	10.21	34.46
Total	898.76	18.68	47.78	880.08	49.69

Data source: Taiwan Insurance Institute

The analysis on market share by company shows that Fubon Insurance still has the highest market share of 23.95%, followed by Cathay Century Insurance, Shinkong Insurance, Tokio Marine Newa Insurance, and MSIG Mingtai Insurance, with a market share of 12.25%, 10.66%, 7.42% and 7.06%, respectively. The top five non-life insurance industry's premium income accounted for more than half of that of the entire industry, which is 61.34%

In addition, the retention ratio analysis shows that the competent authority, from a supervisory policy perspective, is still making vigorous efforts to guide the industry to increase their retention ratio. In response to competition,

Central Reinsurance Corporation Annual Report 2020 135

non-life insurance companies have been adjusting their reinsurance structure with higher retention ratio. Therefore, the retention ratio of non-life insurance companies remains high.

Currently, the government has been progressively promoting agricultural insurance. In response to market competition, the non-life insurance companies continue to develop new individual insurance products. Both will contribute to the total premium income of the non-life insurance business.

Domestic life insurance market:

In 2020, the premium income of life insurance industry was nearly NT$3,163,965 million, a decrease of 8.73%. The business results of life insurance industry during the most recent two years are shown in Table 5:

Table 5: Business Results of the Life Insurance Industry

		Unit:NT$; %
Item	2020	2019
Average sum insured of new business of individual life insurance (NT$10,000)	73.79	59.94
Average sum insured of individual life insurance in force (NT$10,000)	81.74	81.83
Average premium income per individual life insurance policies in force (NT$1,000)	44.46	50.63
Insurance density (NT)	134,287	146,874
Ratio of having insurance coverage (%)	260.49	256.09
Premium income (100 million of NT)	31,639.65	34,666.83
Annual growth rate of premium income (%)	(8.73)	(1.28)

Data source: Figures and calculation results are based on relevant data published by the Taiwan Insurance Institute.

Analysis of premium income source: Life insurance accounted for 75.75%, accident insurance for 2.13%, health insurance for 12.63%, and annuity insurance for 9.49%. In terms of individual and group insurance, individual insurance as the key coverage accounted for 99.28%, and group insurance for 0.72%. The development of each type of insurance: Due to the decrease in liability reserve interest rate, the decrease of interest-sensitive life insurance policies’ declared interest rate, the competent authority’s implementation of declared interest rate stabilization mechanism in July 2020, and the impact from Covid-19, individual life insurance business fell by 11.16% compared with last year, and individual annuity insurance also fell by 4.92%. Accident insurance declined by 0.34% compared to last year, while health insurance

136 Central Reinsurance Corporation Annual Report 2020

grew by 3.53%. As Table 6:

Table 6 Life insurance premium income structure

			Unit: 100 million of NT$; %	Unit: 100 million of NT$; %
Year		2020		2019

	Premium	Growth Rate	Market	Premium

	Income	%	Share %	Income
Type of Insurance

Individual
Life	23,917.28	(11.16)	75.60	26,923.25
Accident	600.58	(0.06)	1.90	600.94
Health	3,895.72	3.66	12.31	3,758.22
Annuity	2,997.06	(4.92)	9.47	3,151.98
Individual Subtotal	31,410.64	(8.78)	99.28	34,434.39
Group
Life	48.72	4.28	0.15	46.72
Accident	73.92	(2.56)	0.23	75.86
Health	101.58	(1.21)	0.32	102.82
Annuity	4.79	(31.96)	0.02	7.04
Group Subtotal	229.01	(1.48)	0.72	232.44
Life Total	23,966.00	(11.14)	75.75	26,969.97
Accident Total	674.50	(0.34)	2.13	676.80
Health Total	3,997.30	3.53	12.63	3,861.04
Annuity Total	3,001.85	(4.98)	9.49	3,159.02
Grand Total	31,639.65	(8.73)	100.00	34,666.83

Data source: Taiwan Insurance Institute

Reinsurance market:

In 2020, there remain three reinsurance companies in Taiwan. Within domestic market, non-life insurance industry has total premium ceded of NT$57,799 million, NT$4,191 million or 7.82% up from NT$53,608 million in 2019. In terms of premium ceded to premium income, the ratio in 2020 is 30.73%, 47 basis points up from 30.26% in 2019. As a whole, the trend of increasing retention ratio from non-life insurance companies will not diminish. Competition in domestic reinsurance market is therefore set to heat up in the future. Meanwhile, life insurance industry has total premium ceded of NT$23,559 million, NT$1,984 million or 9.20% up from NT$21,575 million in 2019. The increase was mainly contributed by the growth in health insurance business. Recently, the government has been encouraging the development of new types of products as well as the sales of protection-type

Central Reinsurance Corporation Annual Report 2020 137

products in order to improve insurance protection and retirement planning for citizens. As a result, protection-type reinsurance market is expected to grow in the future.

Competition situation:

The Company is a professional reinsurance company that has been cultivating Taiwan market for more than fifty years. Cooperating life and non-life reinsurance business with most domestic insurance companies for many years, the Company has built a solid business foundation. In spite of a high penetration in domestic market and a relatively stable market share, the Company still faces challenges of competition from foreign reinsurance companies and the continuous increase in retention from clients.

Various sources show that capacity in global reinsurance market is quite adequate. The global reinsurance market has not suffered particularly severe natural disaster losses since 2013, but the impact of climate change, the increase in global catastrophe loss, and the loss and uncertainty brought by COVID-19 have been affecting underwriting profits of insurance industry recently. The renewal results of this year demonstrate that reinsurers have become more stringent, terms have improved, and rates have shown an upward trend. However, due to sufficient capacity in the market, the market remains competitive.

As "Offshore Banking Act" incorporated insurance business as part of international financial business, the insurance companies are allowed to set up offshore insurance units (OIU), which specialize in foreign currency denominated insurance business, reinsurance business, and other insurance related business approved by the competent authorities. The business income tax exemption from OIU brings advantages to the Company for operating overseas business.

138 Central Reinsurance Corporation Annual Report 2020

5.1.3 Research and Development

A listing of research and development expenditures by the company during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report: None.
A listing of technologies and/or products successfully developed during the most recent fiscal year or the current fiscal year up to the date of publication of the annual report: None.
Future research and development plans and expected research and development expenditures:
The Company has invested considerable human resources and costs over the years and has continuously introduced new services to meet customers' reinsurance needs. However, the Company mainly provides intangible reinsurance services; therefore, R&D investment is not applicable.
Whether the company has laid down an intellectual property management plan linked to operational goals: The Company is in reinsurance industry, mainly undertaking insurance risks arising from insurance products developed by direct insurance companies. Based on the industry's characteristics, there is neither additional intellectual property management plan nor trademark authorization.

5.1.4 Long-Term and Short-Term Business Development Plans

- Long Term Business Development Plan

The Company is committed to becoming the " The Best Professional Reinsurer in Asia " . To achieve this goal, the following long-term business plans have been established:

(1) Optimize the advantage of a domestic establishment; provide professional services to continuously strengthen the breadth and depth of the domestic market.
(2) Steadily expand the international market; continuously elevate the operational standards; increase the geographic diversity of the business portfolio, strengthen accumulated risk control and ensure pricing adequacy to enhance and quality of our overseas business.
(3) Regard customer needs and increase service effectiveness to improve

Central Reinsurance Corporation Annual Report 2020 139

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) Instill compliance and internal audit/control procedures; focus on risk management; strengthen corporate governance.
(6) Fulfill corporate social responsibilities; achieve sound ethical corporate management to facilitate the continuous development of the insurance market.
(7) Reinforce talent development and improve professions to widen the breadth of business development.

Short-Term Business Development Plan

When developing the business plans, the Company always upholds the principles of " Focusing on both quality and quantity; pursuing constant business growth " . While carefully monitoring its service quality, the Company also exercises good control on various risks to ensure continuous profit growth as well as steady operational performance. The 2021 business development plans for the Company’s respective business are highlighted below:

(1) Domestic Reinsurance Business
Abide by underwriting disciplines and exercise proper control over accumulated catastrophe risks to ensure stable underwriting profit.
Actively strive for high-quality business, leverage the Company’s marketing advantages in the local market, regard customer needs, provide tailored services and continuously expand the breadth and width of our local market.
Support the facultative reinsurance for our clients to tighten the business relationship, thereby increasing treaty reinsurance opportunities.
Arrange pro rata retrocession to transfer the assumed property catastrophe risk, thereby expanding underwriting capacity and reducing the retrocession cost of our catastrophe cover.
Provide professional services to maintain good and close customer relationship; improve the professional image and marketing advantage of

140 Central Reinsurance Corporation Annual Report 2020

the company by organizing various events, including: professional seminars, consulting services on actuarial know-how and regulatory requirements, assistance on new product development and pricing as well as experience sharing platform for industry.

Constantly grasp the new product trend, the development of InsurTech as well as changes in regulations or policies to seize business opportunities.
Within the Company’s risk appetite, continuously support the development of business initiated by the government in response to the implementation of ESG.
(2) International Reinsurance Business
Prudently expand international business and further diversify the risk of geographical concentration and product line to increase the efficiency of capital utilization as well as reduce the volatility of business results.
Aim for underwriting profit oriented; periodically monitor the business performance to eliminate underperforming contracts.
Increase direct business; in the meantime develop the small and medium size niche market so as to elevate the transparency of underwriting information and identify opportunities for further profit-making.
Develop high-quality facultative reinsurance business through strengthening employees’ professional expertise in underwriting to enhance the depth and breadth of business as well as profitability.
Design suitable retrocession programs on areas or portfolios with higher catastrophe risks to reduce the fluctuation in business performance and allow domestic insurance unit to undertake the international business with more fluctuations to enhance underwriting capacity and risk management benefits.
(3) Fund utilization

The Company will continue to follow a prudent investment strategy, accompanied by strict risk control. Through strengthening asset quality as well as capital utilization, the Company aims for pursuing stable returns in order to support the sustainable development of reinsurance business.

Central Reinsurance Corporation Annual Report 2020 141

5.2 Market and Sales Overview

5.2.1 Market Analysis

5.2.1.1 Breakdown by Region

	NT$ thousands	NT$ thousands	NT$ thousands	NT$ thousands
Year Region	2020		2019
	Amount	Percentage (%)	Amount	Percentage (%)
Domestic Inward Business	14,605,616	79.34	13,521,648	80.70
Overseas Inward Business	3,802,239	20.66	3,233,880	19.30
Total	18,407,855	100.00	16,755,528	100.00

5.2.1.2 Market Share

In Taiwan market, our market share at the end of 2020 is as follows.

In Taiwan market, our market share at the end of 2020 is as follows.	In Taiwan market, our market share at the end of 2020 is as follows.	In Taiwan market, our market share at the end of 2020 is as follows.
NT$millions
Year Item	Non-Life Insurance	Life Insurance
Written Premium	188,111	3,163,965
Outward Premium	57,799	23,559
Cession Rate(%)	30.73	0.74
Central Re’s Inward	11,666	2,940
Our Market Share(%)	20.18	12.48

Source: Taiwan Insurance Institute

5.2.1.3 Market Development

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 2021, reasonable underwriting profit is predicted subject to that there is no major large loss in the market.

Domestic Life Business

The authority promulgated the “Directions Governing the Minimum Ratio of Death Benefit to Policy Value (Account Value) Regarding the Life Insurance Products” and amended the “Directions for the Review of Life Insurance

142 Central Reinsurance Corporation Annual Report 2020

Products,” both of which took effect from July 1, 2020. The authority took these measures in order to: (a) ensure the sound development of insurance firms; (b) promote more diversified insurance protections, and ensure that insurance fulfills its function of providing the public with peace of mind; and (c) help insurers adopt the International Financial Reporting Standards 17.

It is hoped that insurers will provide a certain degree of protection against death risk, adjust product structure to increase protections and reduce the percentage of savings-type insurance policies. We expect the key products to shift to protection life insurance, unit-linked products, and health insurance in response to the medical protection needs for retirement, long-term care and advanced medical treatments. The rising demand for protection products will increase the product diversity and contribute to the growth of reinsurance business.

International Non-life Business

After frequent catastrophes in recent years and last year’s pandemic, global reinsurers have gradually managed to improve the pricing and underwriting. Following the surge of COVID-19 pandemic-related claim disputes, the demand/supply of traditional underwriting capacity is expected to change slightly in the short term. Nevertheless, reinsurance demand for solutions to cope with the challenges from climate change, cyber risk, and business interruption is expected to continue growing.

5.2.1.4 Competitive niche:

According to domestic market research reports, the main considerations for non-life and life insurance companies in selecting reinsurance companies are: (1) credit rating, (2) services provided, and (3) long-term and stable partnership. The analysis of the Company’ qualifications for these three aspects are as follows:

(1) Increased financial strength and excellent credit ratings:

After capital increases several times, the Company’s paid-in capital went from NT$ 15 million when it was established, with more than 50 years of development, to NT$5,904 million by the end of 2020, which is close to the authorized capital of NT$6,000 million. In addition, in order to build a solid financial foundation and strengthen its solvency capacity, the Company provides adequate reserves based on business

Central Reinsurance Corporation Annual Report 2020 143

situations.

The international credit rating agency A.M. Best and S&P Global Ratings have given the Company a credit rating of A and a stable rating outlook based on the Company’s long-term and good partnership with domestic insurance companies, solid domestic market position, strong capital adequacy and satisfactory operating performance. Also, Taiwan Ratings Corporation has given the Company a credit rating of twAA+.

Having an excellent credit rating will contribute to the operation and development of good-quality business and fully demonstrate that the Company can realize its commitment to customers with strong solvency.

(2) Provide customers with diversified services:

In recent years, the Company has continued to provide diversified services to the insurance market, including:

Providing capacity for reinsurance market and meeting customized reinsurance needs;
Assisting customers in the design and development of new products;
Providing the market with the Company's experience and achievements in developing risk management;
Providing timely training for underwriting and claims skills as well as regulatory and actuarial consulting services;
To closely suit the needs of customers, strengthen customer service and enhance its professional image, the Company has held a series of "Life Insurance Underwriting and Claims Seminars" in 2020 including Risk Characteristics of Various Types of Health Insurance, Sleep Disorders and Sleep Apnea, Interpretation of Laboratory Values, Interpretation of Pathology Reports, Lecture of Interpretation of Medical Records (How to Understand a Pile of Medical Records)

The Company has organized various professional seminars to satisfy our clients’ needs for years. Participants were given the opportunities to discuss on the market status and future trends,

144 Central Reinsurance Corporation Annual Report 2020

share information and improve their expertise. The courses and seminars also contributed to the tightening of client relationship for the Company.

(3) Keep long-term close partnership with customers

The Company has been established for more than 50 years and is the only professional reinsurance company founded in Taiwan. Based on long-term cooperative relationships, the Company has established a profound partnership with domestic non-life and life insurance companies, working together in prosperity for mutual trust and mutual benefit. The Company upholds a sound operation and a positive attitude of proactively responding to customers’ needs, observing the reinsurance market's development trend to timely respond to customers’ needs, aggressively proposing appropriate reinsurance business model, and providing customers with an optimal reinsurance solution.

5.2.1.5 Positive and negative factors for future development, and the company's response to such factors:

(1)Positive factors:

Upgrading credit ratings:

For the Company’s financial strength rating, since 2010, the international credit rating agency A.M.Best raised the Company’s credit rating to A. In 2013, the international credit rating agency S&P Global Ratings also upgraded its credit rating to A. It shows that international credit rating agencies have highly recognized the Company's long-term sound and good operating performance. A good credit rating will definitely help the Company to expand its business and strive for high-quality business.

Long-term steady customer relationship and market position Good customer relationships are critical to reinsurance business operations. As the Country's only professional reinsurance company, the Company's business development with customers in Taiwan is based on a long-term and good cooperative relationship.
Maintain a sufficient level of capacity

Central Reinsurance Corporation Annual Report 2020 145

In recent years, the Company has progressively accumulated various liability reserves and expanded the capital base. Currently, the special reserve under liabilities has accumulated about NT$3,500 million, and the equity before distribution of dividends in 2020 was NT$13,409 million, with a retention capacity remaining at a sufficient level.

The competent authority has successively lifted restrictions on the use of funds in the insurance industry in recent years.
The competent authority allows the insurance industry to set up an Offshore Insurance Unit (OIU) and provides business income tax exemption for operating overseas business.
(2) Negative factors:
The growth of domestic reinsurance demand is limited. The fiercer market competition, the minor underwriting profits: As domestic insurance companies continue to maintain a high retention rate, the government is also making a vigorous effort to open up foreign reinsurers and insurance brokers to come to Taiwan for commencing business and set up branches, making the reinsurance market more competitive, market grapple with oversupply, and underwriting profits even thinner.
At the beginning of 2020, affected by the novel coronavirus pneumonia (COVID-19), the global economy fell into recession. Looking forward to 2021, vaccines have been released one after another, and the epidemic is expected to be gradually under control. However, the world will still face (1) the prevalence and effectiveness of vaccines (2) how the central bank of each country response to monetary easing policies (3) new policies of the new Biden administration (4) uncertain factors such as whether the economy of each country will be recovered as expected. Predictably, it will still be challenging to operate in the future financial market.
(3) The company's response to such factors:
In response to the domestic market's competitive environment,

146 Central Reinsurance Corporation Annual Report 2020

the Company keeps up with market development and customers’ needs. It actively provides reinsurance underwriting capacity for new types of insurance in the industry, thereby increasing new assumed reinsurance business while strengthening the non-proportional reinsurance pricing ability to cater to changes in customers’ reinsurance needs and offering excess of loss reinsurance protection. Furthermore, the Company zeros in on the customers’ needs, improving customer service with customized services and timely assisting customers in new product design, training for underwriting and claims skills and regulatory and actuarial consulting services, etc., which will enhance the company's overall marketing advantage and create opportunities and a platform for expanding high-quality business. Meanwhile, it continuously cultivates and engages insurance professionals and marketing talents, promoting the Company's high-quality professional brand and image.

Taiwan is still the main market for the Company to develop non-life and life insurance business. However, in view of diversifying geographic concentration risks and expanding the scale of operations, we will continue to steadily develop the international market, and within the risk tolerance of each region instituted by the Company, expand foreign treaty and facultative reinsurance with caution to increase the source of underwriting profits and strengthen the efficiency in utilization of the funds.
Given the circumstances that the volatility will get higher in the financial market for the future, credit safety will still be the top concern for the Company's use of funds. The best investment choice is the one with a high credit rating, which provides the principal's safety. Also, the exchange rate dynamic hedging is adopted for foreign investment positions to conduct exchange rate hedging better depending on market dynamics, thereby effectively reducing the cost and increasing the effectiveness of hedging. With moderate investment strategies and accompanied by rigorous risk control, the Company’s goal is to pursue safe and stable

Central Reinsurance Corporation Annual Report 2020 147

income while supporting the reinsurance business's sustainable development.

5.2.2 Main product applications and production processes:

(1) Main products applications:

The Company mainly undertakes reinsurance business in Taiwan. After retaining certain amounts, the Company will cede the reinsurance to domestic insurance companies preferentially and the remaining to foreign insurance companies in exchange for reinsurance ceded opportunity. Therefore, such retrocession arrangement can not only diversify the geographical accumulation risk but also stabilize the sound development of insurance market.

(2) Manufacturing processes: Not applicable.

5.2.3 Status of supply of the company's major raw materials:

Not applicable to the reinsurance industry.

5.2.4 Main customers who account for over 10% of total sales in recent 2 year and their individual purchase amounts and share:

For main customers who account for over 10% of total sales in recent 2 year, there have been no significant changes in the amounts and the percentage. With respect to statistics on net sales amount, it is not applicable to the reinsurance industry.

148 Central Reinsurance Corporation Annual Report 2020

The Net Sales for Main Customers in recent 2 year

								Unit: Thousands of NT$;%	Unit: Thousands of NT$;%	Unit: Thousands of NT$;%	Unit: Thousands of NT$;%
								As of the last quarter of 2020
	2020				2019
								(Note 2)

								Name	Amount	Percentage
										of the net
			Relationship				Relationship			sales as of	Relationship
		Percentage of				Percentage
Name			with the				with the			the	with the
	Amount	the net sales		Name	Amount	of the net
			issuer (the				issuer (the			preceding	issuer (the
		(%)				sales (%)
			Company)				Company)			quarter for	Company)

										the current
										year
The non-life insurance Association of the Compulsory Motor insurance Pool	2,600,177	14.13	None	The non-life insurance Association of the Compulsory Motor insurance Pool	2,571,593	15.35	None	Note 2
Other	15,807,678	85.87	None	Other	14,183,935	84.65	None
Net Sales	18,407,855	100.00	-	Net Sales	16,755,528	100.00	-

Note 1: In respect of a list for main customers who account for over 10% of total sales in recent 2 year and their individual purchase amounts and share, if the customer’s name should not be disclosed as agreed upon in the contract or the party in the transaction is an individual and is not a related party, a client code may be used.
Note 2: Before the date of publication of the annual report, there is no financial data for the most recent period audited and attested or reviewed by a CPA.
5.2.5 An indication of the production volume for the 2 most recent fiscal years: Not applicable to the reinsurance industry.
5.2.6 An indication of the volume sold for the 2 most recent fiscal years: List the reinsurance premium income taken by the Company.

NT$ thousands

	Domestic		International
Item		Domestic Life		International
	Non-Life		Non-Life		Total
Year		Business		Life Business
	Business		Business

2019	10,596,666	2,924,982	3,168,119	65,761	16,755,528
2020	11,665,768	2,939,848	3,745,210	57,029	18,407,855

Central Reinsurance Corporation Annual Report 2020 149

5.3 Human Resources

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

Year	Year	2020	2019	Data as of March 30,2021
Number of Employees		139	139	137
Average Age		40.24	40.42	40.30
Average Years of Service		10.75	10.36	11.04
Education (%)	Masters	41.01	41.73	40.15
	University or College	58.27	57.55	59.12
	Others	0.72	0.72	0.73

Note: The number of full-time employees includes 1 person, who took leave without pay till March 30, 2021.

5.4 Information on Environmental Protection Expenditure

The Company operates in reinsurance business, which is free of environmental pollution. As of the date of publication of the annual report, the Company has not violated relevant environmental laws or regulations.

5.5 Labor Relations

5.5.1 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.

Employee benefit plans:

(1) Leave Policies: According to the Labor Standards Act, employees are entitled to annual leave.
(2) Employee Insurances: Employees are covered by labor insurance, national health insurance, group personal accident insurance and travel insurance on overseas business trips.
(3) Health Care: The Company offers employee physical examination programs on a regular basis to ensure the physical health of its employees (including physical examination for new employees).
(4) On-job training and Continuing education: The Company encourages its employees to elevate their professional abilities. In 2020, it totals 396

150 Central Reinsurance Corporation Annual Report 2020

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. Employees are granted paid official leaves for attending relevant examinations, as well as full-amount subsidy for the enrollment fee. Please refer to page 7 for details.

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

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.

Labor-management agreement:

Central Reinsurance Corporation Annual Report 2020 151

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.

Measures for preserving employees’ rights and interests:

The Company sets forth the human resource regulations in accordance with 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.

5.5.2 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.

5.5.3 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,

152 Central Reinsurance Corporation Annual Report 2020

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 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.

5.5.4 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 2020.
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 2020 was completed on December 28. A disaster

Central Reinsurance Corporation Annual Report 2020 153

reporting system has been established to minimize the loss.

The Company has established its Regulations for Energy Saving and Carbon Reduction to fulfill its environmental protection objectives. Regular inspections are conducted to monitor the carbon dioxide concentration in the offices. Water quality test on drinking machines 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.

5.6 Important Contracts

5.6.1 Non-Life Business

Type of Contract	Counterparty	Period	Major Contents	Restrictions
Reinsurance Contracts	Domestic and overseas non-life insurance companies	2020.1.1-2020.12.31 2021.1.1-2021.12.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
	Overseas non-life insurance companies	2020.4.1-2021.3.31 2021.4.1-2022.3.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
Retrocession Contracts	Domestic and overseas non-life insurance companies	2020.1.1-2020.12.31 2021.1.1-2021.12.31	Non-life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas non-life reinsurance companies	2020.1.1-2020.12.31 2021.1.1-2021.12.31	Non-life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas non-life reinsurance companies	2020.1.1-2020.12.31 2021.1.1-2021.12.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
	Overseas non-life reinsurance companies	2020.4.1-2021.3.31 2021.4.1-2022.3.31	Non-life reinsurance inward businesses	Some contracts include exclusion clauses
Catastrophe Reinsurance Contracts	Overseas non-life reinsurance companies	1. 2020.2.1-2021.1.31 2021.2.1-2022.1.31 2. 2020.2.1-2021.2.28 2021.3.1-2022.2.28	To protect our domestic net retention excess catastrophe losses	The contracts include exclusion clauses
	Overseas non-life reinsurance companies	2020.2.1-2021.4.30 2021.5.1-2022.4.30	To protect our overseas net retention excess catastrophe losses	The contracts include exclusion clauses

154 Central Reinsurance Corporation Annual Report 2020

5.6.2 Life Business

Type of Contract	Counterparty	Period	Major Contents	Restrictions
Reinsurance Contracts	Domestic and overseas life insurance companies	2020.1.1-2020.12.31 2021.1.1-2021.12.31	Life reinsurance inward businesses	Some contracts include exclusion clauses
Retrocession Contracts (Non-Cat)	Domestic life insurance companies	2020.1.1-2020.12.31 2021.1.1-2021.12.31	Life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas life reinsurance companies	2020.1.1-2020.12.31 2021.1.1-2021.12.31	Life reinsurance outward businesses	Some contracts include exclusion clauses
	Overseas life reinsurance companies	2020.4.1-2021.3.31 2021.4.1-2022.3.31	Life retrocession inward businesses	Some contracts include exclusion clauses
Catastrophe Reinsurance Contracts (Cat)	Overseas life reinsurance companies	2020.2.1-2021.1.31 2021.2.1-2022.1.31	To protect our domestic net retention excess catastrophe losses	The contracts include exclusion clauses

Central Reinsurance Corporation Annual Report 2020 155

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

Condensed Balance Sheets:

Condensed Balance Sheets:	Condensed Balance Sheets:
							NT$ thousands
Year Items		From 2016 To 2020 (Note 1)					01/01/2021 ~03/30/2021 (Note4)
		2020	2019	2018	2017	2016
Cash and Cash Equivalents		15,001,586	12,603,772	17,745,305	16,772,180	15,588,709	NA
Account Receivable		454,002	325,191	280,768	281,681	116,044	NA
Financial Assets (Note 3)		19,081,388	19,595,470	13,408,611	14,417,155	12,908,694	NA
Reinsurance Contract Assets		6,065,459	5,066,416	4,216,071	3,726,066	3,624,254	NA
Property and Equipment		206,513	204,631	204,778	206,745	208,193	NA
Intangible Assets		5,240	8,866	5,186	922	2,480	NA
Other Assets		1,899,400	1,357,677	1,429,431	1,105,672	1,139,858	NA
Total Assets		42,713,588	39,162,023	37,290,150	36,510,421	33,588,232	NA
Account Payable		420,922	456,543	309,813	409,870	317,140	NA
Financial Liabilities (Note 3)		32,440	10,095	3,655	13,290	25,879	NA
Insurance Liabilities		28,491,167	26,234,743	25,565,926	24,430,514	23,594,638	NA
Provisions		779	18,011	18,789	21,013	3,142	NA
Other Liabilities (Note 3)		359,043	413,508	193,731	384,262	148,224	NA
Total Liabilities	Before Distribution	29,304,351	27,132,900	26,091,914	25,258,949	24,089,023	NA
	After Distribution	(Note 2)	27,664,250	26,623,264	25,821,224	24,370,161	NA
Capital		5,903,888	5,903,888	5,903,888	5,622,750	5,622,750	NA
Capital Reserve		300,000	300,000	300,000	300,000	300,000	NA
Retained Earnings	Before Distribution	6,635,437	5,654,071	5,081,189	4,943,231	3,834,455	NA
	After Distribution	(Note 2)	5,122,721	4,549,839	4,099,818	3,553,317	NA
Other Equity		569,912	171,164	(86,841)	385,491	(257,996)	NA
Total Equity	Before Distribution	13,409,237	12,029,123	11,198,236	11,251,472	9,499,209	NA
	After Distribution	(Note 2)	11,497,773	10,666,886	10,689,197	9,218,071	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 2020 has not yet been ratified at the stockholders’ meeting as of the reporting date.

156 Central Reinsurance Corporation Annual Report 2020

(1)Financial assets from 2016 to 2017 include Financial assets at fair value through profit or loss, Available-for-sale financial assets, Investments in debt instrument without active market, Held-to-maturity financial assets, Other financial assets and Investment property; financial assets from 2018 to 2020 include Financial assets at fair value through profit or loss, Financial assets at amortized cost, Other financial assets and Investment property.
(2)Other assets include Right-of-use assets, Current tax assets, Deferred income tax assets, and other assets recognized.
(3)Financial liabilities are financial liabilities at fair value through profit or loss.
(4)Other liabilities include Lease liabilities, Current tax liabilities, Deferred income tax liabilities, and other liabilities recognized.
As of the reporting date, the Company did not have the latest financial information audited or reviewed by CPA for the current year.

Condensed Statement of Comprehensive Income:

					NT$ thousands	NT$ thousands
Year Items		From 2016 To 2020 (Note 1)				01/01/2021 ~03/30/2021 (Note3)
	2020	2019	2018	2017	2016
Operating Revenue	17,656,923	16,092,924	14,871,535	14,599,949	13,444,095	NA
Gross Profit	2,189,794	1,862,208	1,747,736	2,066,838	1,223,947	NA
Net Operating Income	1,786,314	1,507,236	1,377,055	1,693,217	913,911	NA
Non-Operating Income and Expenses	2,322	275	42	940	(1,190)	NA
Income from Continuing Operations before Tax	1,788,636	1,507,511	1,377,097	1,694,157	912,721	NA
Income from Continuing Operations after Tax	1,515,729	1,104,125	1,050,071	1,389,459	765,790	NA
Net Income	1,515,729	1,104,125	1,050,071	1,389,459	765,790	NA
Total Other Comprehensive Income for The Year(after tax)	395,735	258,112	(547,439)	643,942	(222,469)	NA
Total Comprehensive Income for The Year	1,911,464	1,362,237	502,632	2,033,401	543,321	NA
Earnings per Share(after tax) (NT$)(Note 2)	2.57	1.87	1.78	2.35	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 2020 157

6.1.2 Independent Auditors’ Name and Audit Opinion

Year	CPA Firm	CPA’s Name	Audit Opinion
2020	PricewaterhouseCoopers, Taiwan	Chen, Hsien-I Lee,Hsiu-Ling	Unqualified Opinion
2019	PricewaterhouseCoopers, Taiwan	Chen, Hsien-I Lai,Chung-Hsi	Unqualified Opinion
2018	PricewaterhouseCoopers, Taiwan	Chen, Hsien-I Lai,Chung-Hsi	Unqualified Opinion
2017	PricewaterhouseCoopers, Taiwan	Chen, Hsien-I Lai,Chung-Hsi	Unqualified Opinion
2016	PricewaterhouseCoopers, Taiwan	Chen, Hsien-I Lai,Chung-Hsi	Unqualified Opinion

158 Central Reinsurance Corporation Annual Report 2020

6.2 Financial Analyses for Recent Five Years

Financial Analyses:

Financial Analyses:
Year Items	From 2016 To 2020 (Note 1)					01/01/2021 ~03/30/2021 (Note 2)
	2020	2019	2018	2017	2016
Operating Ability
Changes in Gross Premiums	9.86%	8.86%	5.68%	3.72%	(1.07%)	NA
Changes in Reinsurance Claims Paid	(1.16%)	20.88%	4.88%	(2.42%)	(9.46%)	NA
Changes in Retention Premiums	9.82%	8.49%	4.99%	3.99%	(1.11%)	NA
Equity on Total Assets	31.39%	30.72%	30.03%	30.82%	28.28%	NA
Profitability
Return on Total Assets	3.70%	2.89%	2.85%	3.96%	2.29%	NA
Return on Equity	11.92%	9.51%	9.35%	13.39%	8.13%	NA
Net Investment Gain on Available Fund	2.16%	1.77%	1.10%	2.49%	0.52%	NA
Return on Investments	2.11%	1.73%	1.08%	2.44%	0.51%	NA
Retention Combined Ratio	94.44%	95.21%	94.81%	91.06%	95.28%	NA
Retention Expenses Ratio	28.38%	30.26%	31.41%	31.55%	32.44%	NA
Retention Loss Ratio	66.06%	64.95%	63.40%	59.51%	62.84%	NA
Operating Structure
Retention Premiums on Equity	127.40%	129.32%	128.04%	121.37%	138.25%	NA
Gross Premiums on Equity	137.28%	139.29%	137.45%	129.44%	147.82%	NA
Net Reinsurance Commission on Equity	1.02%	0.92%	0.97%	0.90%	1.10%	NA
Insurance Liabilities on Equity	212.47%	218.09%	228.30%	217.13%	248.39%	NA
Changes in Equity	11.47%	7.42%	(0.47%)	18.45%	1.60%	NA
Expenses Ratio	28.33%	29.91%	31.15%	31.48%	32.34%	NA
Analysis of financial ratio in last two years. (If the difference doesn’t exceed 20%, the analysis is not required) 1. Changes in Reinsurance Claims Paid less than last year�Mainly due to the change in reinsurance claims paid in 2020 less than in 2019. 2. Return on Total Assets and Return on Equity more than last year�Mainly due toNet Incomeincreased in 2020. 3. Net Investment Gain on Available Fund and Return on Investments more than last year�Mainly due to the net investment gain increased in 2020. 4. Changes in Equity more than last year�Mainly due to other comprehensive income upon reclassification of applyingoverlayapproach in 2020 more than in 2019.

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.
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 2020 159

The calculation formula of the analysis item is as follows

Operating Ability
(1)Changes in Gross Premiums = (Accumulated Gross Premiums for the current period – Accumulated Gross Premiums for the prior period ) / Accumulated Gross Premiums for the prior period
(2)Changes in Reinsurance Claims Paid = (Accumulated Reinsurance Claims Paid for the current period –Accumulated Reinsurance Claims Paid for the prior period ) / Accumulated Reinsurance Claims Paid for the prior period
(3)Changes in Retention Premiums = (Accumulated Retention Premium for the current period – Accumulated Retention Premium for the prior period) / Accumulated Retention Premium for the prior period

Retention Premiums = Gross premiums written – Reinsurance premiums ceded

(4)Equity on Total Assets = Total Equity / Total Assets
Profitability
(1)Return on Total Assets = [Income after tax + Interest Expense * ( 1 - tax rate ) ] / Average Total Assets

Average Total Assets = ( Beginning of period Assets + End of period Assets ) / 2

(2)Return on Equity = Income after tax / Average Equity

Average Equity = (Equity for the current period + Equity for the prior period ) / 2

(3)Net Investment Gain on Available Fund = Net Investment Gain for the current period / [ (Beginning of period Available Fund + End of period Available Fund - Net Investment Gain for the current period ) ] / 2
(4)Return on Investments = Net Investment Gain for the current period / [(Beginning of period Assets + End of period Assets - Net Investment Gain for the current period ) / 2 ]
(5)Retention Combined Ratio = Retention Expenses Ratio + Retention Loss Ratio
(6)Retention Expenses Ratio = Retention Expenses / Retention Premiums Retention Premiums = Reinsurance Premium written - Reinsurance premium ceded Retention Expenses = Reinsurance Commission Expenses - Reinsurance Commission Revenue + Overriding Commission Expenses - Overriding Commission Revenue + Selling Expenses + Administration Expenses + Depreciation and Amortization of Own-use Property
(7)Retention Loss Ratio = Retention Reinsurance Claims Paid / Retention Earned Premiums Retention Reinsurance Claims Paid = Reinsurance Claims Paid – Reinsurance Claims Recovery +Net changes in Claims Reserve
Retention Earned Premiums = Gross premiums written - Reinsurance Premiums ceded - Net

160 Central Reinsurance Corporation Annual Report 2020

changes in Unearned Premium Reserve

Operating Structure
(1) Retention Premiums on Equity = Retention Premiums / Equity
(2)Gross Premiums on Equity = Gross premiums written / Equity
(3)Net Reinsurance Commission on Equity = ( Unearned Premium Reserve / Retention Premiums ) * Reinsurance Commission Income / Equity
(4)Insurance Liabilities on Equity = Insurance Liabilities / Equity
Insurance Liabilities = Equalization Reserve + Claims Reserve + Unearned Premium Reserve +Other Reserve
(5)Changes in Equity = (Equity for the current period - Equity for the prior period ) / Absolute Value of Equity for the prior period
(6)Expenses Ratio = Expenses / Reinsurance Premium written Expenses = Reinsurance Commission Expenses + Overriding Commission Expenses + Selling Expenses + Administration Expenses + Depreciation and Amortization of Own-use Property

6.3 Audit Committee’s Review Report

Please refer to page 162.

6.4 Financial Statements and Report of Independent Accountants

Please refer to pages 163 to 244.

6.5 A parent company only financial statement for the most recent fiscal year, certified by a CPA, but not including the statements of major accounting items

Not applicable.

6.6 If the company or its affiliates have experienced financial difficulties in the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, the annual report shall explain how said difficulties will affect the company's financial situation

None.

Central Reinsurance Corporation Annual Report 2020 161

Audit Committee’s Review Report

TO�2021 Annual General Meeting of Shareholders

Central Reinsurance Corporation (Central Re)

The Board of Directors has prepared the Company’s 2020 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 Act, we hereby submit this report.

Central Reinsurance Corporation

Convener of the Audit Committee: Chou, Yu-Cheng

March 18, 2021

162 Central Reinsurance Corporation Annual Report 2020

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Central Reinsurance Corporation Annual Report 2020 163

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164 Central Reinsurance Corporation Annual Report 2020

Central Reinsurance Corporation Annual Report 2020 165

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Central Reinsurance Corporation Annual Report 2020 167

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Central Reinsurance Corporation Annual Report 2020 169

CENTRAL REINSURANCE CORPORATION

BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

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December 31, 2020 December 31, 2019
ASSETS Notes AMOUNT % AMOUNT %
11000 Cash and cash equivalents 6(1) � ��
12000 Accounts receivable 6(2) ��
14110 Financial assets at fair value through 6(3)
profit or loss ��
14145 Financial assets at amortized cost 6(4) ��
14180 Other financial assets 6(5) ��
14200 Investment property, net 6(7) ��
15000 Reinsurance contract assets 6(8) ��
16000 Property and equipment, net 6(11) ��
16700 Right-of-use assets ��
17000 Intangible assets ��
17800 Deferred income tax assets 6(17) ��
18000 Other assets ��
TOTAL ASSETS � ��
LIABILITIES AND EQUITY
21000 Accounts payable 6(12) � ��
21700 Current income tax liabilities ��
23200 Financial liabilities at fair value through 6(3)
� �
profit or loss ��
23800 Lease liabilities ��
24000 Insurance liabilities 6(8) ��
27000 Provisions 6(13) ��
28000 Deferred income tax liabilities 6(17) ��
25000 Other liabilities ��
TOTAL LIABILITIES ��
30000 EQUITY
31000 Capital
31100 Common stock 6(14) ��
32000 Capital reserve ��
33000 Retained earnings
33100 Legal reserve ��
33200 Special reserve 6(16) ��
33300 Undistributed earnings ��
34000 Other equity interest ��
TOTAL EQUITY ��
TOTAL LIABILITIES AND
EQUITY � ��
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The accompanying notes are an integral part of these financial statements.

170 Central Reinsurance Corporation Annual Report 2020

CENTRAL REINSURANCE CORPORATION STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share)

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Years ended December 31 Changes
2020 2019 Percentage
Items Notes AMOUNT % AMOUNT % (%)
41000 Operating revenues
41100 Gross premiums written ��
51100 Less: Reinsurance premiums
ceded ��
51310 Net change in unearned 6(8)
premium reserve � ��
41130 Retention earned premiums ��
41300 Reinsurance commission revenue ��
41400 Overriding commission revenue ��
41500 Net gain from investment
41510 Interest income ��
41521 Gain or loss on valuation of
financial assets or financial
liabilities at fair value through
profit or loss ��
41526 Realized gain or loss on 6(4)
financial assets at amortized
cost ��
41550 Foreign exchange gain (loss) ��
41570 Gain (loss) on investment 6(7)
property ��
41585 Expected credit impairment and 6(4)
reversal profit from investments ��
41600 Gain (loss) upon reclassification 6(3)
of applying overlay approach � ��
Total net gain from investment ��
41800 Other operating revenues ��
Total operating revenues ��
51000 Operating costs
51200 Reinsurance claims paid ��
41200 Less: Reinsurance claims
recovery ��
51260 Retention reinsurance claims paid ��
51300 Net changes in other insurance 6(8)
liabilities ��
51500 Reinsurance commission
expenses ��
51700 Financial cost ��
51800 Other operating costs � ��
Total operating costs � ��
58000 Operating expenses
58100 Selling expenses ��
58200 Administration expenses ��
58300 Training expenses ��
58400 Expected credit impairment 13
reversal from non-investments � � ��
Total operating expenses � ��
Net operating income ��
59000 Non-operating income and expenses ��
62000 Income from continuing
operations before tax ��
63000 Income tax expense 6(17) � ��
64000 Income from continuing
operations after tax ��
66000 Net income ��
(Continued)
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Central Reinsurance Corporation Annual Report 2020 171

CENTRAL REINSURANCE CORPORATION STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share)

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Years ended December 31 Changes
2020 2019 Percentage
Items Notes AMOUNT % AMOUNT % (%)
83000 Other comprehensive income
83100 Items may not be reclassified to
profit or loss subsequently
83110 Remeasurements of defined 6(13)
benefit plans ��
83180 Income tax relating to the items 6(17)
may not be reclassified to profit
or loss subsequently ��
83200 Items may be reclassified to
profit or loss subsequently
83210 Exchange differences on
translation of foreign financial
statements ��
83295 Other comprehensive income 6(3)
(loss) upon reclassification of
applying overlay approach ��
83280 Income tax relating to items that 6(17)
may be reclassified ��
Total other comprehensive income
for the year (after tax) ��
85000 Total comprehensive income for
the year ��
Earnings per share
97500 Basic and Diluted (in NT dollars) 6(16) ��
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The accompanying notes are an integral part of these financial statements.

172 Central Reinsurance Corporation Annual Report 2020

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173

CENTRAL REINSURANCE CORPORATION

STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

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||||||||
|---|---|---|---|---|---|---|
|Years ended December 31|
|2020|2019|
|CASH FLOWS FROM OPERATING ACTIVITIES|
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|Financial assets at amortized cost|��|�|��|�|
|Other financial assets|�|��|��|
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|Net cash flows from (used in) operating activities|��|�|��|�|
|CASH FLOWS FROM INVESTING ACTIVITIES|
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|Acquisition of investment property|�|��|�|�|��|�|
|Net cash flows used in investing activities|�|��|�|�|��|�|
|CASH FLOWS FROM FINANCING ACTIVITIES|
|Repayments of principal portion of lease liabilities|�|��|��|�|
|Payment of cash dividends|�|��|�|�|��|�|
|Net cash flows used in financing activities|�|��|�|�|��|�|
|Effects of exchange rate changes|�|��|�|��|
|Net increase (decrease) in cash and cash equivalents|��|�|��|�|
|Cash and cash equivalents at beginning of year|��|��|
|Cash and cash equivalents at end of year|�|��|�|��|

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The accompanying notes are an integral part of these financial statements.

174 Central Reinsurance Corporation Annual Report 2020

CENTRAL REINSURANCE CORPORATION

NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2020 AND 2019

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

1. HISTORY AND ORGANIZATION

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

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

These financial statements were authorized for issuance by the Board of Directors on March 18, 2021.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

follows:
New Standards,Interpretations and Amendments Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark reform’ Amendments to IFRS 16, ‘Covid-19-related rent concessions’ Note�Earlier application from January 1, 2020 is allowed by FSC.	Effective Date by International Accounting Standards Board
	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020 (Note)

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

Central Reinsurance Corporation Annual Report 2020 175

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Company.

New standards, interpretations and amendments endorsed by the FSC effective from 2021 are as follows:

follows:
New Standards,InterpretationsandAmendments	Effective date by International Accounting StandardsBoard
Amendments to IFRS 4, ‘Extension of the temporary exemption from applying IFRS 9’ Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, ‘Interest Rate Benchmark Reform— Phase 2’	January 1, 2021 January 1, 2021

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

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

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

endorsed by the FSC are as follows:

New Standards,InterpretationsandAmendments

Effective date by
International Accounting
StandardsBoard

Amendments to IFRS 3, ‘Reference to the conceptual
framework’
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’
IFRS 17, ‘Insurance contracts’
Amendments to IFRS 17, 'Insurance contracts'
Amendments to IAS 1, ‘ Classification of liabilities as current or
non-current’
Amendments to IAS 1, ‘Disclosure of accounting policies’
Amendments to IAS 8, ‘Definition of accounting estimates’
Amendments to IAS 16, ‘Property, plant and equipment: proceeds
before intended use’
Amendments to IAS 37, ‘Onerous contracts— cost of fulfilling a
contract’
Annual improvements to IFRS Standards 2018–2020

January 1, 2022
To be determined by
International Accounting
Standards Board
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022
January 1, 2022
January 1, 2022

Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment. The quantitative impact will be disclosed when the assessment is complete.

A. IFRS 17, ‘Insurance Contracts’ replaces IFRS 4 and establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts issued. The standard applies to

176 Central Reinsurance Corporation Annual Report 2020

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

B. Amendments to IFRS 17, ‘insurance contracts’

The amendments to IFRS 17 include the deferral of effective date, expected recovery of insurance acquisition cash flows, contractual service margin attributable to investment services, reinsurance � contracts held recovery of losses and other amendments, and they are not intended to change the fundamental principles of the standard.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

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

(2) Basis of preparation
A. The Company does not have a subsidiary, and the Company’s financial statements are separate financial statements composed of the balance sheet, statement of comprehensive income, statement of changes in equity, statement of cash flows, and relevant notes.
B. Except for the following items, these financial statements have been prepared under the historical cost convention:
- (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- (b) Financial assets at fair value through other comprehensive income.

Central Reinsurance Corporation Annual Report 2020 177

  - (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.

  - (d) Various insurance liabilities and reinsurance reserve assets recognized in accordance with specific statutory requirements and regulations relevant to insurance enterprises.

C. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 5.
(3) Foreign currency translation
A. Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the “functional currency”). The financial statements are presented in New Taiwan Dollars (“NTD”), which is the Company’s functional currency.
- (a) Transactions denominated in foreign currencies are translated into functional currency at the spot exchange rates prevailing at the transaction date. The translation differences upon actual payment are recognized in current profit or loss.
- (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the reporting date. Exchange differences arising upon re-translation at the reporting date are recognized in current profit or loss.
- (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
- (d) Except for aforementioned non-monetary assets denominated in foreign currencies held at fair value through profit or loss, foreign exchange gains or losses that arise from investing activities are recognized under net gain (loss) from investment in the statement of comprehensive income. Other foreign exchange gains or losses that do not arise from investing activities are recognized under other operating revenues or other operating costs.
B. The financial position and financial performance of offshore insurance branch that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- (a) Assets and liabilities for each balance sheet presented are translated at the spot exchange rate at the date of that balance sheet;

178 Central Reinsurance Corporation Annual Report 2020

  - (b) Income and expenses for each statement of comprehensive income are translated at spot exchange rates of the trade date; and

  - (c) All resulting exchange differences are recognized in other comprehensive income.

(4) Cash equivalents
A. The statement of cash flows is prepared on the basis of cash and cash equivalents.
B. Cash equivalents refer to short-term, highly liquid investments that are:
- (a)Readily convertible to known amount of cash; and
- (b)Subject to an insignificant risk of changes in value.
C. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations (including time deposits within 12 months of the contract period) are classified as cash equivalents.
(5) Financial assets at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortized cost or fair value through other comprehensive income. A financial asset is eligible for designation for the overlay approach if, and only if, the following criteria are met:
- (a) It is measured at fair value through profit or loss applying IFRS 9 but would not have been measured at fair value through profit or loss in its entirety applying IAS 39; and
- (b) It is not held in respect of an activity that is unconnected with contracts within the scope of IFRS 4.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. The Company subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.
D. The Company recognizes profit or loss when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.
E. The Company values the difference of reclassification amounts of financial assets at fair value through profit or loss and fair value through other comprehensive income for the financial assets applying overlay approach, using:
- (a) The amount reported in profit or loss for the designated financial assets applying overlay approach under IFRS 9; and
- (b) The amount that would have been reported in profit or loss for the designated financial assets if IAS 39 had been applied.
(6) Financial assets at amortized cost
A. Financial assets at amortized cost are those that meet all of the following criteria:
- (a) The objective of the Company’s business model is achieved by collecting contractual cash flows; and

Central Reinsurance Corporation Annual Report 2020 179

(b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at amortized cost are recognized and derecognized using trade date accounting.
C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognized in profit or loss when the asset is derecognized or impaired.

(7) Non-hedging and embedded derivatives

A. Non-hedging derivatives are initially recognized at fair value on the date a derivative contract is entered into and recorded as financial assets or financial liabilities at fair value through profit or loss. They are subsequently remeasured at fair value and the gains or losses are recognized in profit or loss.
B. Under the financial assets, the hybrid contracts embedded with derivatives are initially recognized as financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and financial assets at amortized cost based on the contract terms.
(8) Impairment of financial assets

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

(9) Investment property
A. An investment property is stated initially at its cost including related transaction costs; measured subsequently using the cost model and stated at cost less accumulated depreciation and accumulated impairment loss. Subsequent costs of major renewals and betterments are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. Repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
B. The Company uses a portion of the property for its own use and another portion to earn rentals or for capital appreciation. When these portions can be sold separately, the own-use portion is accounted for in accordance with IAS 16, “Property, Plant and Equipment”. However, property held either to earn rental income or for capital appreciation or for both is subject to IAS 40, “Investment Property”. If part of property cannot be individually sold, and owner-occupied property is insignificant, it is accounted for as investment property.

180 Central Reinsurance Corporation Annual Report 2020

C. An investment property shall be derecognized on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. When assets are derecognized, the cost and the accumulated depreciation at the time of sale or retirement are written off. Gain or loss on sale of the investment property, rental income, and relevant payment shall be recognized in gain or loss on investment property under net gain from investment. Except for land, property is depreciated on a straight-line basis over its estimated useful life of 3 to 60 years. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, from the date of the change.
(10) Leasing arrangements (lessee)�right-of-use assets/ lease liabilities
A. Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company. For short-term leases or leases of low-value assets, lease payments are recognized as an expense on a straight-line basis over the lease term.
B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are fixed payments, less any lease incentives receivable. The Company subsequently measures the lease liability at amortized cost using the interest method and recognizes interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognized as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.
C. At the commencement date, the right-of-use asset is stated at cost, which is the amount of the initial measurement of lease liability. The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognized as an adjustment to the right-of-use asset.
D. For lease modifications that decrease the scope of the lease, the lessee shall decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize the difference between remeasured lease liability in profit or loss.
(11) Reinsurance contract assets

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

Central Reinsurance Corporation Annual Report 2020 181

of Financial Reports by Insurance Enterprises”.

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

(13) Property and equipment

A. Property and equipment are stated initially at its cost including related transaction costs, measured subsequently using the cost model and stated at cost less accumulated depreciation and accumulated impairment loss. Reserve for land revaluation increment tax set aside for revaluation over the current land value is recognized as deferred income tax liabilities. Subsequent costs of major renewals and betterments are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. Repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
B. Depreciation is computed using straight-line method over the estimated service lives as follows: buildings and equipment, 3 to 60 years; computer equipment, 3 to 6 years; transportation equipment, 3 to 10 years; and miscellaneous equipment, 3 to 10 years.
C. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, from the date of the change.
D. When an asset is retired or disposed, the cost plus revaluation increment, if any, and related accumulated depreciation are removed from the accounts, and the resulting gain or loss is credited or charged to non-operating income and expenses during the financial period in which they are incurred.
(14) Impairment of non-financial assets
The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than

182 Central Reinsurance Corporation Annual Report 2020

what the depreciated or amortized historical cost would have been if the impairment had not been recognized. Impairment loss and gain on reversal of impairment loss for investment property are recognized under operating revenue. Impairment loss and gain on reversal of impairment loss for property and equipment are recognized in non-operating income and expenses.

(15) Loss allowance
A. Loss allowance for accounts receivable, other financial assets and refundable deposits under other assets should be assessed and recognized in accordance with IFRS 9 and the “Guidelines for Handling Assessment of Assets, Loans Overdue, Delinquent Accounts Receivable on Demand by Insurance Enterprises”.
B. Loss allowance for reinsurance contract assets should be assessed and recognized in accordance with IFRS 4 and the “Guidelines for Handling Assessment of Assets, Loans Overdue, Delinquent Accounts Receivable on Demand by Insurance Enterprises”.

(16) Financial liabilities at fair value through profit or loss

A. Financial liabilities at fair value through profit or loss are financial liabilities held for trading. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges.
B. At initial recognition, financial liabilities at fair value through profit or loss are measured at fair value plus transaction costs. The Company subsequently measures the financial liabilities at fair value, and recognizes the gain or loss in profit or loss.
(17) Derecognition of financial assets and financial liabilities
The Company derecognizes a financial asset when one of the following conditions is met:
A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Company has not retained control of the financial asset.
A financial liability is derecognized when the obligation specified in the contract is either discharged or cancelled or expires.

(18) Offsetting financial assets and financial liabilities

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

(19) Classification of reinsurance contracts

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

An insurance contract is a contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified

Central Reinsurance Corporation Annual Report 2020 183

uncertain future event (the insured event) adversely affects the policyholder. A contract with no significant insurance risk being transferred is not classified as an insurance contract and is recognized by deposit accounting.

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

(20) Insurance liabilities

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

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

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

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

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

(21) Liability adequacy test

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

184 Central Reinsurance Corporation Annual Report 2020

(22) Employee benefits

A. Short-term employee benefits

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

B. Pensions

(a) Defined contribution plan

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

(b) Defined benefit plan
- i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plan is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of highquality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Company uses interest rates of government bonds (at the balance sheet date) instead.
- ii. Remeasurement arising on defined benefit plan are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.
- iii. Past service costs are recognized immediately in profit or loss.
C. Employees’ compensation and directors’ remuneration
Employees’ compensation and directors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts should be recognized in profit or loss of the following year.

(23) Income tax

A. The income tax expense (benefit) for the period comprises current and deferred income tax. Income tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operates and generates

Central Reinsurance Corporation Annual Report 2020 185

taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. Income tax on undistributed earnings is recorded as expense in the year when the stockholders approve to retain the earnings.

C. Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
D. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each reporting period, unrecognized and recognized deferred income tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current income tax assets against current income tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.
(24) Dividends
Dividends are recorded in the Company’s financial statements in the period in which they are approved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to common stock on the effective date of new shares issuance.
(25) Reinsurance revenues

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

(26) Operating segments

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

186 Central Reinsurance Corporation Annual Report 2020

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

The preparation of these financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors (including the impact of Covid-19). Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. The related information is addressed below:

(1) Critical judgements in applying the Company’s accounting policies
None.
(2) Critical accounting estimates and assumptions
A. Reinsurance premiums
- The Company’s estimated reinsurance revenue is based on the ceding company’s annual forecasted reinsurance information and then the Company calculates the revenue proportion to be recognized in each quarter based on previous experience of actual statements. Thereafter, when actual statements are received each quarter, original estimates are reversed and actual statements are accrued. The reason for differences between actual statements and estimated amounts is evaluated to adjust the estimated revenues of remaining period, accordingly.
B. Claims reserve (under insurance liabilities)
- Aside from statutorily required insurances, the Company estimates the ultimate loss ratio and provisions claims reserve based on assessment factors such as information provided by the ceding company, claim development factors, contract type, insurance risk characteristics, market information, and judgement for the experience of claims and underwriting. Any change in the methodology and assumptions used in calculating the ultimate loss ratio would significantly affect the amount of claims reserve. A part of claims reserve is recognized using the case-by-case estimation method for Reported-But-Not-Paid cases while the remaining is provisioned for Incurred-But-Not-Reported claims.
C. Fair value measurement of financial instruments
- Except for the financial instruments with available public pricing information, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the balance sheet date. For details on the main methods and assumptions used to measure the fair value of financial instruments, please refer to Note 12 (1) D.

Central Reinsurance Corporation Annual Report 2020 187

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash: Petty cash Checking accounts Demand deposits Cash equivalents: Time deposits	December31,2020 121 $ 4,536 3,679,281 11,317,648 15,001,586 $	December31,2019
		114 $ 52,689 2,182,472 10,368,497
		12,603,772 $

A. The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The Company has no cash and cash equivalents pledged to others.
C. Certain time deposits of the Company did not meet the definition of cash equivalents and are presented in other financial assets. Please see Note 6 (5).

(2) Accounts receivable

Notes receivable Other receivables Total Less: Loss allowance ( Net amount	December31,2020 855 $ 453,170 454,025 23) ( 454,002 $	December31,2019 1,257 $ 323,965 325,222 31) 325,191 $

As of December 31, 2020 and 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the accounts receivable was $454,002 and $325,191, respectively. Information relating to credit risk and movements of loss allowance is provided in Note 13 (1).

188 Central Reinsurance Corporation Annual Report 2020

(3) Financial assets and financial liabilities at fair value through profit or loss

	December31,2020	December31,2020	December31,2019	December31,2019
Financial assets mandatorily measured at fair value
through profit or loss
Domestic items:
Listed and over-the-counter	$	2,082,682	$	2,436,788
common stocks
Listed and over-the-counter		212,232		212,232
preferred stocks
Unlisted stocks		166,747		166,747
Securities real estate products		-		21,764
Open-end funds		665,348		421,182
Derivatives		240,388		122,789
Foreign items:
Listed and over-the-counter		1,864,474		1,577,326
common stocks
Open-end funds		604,866		496,676
Index funds		115,896		221,402
Government bonds		141,534		-
		6,094,167		5,676,906
Valuation adjustment		866,225		289,984
	$	6,960,392	$	5,966,890
	December31,2020		December31,2019
Financial liabilities held for trading
Domestic items:
Non-hedging derivatives	$	31,744	$	5,376
Foreign items:
Non-hedging derivatives		696		4,719
	$	32,440	$	10,095

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

Derivativeinstruments FX swap contracts Forward foreign exchange contracts Futures	Contract amount (Notional Contract principal) period 7,732,265 $ 2020.01.02~ 2022.09.08 2,086,126 2020.04.21~ 2021.11.26 42,065 2020.12.22~ 2021.03.19 December31,2020	December31,2019	December31,2019
	Contract amount (Notional principal) 7,732,265 $ 2,086,126 42,065	Contract amount (Notional principal) 6,498,163 $ 1,697,718 302,526	Contract period
			2019.04.02~ 2020.12.28 2019.07.12~ 2020.04.23 2019.12.19~ 2020.03.20

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

Central Reinsurance Corporation Annual Report 2020 189

(a) FX swap contracts

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

(b) Forward foreign exchange contracts

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

The Company holds Mini S&P500 index futures and Mini Nasdaq index futures. As of December 31, 2020 and 2019, the related margins were $300,701 and $129,409, respectively.

B. The Company has no financial assets at fair value through profit or loss pledged to others.
C. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 13 (1).
D. In adopting IFRS 9 effective January 1, 2018, the Company has elected to apply overlay approach and recognized gain or loss for designated financial assets in accordance with IFRS 4.
(a) The designated financial assets applying overlay approach that are connected with insurance contracts are as follows:

December 31, 2020 December 31, 2019

Financial assets mandatorily measured at fair value through profit or loss Domestic items: Listed and over-the-counter common stocks Listed and over-the-counter preferred stocks Unlisted stocks Open-end funds Foreign items: Listed and over-the-counter common stocks Open-end funds Index funds Valuation adjustment	1,808,286 $ 212,232 166,747 665,348 1,854,798 604,866 115,896 5,428,173 818,532 6,246,705 $	2,203,425 $ 212,232 166,747 421,182 1,342,232 496,676 -
		4,842,494 250,995
		5,093,489 $

190 Central Reinsurance Corporation Annual Report 2020

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

		2020		2019
Gain (loss) under IFRS 9	$	1,036,544 $		690,277
Less: (Gain) loss under IAS 39	(	469,007) (		376,660)
Amount of reclassification applying
overlay approach	$	567,537 $		313,617
Income tax (expense) benefit on other
comprehensive income	($	32,387) ($		21,015)
Financial assets at amortized cost
	December31,2020		December31,2019
Domestic items:
Securitized financial asset
products	$	250,000	$	400,430
Corporate bonds		1,326,143		1,552,176
Government bonds		947,361		1,031,824
Foreign items:
Securitized financial asset
products		420,147		783,392
Corporate bonds		6,417,522		6,654,852
Financial bonds		2,426,307		3,226,547
Government bonds		338,852		357,270
		12,126,332		14,006,491
Less: Loss allowance	(	4,346)	(	4,176)
Less: Statutory deposits	(	947,361)	(	922,291)
	$	11,174,625	$	13,080,024

(4) Financial assets at amortized cost

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

below:
		2020			2019
Interest income	$	366,895		$	389,766
Impairment (loss) reversal	(	170)	(		611)
(Loss) gain on disposal	(	90)			-
	$	366,635		$	389,155

Gain or loss on disposal of the financial assets at amortized cost arose from infrequent sale or insignificant in value, both individually and in aggregate.

B. As of December 31, 2020 and 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortized cost held by the Company was $12,121,986 and $14,002,315, respectively.

Central Reinsurance Corporation Annual Report 2020 191

C. Under the Insurance Act, the Company is required to deposit an amount equal to 15% of its paidin capital. As of December 31, 2020 and 2019, the Company provided government bonds with a par value of $900,000 as statutory deposit.
D. Information relating to credit risk of financial assets at amortized cost is provided in Note 13 (1).

(5) Other financial assets

Time deposits

December 31, 2020 December 31, 2019 $ 499,556 $ 100,000

A. As of December 31, 2020 and 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the other financial assets were $499,556 and $100,000, respectively.
B. The Company transacts with financial institutions all with high credit quality, so it expects that the probability of counterparty default is remote.
C. The Company has no other financial assets pledged to others.
D. Information relating to credit risk of other financial assets is provided in Note 13 (1).

(6) Structured entities

A. In accordance with the regulations of IFRS 12, ‘Disclosure of interests in other entities’, information about the interests in structured entities that are not controlled by the Company is as follows:

December 31, 2020

follows:		December	31,2020
Type ofstructured entities		Bookvalue 670,085 $ December	Nature
Securitized financial asset products			The risks and rewards associated with the assets of the structured entity were passed on to investors through issuing bonds. 31,2019
Type ofstructured entities Securitized real estate products Securitized financial asset products Total		Bookvalue 38,893 1,183,722 1,222,615	Nature
	$		The beneficial securities were issued by trustee to provide investor gain on transaction, rent and value increment of real estate market. The risks and rewards associated with the assets of the structured entity were passed on to investors through issuing bonds.
	$

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

192 Central Reinsurance Corporation Annual Report 2020

B. As of December 31, 2020 and 2019, the structured entities that are not controlled by the Company are accounted for as financial assets at fair value through profit or loss and financial assets at amortized cost. The entity’s maximum exposure is the carrying amount of assets held. The investment position is restricted by contract terms and conditions of issue and exposes the corresponding market risk. The Company has considered risk management approach of relevant market. Please see Note 13 (1).

(7) Investment property

At January1,2020 Cost Accumulated depreciation 2020 At January 1 Additions-from subsequent expenditure Depreciation At December 31 At December 31,2020 Cost Accumulated depreciation AtJanuary1,2019 Cost Accumulated depreciation 2019 At January 1 Additions-from subsequent expenditure Depreciation At December 31 At December31,2019 Cost Accumulated depreciation	Land 411,606 $ - ( 411,606 $ 411,606 $ - - ( 411,606 $ 411,606 $ - ( 411,606 $ Land 411,606 $ - 411,606 $ 411,606 $ - - 411,606 $ 411,606 $ - 411,606 $	Building 86,759 $ 49,809) ( 36,950 $ 36,950 $ 426 2,167) ( 35,209 $ 87,185 $ 51,976) ( 35,209 $ Building 86,625 $ 47,553) ( 39,072 $ 39,072 $ 134 2,256) ( 36,950 $ 86,759 $ 49,809) ( 36,950 $	Total 498,365 $ 49,809) 448,556 $ 448,556 $ 426 2,167) 446,815 $ 498,791 $ 51,976) 446,815 $ Total 498,231 $ 47,553) ( 450,678 $ 450,678 $ 134 2,256) ( 448,556 $ 498,365 $ 49,809) ( 448,556 $

Central Reinsurance Corporation Annual Report 2020 193

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

from the investment property are as follows:
Rental revenue from the lease of the investment property Direct operating expenses arising from the investment property that generated rental income in the period	Year ended December31,2020 24,032 $ 5,271	Year ended December31,2019
		26,462 $ 5,505

The Company recognized rent income based on the operating lease agreement, which does not include variable lease payments.

B. The Company leases investment properties to others under non-cancellable operating lease agreements. Rental contracts are typically made for periods between 1 and 3 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes, or a residual value guarantee was required. The maturity analysis of the lease payments under the operating leases is as follows:

2020 2021 2022 2023	December31,2020 - $ 19,138 12,163 6,053 37,354 $	December31,2019
		20,885 $ 5,048 222 -
		26,155 $

C. The fair values of the investment property held by the Company were estimated by an accredited external independent appraiser under “Regulations on Real Estate Appraisal” using valuation techniques of both the income approach and comparison approach, based on observable active market prices and the characteristics, locations and conditions of each asset on the measurement date –December 31, 2020 and 2019. The fair values of the investment property as at the aforementioned measurement dates were $1,266,817 and $1,265,967, respectively, which is categorized as Level 3 within the fair value hierarchy. Key assumptions of the income approach are as follows:

December 31, 2020 December 31, 2019 Capitalization rate 1.02%~1.46% 1.02%~1.47%

D. The above assets were not pledged to others as collateral.

194 Central Reinsurance Corporation Annual Report 2020

(8) Reinsurance contract assets and insurance liabilities

A. Details of reinsurance contract assets are as follows:

Details of reinsurance contract assets are	as follows:	as follows:
	December31,2020			December		31,2019
Due from reinsurers and
ceding companies	$	3,825,421		$	3,257,541
Due from reinsurers and
ceding companies-overdue		35,561				19,664
Reinsurance reserve assets
Ceded unearned premium
reserve		392,396				357,509
Ceded claims reserve		1,428,299			1,023,362
Ceded liability reserve		403,861				421,249
Ceded premium deficiency
reserve		1,128				2,266
		6,086,666			5,081,591
Less: Loss allowance- Due
from reinsurers and
ceding companies	(	21,207)	(			15,133)
Less: Loss allowance-Ceded
unearned premium
reserve		-	(			34)
Less: Loss allowance-Ceded
claims reserve		-	(			8)
	$	6,065,459		$	5,066,416

claims reserve $	claims reserve $	- ( 6,065,459	8) 5,066,416 $	8) 5,066,416 $
(a) The credit quality information of reinsurance contract		assets that are	neither past due nor
impaired is as follows, and the evaluation of credit rating was conducted according to the
ultimate reinsurers:
	December31,2020		December31,2019
Group 1	$	21,726	$	31,816
Group 2		777,398		916,680
Group 3		4,408,590		3,354,374
Group 4		86,714		55,385
Group 5		15,839		16,766
Group 6		466,658		410,315
	$	5,776,925	$	4,785,336

Group 1: S&P AAA or equivalents. Group 2: Over S&P AA- or equivalents. Group 3: Over S&P A- or equivalents. Group 4: Over S&P BBB- or equivalents. Group 5: Under S&P BBB- or equivalents. Group 6: without credit rating etc.

Central Reinsurance Corporation Annual Report 2020 195

Note: Reinsurances undertaken without a credit rating are primarily from domestic insurance companies.
(b) The balances and ageing analysis of reinsurance contract assets that were past due but not impaired and impaired are as follows:

impaired and impaired are as follows:
Over one month, under three months Over three months, under six months Over six months, under nine months Over nine months	December31,2020 115,057 $ 121,950 46,407 26,327 309,741 $	December31,2019
		88,978 $ 102,852 101,688 2,737
		296,255 $

i. The ages of due from reinsurance and ceding companies, except for the estimated reinsurance receivables or payables on closing date, are classified by its booking date.
ii. The overdue amounts due from reinsurance and ceding companies above indicate the ultimate reinsurers that were due but not paid and were transferred to overdue accounts in nine months after they became due.
(c) Movement analysis on the Company’s provision for impairment of reinsurance contract assets is as follows:

is as follows:
2020 At January 1 15,175 $ Write-off of bad debts 527) ( Provision of loss allowance 6,559 Recovery of loss allowance - ( At December 31 21,207 $	2019
	23,642 $ - - 8,467)
	15,175 $

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

Details of insurance liabilities are as follows:
Unearned premium reserve Claims reserve Liability reserve Equalization reserve Premium deficiency reserve	December31,2020 6,773,592 $ 17,748,343 403,861 3,515,773 49,598 28,491,167 $	December31,2019
		6,083,352 $ 15,969,362 421,249 3,707,071 53,709
		26,234,743 $

196 Central Reinsurance Corporation Annual Report 2020

C. Movements of ceded unearned premium reserve and unearned premium reserve are as follows:

		2020		2019
Ceded unearned premium reserve
At January 1	$	357,475	$	316,131
Provision		393,339		358,225
Recovery	(	358,225)	(	317,091)
Impairment reversal		34		1,143
Exchange differences on translation of foreign
financial statements	(	227)	(	933)
At December 31 Unearned premium reserve	$	392,396 2020	$	357,475 2019
At January 1	$	6,083,352	$	5,630,654
Provision		6,790,105		6,097,294
Recovery	(	6,097,294)	(	5,627,994)
Exchange differences on translation of foreign
financial statements	(	2,571)	(	16,602)
At December 31	$	6,773,592	$	6,083,352

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

	December31,2020	December31,2020	December31,2020	December31,2019	December31,2019	December31,2019
Ceded claims reserve
Outstanding losses	$		575,243		$	585,216
Incurred but not reported losses			853,056			438,146
Less: Loss allowance			-	(		8)
	$		1,428,299		$	1,023,354
	December31,2020			December31,2019
Claims reserve
Outstanding losses	$		6,045,847		$	5,686,132
Incurred but not reported losses			11,702,496			10,283,230
	$		17,748,343		$	15,969,362
			2020			2019
Ceded claims reserve
At January 1		$	1,023,354		$	741,417
Provision			1,428,299			1,023,362
Recovery	(		1,023,362)	(		741,703)
Impairment reversal			8			278
At December 31		$	1,428,299		$	1,023,354

Central Reinsurance Corporation Annual Report 2020 197

Claims reserve At January 1 Provision Recovery ( At December 31	2020 15,969,362 $ 17,748,343 15,969,362) ( 17,748,343 $	2019 15,557,856 $ 15,969,362 15,557,856) 15,969,362 $

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

				2020	2020								2019	2019
		Foreign										Foreign
	currency											currency
		amount			Exchange			NTD				amount		Exchange		NTD
	(in	thousands)	Currency		rate	(in		thousands)	(in thousands)				Currency	rate	(in	thousands)
Ceded liability
reserve
At January 1	$	97,491	CNY		4.321		$	421,249			$	81,670	CNY	4.475	$	365,513
Provision		1,789						12,695				17,301				62,380
Recovery	(	7,075)				(		30,083)	(			1,480)			(	6,644)
At December 31	$	92,205	CNY		4.380		$	403,861			$	97,491	CNY	4.321	$	421,249
				2020									2019
	Foreign											Foreign
	currency											currency
		amount			Exchange			NTD				amount		Exchange		NTD
(in		thousands)	Currency		rate	(in thousands)			(in thousands)				Currency	rate	(in	thousands)
Liability
reserve
At January 1	$	97,491	CNY		4.321	$		421,249		$		81,670	CNY	4.475	$	365,513
Provision		1,789						12,695				17,301				62,380
Recovery	(	7,075)				(		30,083)	(			1,480)			(	6,644)
At December 31	$	92,205	CNY		4.380	$		403,861		$		97,491	CNY	4.321	$	421,249

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

F. Equalization reserves

(a) Details of equalization reserves are as follows:

alization reserves Details of equalization reserves are as follows:
Equalization reserve for statutory insurance Reserve for fluctuation of risk Reserve for extraordinary business losses	December31,2020 934,695 $ 2,055,296 525,782 3,515,773 $	December31,2019
		1,125,993 $ 2,055,296 525,782
		3,707,071 $

198 Central Reinsurance Corporation Annual Report 2020

(b) Movement of equalization reserves is as follows:

Movement of equalization reserves is as follows:
At January 1 Recovery At December 31	2020 3,707,071 $ 191,298) ( 3,515,773 $	2019
		3,956,919 $ 249,848) (
		3,707,071 $

(c) According to Jin-Kuan-Bao-Tsai Order No. 10102517491, “Directions for Strengthening Special Reserve by Reinsurance Enterprises”, Jin-Kuan-Bao-Chan Order No. 10102531541, “Directions for Strengthening Co-insurance Reserve of Residential Earthquake Insurance” and Jin-Kuan-Bao-Tsai Order No. 10102517091, “Regulations for Reserving Nuclear Energy Insurance Reserve by Non-Life Insurance Enterprises” dated December 28, 2012, the Company’s accounts applicable or not applicable for the years ended December 31, 2020 and 2019, are as follows:

Year ended December 31, 2020

Applicable Not applicable Effect	Net income 1,515,729 $ 1,515,729 - $		Earnings per share (indollars) 2.57 $ 2.57 - $ (	Total liabilities 29,304,351 $ 27,087,021 2,217,330) $	Totalequity
					13,409,237 $ 15,626,567
					2,217,330 $

Year ended December 31, 2019

Applicable Not applicable Effect	Net income 1,104,125 $ 1,104,125 - $		Earnings per share (indollars) 1.87 $ 1.87 - $ (	Total liabilities 27,132,900 $ 24,915,570 2,217,330) $	Totalequity
					12,029,123 $ 14,246,453
					2,217,330 $

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

Ceded premium deficiency reserve At January 1 Provision Recovery ( At December 31 Premium deficiency reserve At January 1 Provision Recovery ( At December 31	2020 2,266 $ 1,128 2,266) ( 1,128 $ 2020 53,709 $ 49,598 53,709) ( 49,598 $	2019
		2,498 $ 2,266 2,498)
		2,266 $
		2019
		54,984 $ 53,709 54,984)
		53,709 $

Central Reinsurance Corporation Annual Report 2020 199

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

follows:
December31,2020	Dueinone year		Due	afterone year		Total
Insurance liabilities
Unearned premium reserve	$	3,045,137	$	2,170,925	$	5,216,062
Claims reserve		9,085,546		6,477,226		15,562,772
Liability reserve		-		403,861		403,861
Premium deficiency reserve		28,955		20,643		49,598
Note: Insurance liabilities exclude		statutory insurance (total amount of compulsory automobile
liability insurance, residential earthquake insurance and nuclear insurance is $3,743,101).
December 31,2019		Due in oneyear	Due after oneyear			Total
Insurance liabilities
Unearned premium reserve	$	2,628,276	$	1,911,061	$	4,539,337
Claims reserve		8,011,004		5,824,927		13,835,931
Liability reserve		-		421,249		421,249
Premium deficiency reserve		31,098		22,611		53,709

Note: Insurance liabilities exclude statutory insurance (total amount of compulsory automobile liability insurance, residential earthquake insurance and nuclear insurance is $3,677,446).

200 Central Reinsurance Corporation Annual Report 2020

(9) Reserves for unqualified reinsurance

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

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

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

B. As of December 31, 2020 and 2019, the Company’s unqualified reinsurance premiums ceded were ($3,507) and $239, respectively.
C. Reserve for unqualified reinsurance as of December 31, 2020 and 2019 were as follows:

Ceded unearned premium reserve Ceded claims reserve	December31,2020 - $ 59 59 $	December31,2019
		1,647 $ 549
		2,196 $

Central Reinsurance Corporation Annual Report 2020 201

(10) Offsetting financial assets and financial liabilities

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

Financial assets
Description December31,2020 Derivatives December31,2019 Derivatives	Gross amounts Financial instruments of recognized not set off in the financialassets balance sheet 240,388 $ 10,633 $ 122,789 $ 5,000 $	Net amount
		229,755 $
		117,789 $

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

(b) Financial liabilities

profit or loss. Financial liabilities
Description December31,2020 Derivatives December31,2019 Derivatives	Gross amounts Financial instruments of recognized not set off in the financial liabilities balance sheet 32,440 $ 10,633 $ 10,095 $ 5,000 $	Net amount
		21,807 $
		5,095 $

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

202 Central Reinsurance Corporation Annual Report 2020

	Total		308,782 $	104,151) (	204,631 $		204,631 $	7,907	1,422) (		1,422	6,025) (	206,513 $		315,267 $	108,754) (	206,513 $
Miscellaneous	equipment		4,303 $	3,342) (	961 $		961 $	47	820) (		820	314) (	694 $		3,530 $	2,836) (	694 $
Transportation	equipment		4,861 $	4,699) (	162 $		162 $	-	-		-	162) (	- $		4,861 $	4,861) (	- $
Computer	equipment		27,174 $	17,539) (	9,635 $		9,635 $	5,462	602) (		602	3,312) (	11,785 $		32,034 $	20,249) (	11,785 $
	Building		91,648 $	78,571) (	13,077 $		13,077 $	2,398	-		-	2,237) (	13,238 $		94,046 $	80,808) (	13,238 $
	Land		180,796 $	-	180,796 $		180,796 $	-	-		-	-	180,796 $		180,796 $	-	180,796 $
		At January 1, 2020	Cost	Accumulated depreciation		2020	At January 1	Additions	Disposals-cost	Disposals-accumulated	depreciation	Depreciation	At December 31	At December 31, 2020	Cost	Accumulated depreciation

Central Reinsurance Corporation Annual Report 2020 203

	Total		303,966 $	99,188) (	204,778 $		204,778 $	6,195	1,379) (		1,379	6,342) (	204,631 $		308,782 $	104,151) (	204,631 $
Miscellaneous	equipment		4,460 $	3,155) (	1,305 $		1,305 $	-	157) (		157	344) (	961 $		4,303 $	3,342) (	961 $
Transportation	equipment		4,861 $	4,376) (	485 $		485 $	-	-		-	323) (	162 $		4,861 $	4,699) (	162 $
Computer	equipment		22,270 $	16,246) (	6,024 $		6,024 $	6,126	1,222) (		1,222	2,515) (	9,635 $		27,174 $	17,539) (	9,635 $
	Building		91,579 $	75,411) (	16,168 $		16,168 $	69	-		-	3,160) (	13,077 $		91,648 $	78,571) (	13,077 $
	Land		180,796 $	-	180,796 $		180,796 $	-	-		-	-	180,796 $		180,796 $	-	180,796 $
		At January 1, 2019	Cost	Accumulated depreciation		2019	At January 1	Additions	Disposals-cost	Disposals-accumulated	depreciation	Depreciation	At December 31	At December 31, 2019	Cost	Accumulated depreciation

204 Central Reinsurance Corporation Annual Report 2020

(12) Accounts payable

Accounts payable
Notes payable Due to reinsurers and ceding companies Other payables	December31,2020 1,354 $ 222,247 197,321 420,922 $	December31,2019
		- $ 256,460 200,083
		456,543 $

(13) Employee benefits

A. Defined benefit obligation

(a)The Company has established a defined benefit pension plan in accordance with the Labor Standards Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 8% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. After the Company provided a comprehensive assessment report, the Department of Labor, Taipei City Government approved the Company’s reduction of the contribution rate to 2% effective from July, 2019. Also, the Company would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method, to the employees expected to be qualified for retirement next year, the Company will make contributions to cover the deficit once or in installments.

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

	December	31,2020	December	31,2019
Present value of defined benefit obligations	($	37,944)	($	48,803)
Fair value of plan assets		47,342		52,452
Net defined benefit assets	$	9,398	$	3,649

Central Reinsurance Corporation Annual Report 2020 205

Year ended December 31, 2020 Balance at January 1 Current service cost Interest (expense) income Past service cost Remeasurements: Change in demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31 Year ended December 31, 2019 Balance at January 1 Current service cost Interest (expense) income Remeasurements: Change in demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31	Present value of defined benefitobligations		Fair value of plan assets	Net defined benefit asset(liability)
	48,803) ($ 830) ( 322) ( 9,450 40,505) ( 207 5,586) ( 114) ( 5,493) ( - 8,054 37,944) ($ Present value of defined benefitobligations	(	52,452 $ - 347 - 52,799 - - 1,727 1,727 870 8,054) 47,342 $ Fair value of plan assets	3,649 $ 830) ( 25 9,450 12,294 207 5,586) ( 1,613 3,766) ( 870 - 9,398 $ Net defined benefit asset(liability)
	46,309) ($ 790) ( 389) ( 47,488) ( 882) ( 5,416) ( 4,286 2,012) ( - 697 48,803) ($		48,348 $ - 406 48,754 - - 2,146 2,146 2,249 697) ( 52,452 $	2,039 $ 790) ( 17 1,266 882) ( 5,416) ( 6,432 134 2,249 - 3,649 $

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or

206 Central Reinsurance Corporation Annual Report 2020

foreign real estate securitization products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company and domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and domestic subsidiaries are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2020 and 2019 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

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

Discount rate Salary increment	Year ended December31,2020	Year ended December31,2019
	0.35% 3.72%	0.66% 2.49%

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

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

Discount rate increase 0.5% Discount rate decrease 0.5% Salary increment increase 0.5% Salary increment decrease 0.5%	Year ended December31,2020	Year ended December31,2019
	($ 1,968) 2,132 2,050 1,915) (	($ 1,726) 1,867 1,823 1,704) (

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

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

(f)Expected contributions to the defined benefit pension plans of the Company for the year ended December 31, 2021 amounts to $900.

(g)As of December 31, 2020, the weighted average duration of the retirement plan is 11 years. B. Defined contribution plan

(a)Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”). Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

(b)The pension costs under the above-mentioned pension plan of the Company for the years ended December 31, 2020 and 2019 were $7,566 and $7,148, respectively.
(14) Common stock

As of December 31, 2020 and 2019, the Company’s authorized capital were all $6,000,000, and the

Central Reinsurance Corporation Annual Report 2020 207

paid-in capital were all $5,903,888 , with a par value of $10 (in dollars) per share.

(15) Capital reserve
Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paidin capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient. However, according to Jin-Kuan-Bao-Tsai Letter No. 10202501991, for the purpose of strengthening the solvency and operation, insurance companies having no deficit should submit relevant documents demonstrating the financial soundness and steady operation of their companies to FSC for approval before the stockholders’ meeting if they propose to use legal reserve provided under Article 145-1 of Insurance Act and capital surplus to issue cash to shareholders in proportion to their share ownership in accordance with Article 241 of the R.O.C. Company Act.
(16) Retained earnings
A. Limitation on distribution of retained earnings and dividend policy
- Under the Company's Articles of Incorporation, the current year's earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 20% of the remaining amount shall be set aside as legal reserve. Afterwards, the Company shall recognize or reverse special reserve in accordance with regulations, and accumulated unappropriated earnings of the prior period. Appropriation of the remainder shall be proposed by the Board of Directors and resolved by the stockholders.

The Company’s dividends are distributed in the form of cash dividends and stock dividends, in a coordinated way, among which, the cash dividends shall account for at least 50% of the total dividends distributed.

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

B. Special reserve

Special reserve
December31,2020 Equalization reserve 2,615,013 $ Unrealized revaluation increment 126,557 Employees’ education and training 16,027 2,757,597 $	December31,2019
	2,215,608 $ 126,557 16,027
	2,358,192 $

(a) For the year 2020, the provision for equalization reserve amounting to $399,405 had been recognized as special reserve under equity upon annual resolution and is not available for distribution.

(b) The amounts previously set aside by the Company as special reserve on initial application of

208 Central Reinsurance Corporation Annual Report 2020

IFRSs in accordance with Jin-Kuan-Zheng-Fa Order No. 1010012865, dated April 6, 2012 and Jin-Kuan-Bao-Tsai Order No. 10102508861, dated June 5, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. The Company had transferred the amount of $126,557 of unrealized gain from real estate value-added to special reserve under equity.

(c) In accordance with the regulations of Jin-Kuan-Bao-Tsai Order No. 10502066461 promulgated on July 13, 2016, upon appropriating the earnings of 2016 through 2018, the Company shall provision 0.5% of income after tax as special reserve. And starting from the subsequent year of the provision of such special reserve, special reserve as mentioned above may be reversed in an amount equal to expenditures that were for employees’ education and training and for the protection of employees’ interest. However, the above-mentioned order was repealed by Jin-Kuan-Bao-Tsai Order No. 10804932431 on July 30, 2019, resulting in the Company no longer having to provide special reserve starting 2019. The remaining special reserve as mentioned above may be reversed in an amount equal to expenditures that were for employees’ education and training and for the protection of employees’ interest. The Company had transferred the amount of $16,027 for expenditures that were for employees’ education and training and for the protection of employees’ interest to special reserve under equity.
C. On May 28, 2020, the distribution of earnings for 2019 as resolved by the stockholders were $531,350 (cash dividends of $0.9 (in dollars) per share). On March 18, 2021, the distribution of earnings for 2020 as proposed by the Board of Directors was $767,505 (cash dividends of $1.3 (in dollars) per share).
Detailed information on earnings appropriation resolved by the Board of Directors and ratified at the stockholders’ meeting is posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.
D. For information relating to employees’ compensation and directors’ remuneration, please see Note 6 (18).

(17) Income tax

A. Components of income tax expense:

Current income tax: Current income tax on profits for the period Income tax on undistributed earnings Adjustments in respect of prior years Deferred income tax: Origination and reversal of temporary difference ( Income tax expense	Year ended December 31, 2020 332,315 $ 72 340 59,820) ( 272,907 $	Year ended December31,2019 418,899 $ - 839 16,352) 403,386 $

Central Reinsurance Corporation Annual Report 2020 209

B. The income tax relating to components of other comprehensive income are as follows:

Reconciliation between income tax expense and accounting profit: Year ended December31,2020 Exchange differences on translation of foreign financial statements 34,100) ($ Other comprehensive income upon reclassification of applying overlay approach 32,387 Remeasurement of defined benefit obligations 753) ( 2,466) ($ Year ended December31,2020 Tax calculated based on profit before tax and statutory tax rate 357,727 $ Impact of tax adjustments by tax regulations 85,232) ( Tax on undistributed earnings 72 Prior year income tax underestimation 340 Income tax expense 272,907 $	Reconciliation between income tax expense and accounting profit: Year ended December31,2020 Exchange differences on translation of foreign financial statements 34,100) ($ Other comprehensive income upon reclassification of applying overlay approach 32,387 Remeasurement of defined benefit obligations 753) ( 2,466) ($ Year ended December31,2020 Tax calculated based on profit before tax and statutory tax rate 357,727 $ Impact of tax adjustments by tax regulations 85,232) ( Tax on undistributed earnings 72 Prior year income tax underestimation 340 Income tax expense 272,907 $	Year ended December31,2019 8,649) ($ 21,015 27 12,393 $ Year ended December31,2019	Year ended December31,2019 8,649) ($ 21,015 27 12,393 $ Year ended December31,2019
	357,727 $ 85,232) ( 72 340 272,907 $		301,502 $ 101,045 - 839 403,386 $

C. Reconciliation between income tax expense and accounting profit:

210 Central Reinsurance Corporation Annual Report 2020

D. Amounts of deferred tax assets or liabilities as a result of temporary difference are as follows: 2020

					2020
Deferred tax assets Employee benefits-pension expense Employee benefits-unused compensated absences Expected credit impairment and reversal of profit from investment Expected credit impairment and reversal of profit from non-investment Loss allowance of reinsurance contract assets Unrealized foreign exchange losses Exchange differences on translation of foreign financial statements Deferred tax liabilities Gain on revaluation of land Gain upon reclassification of applying overlay approach Unrealized profit on valuation of financial assets		January1 5,577 $ 1,714 400 5 8 38,732 17,338 63,774 $ 41,555 $ 10,479 24,503 76,537 $	Recognized in profitor loss 2,296) ($ 20 55) ( 1) ( 8) ( 79,476 - 77,136 $ - $ - 17,316 17,316 $		Recognized in other comprehensiveincome 753 $ - - - - - 34,100 34,853 $ - $ 32,387 - 32,387 $		December31
							4,034 $ 1,734 345 4 - 118,208 51,438 175,763 $ 41,555 $ 42,866 41,819 126,240 $

Central Reinsurance Corporation Annual Report 2020 211

Deferred tax assets Employee benefits-pension expense Employee benefits-unused compensated absences Expected credit impairment and reversal of profit from investment Expected credit impairment and reversal of profit from non-investment Loss allowance of reinsurance contract assets Unrealized foreign exchange losses Loss upon reclassification of applying overlay approach Exchange differences on translation of foreign financial statements Deferred tax liabilities Gain on revaluation of land Gain upon reclassification of applying overlay approach Unrealized profit on valuation of financial assets				2019
		January1 5,437 $ 1,579 398 - 293 985 10,536 8,689 27,917 $ 41,555 $ - 3,084 44,639 $	Recognized in profitor loss 167 $ 135 2 5 285) ( 37,747 - - 37,771 $ - $ - 21,419 21,419 $	Recognized in other comprehensiveincome 27) ($ - - - - - 10,536) ( 8,649 1,914) ($ - $ 10,479 - 10,479 $		December31
						5,577 $ 1,714 400 5 8 38,732 - 17,338 63,774 $ 41,555 $ 10,479 24,503 76,537 $

E. The Company’s income tax returns have been assessed and approved by the Tax Authority up to 2016 and 2018.

212 Central Reinsurance Corporation Annual Report 2020

(18) Employee benefits expense, depreciation and amortization

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

Function Expense	Year ended December 31,2020	Year ended December 31,2020	Year ended December 31,2019	Year ended December 31,2019
	Operating Costs	Operating Expenses	Operating Costs	Operating Expenses
Employee benefits expense	- $	242,423 $	- $	235,089 $
Salaries	-	206,832	-	185,260
Employees’insurance	-	12,960	-	12,567
Pension	-	4,904) (	-	8,753
Directors’remuneration	-	18,164	-	17,774
Other employee benefits expense (Note 1)	-	9,371	-	10,735
Depreciation (Note 2)	2,167	6,261	2,256	6,653
Amortization	-	4,081	-	2,373

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

Note 2:The depreciation, which is classified as operating cost, is accounted for as deduction to gain on investment property.
A. As of December 31, 2020 and 2019, the average numbers of employees were 145 and 144, respectively, and the average number of directors who were not employed as employees is 8 and 9, respectively.
B. According to the Company’s Articles of Incorporation, after covering accumulated deficits with current year earnings, the remainder, if any, shall provision employees’ compensation of no less than 0.5% and directors’ remunerations of no more than 1%.
C. The Company’s estimated employees’ compensation of $16,288 and $11,728 for the years ended December 31, 2020 and 2019, respectively, were determined from earnings and the distribution in the past on a pro-rata basis, which fell within the scope of the Company’s Articles of Incorporation’s requirements. The Company’s estimated directors’ remuneration for the years ended December 31, 2020 and 2019 were $4,850 and $3,900, respectively. The estimates, which fell within the scope of the Company’s Articles of Incorporation’s requirements, were determined from earnings and the past distribution experiences during the tenure of directors. The aforementioned amounts were recognized in directors’ remuneration. The 2019 employees’ compensation of $11,728 and directors’ remuneration of $3,900 as approved by the Board of Directors of the Company were in agreement with the amounts recognized in the 2019 financial statements, and employees’ compensation and directors� remuneration are distributed in the form of cash.
Information about the appropriation of employees’ compensation and directors’ remuneration by the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.
D. For the years ended December 31, 2020 and 2019, the averages of employee benefit expense were $1,637 and $1,610, respectively.
E. For the years ended December 31, 2020 and 2019, the averages of employee salaries expense were $1,510 and $1,372, respectively, and the average employee salaries expense increased by 10.06% for the year ended December 31, 2020.

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F. There was no supervisors’ remuneration for the years ended December 31, 2020 and 2019. Note: The Company has set up an audit committee, so there was no supervisors’ remuneration.
G. The Company’s compensation policy (including directors, managers, and employees) is as follows:
(a) Directors: Directors’ remuneration is paid in accordance with the Company’s Articles of Incorporation and the remuneration payment policies for directors. Remuneration includes directors’ remuneration, reward, pension and service execution fee. The principal policies are set out below:
- i. Remuneration: The total directors’ remuneration is distributed in accordance with the Company’s Articles of Incorporation and individual directors’ remuneration is distributed in consideration of the degree of each director’s participation in the operation of the Company and the value of their contributions within the total directors’ remuneration.
- ii. Reward: Reward includes salary and bonus and is distributed in accordance with the degree of each director’s participation in the operation of the Company and the value of their contributions as well as in consideration of the general pay levels of the industry.
(b) Managers and employees: The distribution of managers’ and employees’ annual compensation is conducted in accordance with regulations such as the Company’s Articles of Incorporation, compensation payment policies for managements, the management policies of employees’ salary payment and factors such as profit of the current year and performance result after annual assessment; the distribution of year-end bonus and employees’ compensation is also based on the same principles.
(c) In addition, the Company has set a remuneration committee to review the policy, system, standard and structure of the directors’ and managers’ remuneration regularly and to assess and structure of directors’ and managers’ remuneration regularly.

7. RELATED PARTY TRANSACTIONS

(1)	Names of related parties and their relationship with the Company Names of relatedparties Relationshipwith theCompany Evergreen International Corporation Parent company Evergreen Insurance Company Limited Other related parties Evergreen Marine Corporation (Note) Other related parties Directors, general managers, vice general managers, etc. Key management of the Company	Names of related parties and their relationship with the Company Names of relatedparties Relationshipwith theCompany Evergreen International Corporation Parent company Evergreen Insurance Company Limited Other related parties Evergreen Marine Corporation (Note) Other related parties Directors, general managers, vice general managers, etc. Key management of the Company
	Names of relatedparties Evergreen International Corporation Evergreen Insurance Company Limited Evergreen Marine Corporation (Note) Directors, general managers, vice general managers, etc.
		Parent company Other related parties Other related parties Key management of the Company

Note: Evergreen Marine Corporation has become the director of the Company since May 28, 2020. (2) Significant related party transactions and balances

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

B. Other payables (shown under accounts payable) Other related parties Parent Other related parties Total	December31,2020 212 $ December31,2020 1,245 $ 12 1,257 $	December31,2019
		296 $
		December31,2019
		1,254 $ -
		1,254 $

214 Central Reinsurance Corporation Annual Report 2020

C. Operating revenues and operating costs

Operating revenues and operating costs
			Year ended			Year ended
		December31,2020			December31,2019
Other related parties
Gross premiums written		$	19,499		$	10,019
Reinsurance premiums ceded	(		36)	(		18)
Reinsurance commission expenses			8,468			7,423
Reinsurance commission revenue			9			67
Reinsurance claims paid			7,060			3,821
Reinsurance claims recovery	(		29)			150

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

D. Operating expenses

Key management compensation Parent System service charge, fees paid to stock transfer agent and printing expenses, etc. Other related parties Service fees-Others Total Salaries and other short-term employee benefits Post-employment benefits	Year ended December31,2020 14,317 $ 54 14,371 $ Year ended December 31, 2020 37,582 $ 3,429) ( 34,153 $	Year ended December31,2019 14,264 $ - 14,264 $ Year ended December31,2019 29,250 $ 1,246 30,496 $

(3) Key management compensation

8. PLEDGED ASSETS

Please see Note 6 (4).

9. COMMITMENTS

None.

10. SIGNIFICANT ACCIDENTAL LOSS

None.

11. SIGNIFICANT SUBSEQUENT EVENTS

None.

12. OTHERS

(1) Fair value information

A. The fair value of the Company’s financial instruments not measured at fair value is provided in Note 12 (1) K. The fair value of the Company’s investment property measured at cost model is provided in Note 6 (7).
B. The different levels that the inputs to valuation techniques are used to measure fair value of financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the

Central Reinsurance Corporation Annual Report 2020 215

entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability takes place with sufficient frequency and volume to provide pricing information on an on-going basis. The fair value of the Company’s investment in listed and over-the-counter stocks and beneficiary certificates is included in Level 1.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company’s investment in off-the-run government bonds, corporate bonds, financial bonds and derivative instruments is included in Level 2.
Level 3:Unobservable inputs for the asset or liability. The fair value of the Company’s investment in part of investments in debt instrument without active market, mandatory convertible corporate bonds, unlisted stocks and investment property is included in Level 3.

216 Central Reinsurance Corporation Annual Report 2020

C. The related information of financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities as of December 31, 2020 and 2019 is as follows:

is as follows:
December 31, 2020 Non-derivative financial instruments Assets Recurring fair value measurements Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Listed and over-the-counter common stocks Listed and over-the-counter preferred stocks Unlisted stocks Index funds Open-end funds Government bonds Derivative financial instruments Assets Recurring fair value measurements Financial assets at fair value through profit or loss FX swap contracts Forward foreign exchange contracts Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss FX swap contracts Forward foreign exchange contracts Futures	Level 1 4,302,426 $ - - 113,029 1,335,658 - - $ - - - -	Level 2 - $ 231,330 - - - 142,072 237,476 $ 2,912 9,382 22,362 696	Level3 - $ - 595,489 - - - - $ - - - -	Total
				4,302,426 $ 231,330 595,489 113,029 1,335,658 142,072 237,476 $ 2,912 9,382 22,362 696

Central Reinsurance Corporation Annual Report 2020 217

December 31, 2019 Non-derivative financial instruments Assets Recurring fair value measurements Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Listed and over-the-counter common stocks Listed and over-the-counter preferred stocks Unlisted stocks Securitized real estate products Index funds Open-end funds Derivative financial instruments Assets Recurring fair value measurements Financial assets at fair value through profit or loss FX swap contracts Forward foreign exchange contracts Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss FX swap contracts Forward foreign exchange contracts Futures	Level 1 4,257,136 $ - - 38,893 221,780 931,867 - $ - - - -	Level 2 - $ 239,195 - - - - 117,495 $ 5,294 242 5,134 4,719	Level3 - $ - 155,230 - - - - $ - - - -	Total
				4,257,136 $ 239,195 155,230 38,893 221,780 931,867 117,495 $ 5,294 242 5,134 4,719

D. The methods and assumptions the Company used to measure fair value are as follows:

(a) The instruments the Company used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

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

(b) Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques method can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the balance sheet date (i.e. yield curves on the Taipei Exchange, average commercial paper interest rates quoted from Reuters).

218 Central Reinsurance Corporation Annual Report 2020

(c) When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market and swap contracts, the Company adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.
(d) The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques. Forward exchange contracts are usually valued based on the current forward exchange rate.
(e) The Company uses the market approach to evaluate the fair value of unlisted stocks. The used factors include unobservable input. The effect of unobservable inputs to the valuation of financial instruments is provided in Note 12 (1) I.
(f) The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Company’s financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Company’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial instruments at the balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.
(g) The Company takes into account adjustments for credit risks to measure the fair value of financial instruments to reflect credit risk of the counterparty and the Company’s credit quality.
E. For the years ended December 31, 2020 and 2019, there were no transfer between Level 1 and Level 2.

Central Reinsurance Corporation Annual Report 2020 219

F. The following table presents the changes in level 3 instruments for the years ended December 31, 2020 and 2019:	Year ended December 31, 2020	Acquired in the period Disposed of in the period	Recognized Sell, Transfers	Recognized in other Transfers disposal out	Opening in profit comprehensive Buy or into or from Ending	balance or loss income (Note) issuance level 3 settle level 3 balance	Non-Derivative financial instruments	Financial assets at fair value through	profit or loss	Financial assets mandatorily	measured at fair value through 155,230 $ - $ 440,259 $ - $ - $ - $ - $ 595,489 $	profit or loss	Year ended December 31, 2020	Acquired in the period Disposed of in the period	Recognized Sell, Transfers	Recognized in other Transfers disposal out	Opening in profit or comprehensive Buy or into or from Ending	balance loss income issuance level 3 settle level 3 balance	Non-Derivative financial instruments	Financial assets at fair value through	profit or loss	Financial assets mandatorily	measured at fair value through 237,082 $ 70,335) ($ 11,517) ($ 166,747 $ - $ 166,747) ($ - $ 155,230 $	profit or loss	Note: Financial assets mandatorily measured at fair value through profit or loss recognized in other comprehensive income upon reclassification of	applying overlay approach.

220 Central Reinsurance Corporation Annual Report 2020

Unrealized gain or loss on valuation recognized in other comprehensive income and profit or loss arising from the assets held for the years ended	December 31, 2020 and 2019 was $440,259 and ($11,517), respectively.	G. For the years ended December 31, 2020 and 2019, there were no transfer into or out from Level 3.	H. Financial segment is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent	fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make	results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and	represented as the exercisable price, and frequently updating inputs used to the valuation model and making any other necessary adjustments to the	fair value. Financial segment set up valuation policies, valuation processes and rules for measuring fair value of financial instruments and ensure	compliance with the related requirements in IFRS.	I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs	to valuation model used in Level 3 fair value measurement:	Fair value at Valuation Significant Range Relationship of	December 31, 2020 technique unobservable input (weighted average) inputs to fair value	Financial assets at fair value	through profit or loss	Financial assets mandatorily	measured at fair value through	profit or loss	Unlisted stocks (Note) 595,489 $ Market approach Black-Scholes model Liquidity discount 15.15% The lower the liquidity discount, the higher the fair value

Central Reinsurance Corporation Annual Report 2020 221

Fair value at Valuation Significant Range Relationship of	December 31, 2019 technique unobservable input (weighted average) inputs to fair value	Financial assets at fair value	through profit or loss	Financial assets mandatorily	measured at fair value through	profit or loss	Unlisted stocks (Note) 155,230 $ Market approach Black-Scholes model Liquidity discount 10.26% The lower the liquidity discount, the higher the fair value	Note: Items that affect the fair value measurement of unlisted stocks include observable stock prices.	J. The Company has carefully assessed the valuation models and assumptions used to measure fair value; however, different valuation model or input	could result in different valuation results. Specifically, if the valuation of financial instrument classified in Level 3 increase or decrease 10%, the	effects on other comprehensive income in the period would be as follows:	December 31, 2020 December 31, 2019	Change in fair value Change in fair value	recognized in other comprehensive income recognized in other comprehensive income	Favorable Unfavorable Favorable Unfavorable	Financial assets at fair value through profit or loss	Financial assets mandatorily measured at fair value through profit or loss 59,549 $ 59,549) ($ 15,523 $ 15,523) ($

222 Central Reinsurance Corporation Annual Report 2020

K. Fair value of the financial instruments not measured at fair value	Except for the financial instruments below and investment property, the carrying amounts of the Company’s financial instruments not measured at	fair value (including cash and cash equivalents, accounts receivable, other financial assets and accounts payable) are approximate to their fair values.	December 31, 2020 December 31, 2019	Fair value Fair value	Book value Level 1 Level 2 Level 3 Book value Level 1 Level 2 Level 3	Financial assets	Financial assets at amortized cost 12,121,986 $ - $ 12,709,333 $ 249,938 $ 14,002,315 $ - $ 13,880,073 $ 575,077 $	The different levels that the inputs to valuation techniques are used to measure fair value of financial instruments have been defined in Note 12 (1)	B, and the methods and assumptions are as follows:	If recent transaction prices or market maker quotes are available, the fair value is based on such information. If there is no quoted market price	available, the fair value is determined by using valuation techniques and calculated as the present value of the estimated cash flows.

Central Reinsurance Corporation Annual Report 2020 223

December 31, 2019	Within Over	12 months 12 months	12,603,772 $ - $	325,191 -		5,966,890 -	1,061,930 12,018,094	100,000 -	- 448,556	4,062,884 1,003,532	- 204,631	- 610	- 8,866	494,062 799,231		456,011 $ 532 $		266,264 -		10,095 -	240 371	14,347,824 11,886,919	- 18,011	67,866 2,230
December 31, 2020	Within Over	Assets Book value 12 months 12 months Book value	Cash and cash equivalents 15,001,586 $ 15,001,586 $ - $ 12,603,772 $	Accounts receivable 454,002 454,002 - 325,191	Financial assets at fair value through	profit or loss 6,960,392 6,960,392 - 5,966,890	Financial assets at amortized cost 11,174,625 923,671 10,250,954 13,080,024	Other financial assets 499,556 499,556 - 100,000	Investment property 446,815 - 446,815 448,556	Reinsurance contract assets 6,065,459 4,903,355 1,162,104 5,066,416	Property and equipment 206,513 - 206,513 204,631	Right-of-use asset 374 - 374 610	Intangible assets 5,240 - 5,240 8,866	Other assets 1,723,263 873,272 849,991 1,293,293	Liabilities	Accounts payable 420,922 $ 420,347 $ 575 $ 456,543 $		Current income tax liabilities 105,938 105,938 - 266,264	Financial liabilities at fair value through	profit or loss 32,440 32,440 - 10,095	Lease liabilities 377 240 137 611	Insurance liabilities 28,491,167 15,902,739 12,588,428 26,234,743	Provisions 779 - 779 18,011	Other liabilities 126,488 123,805 2,683 70,096

224 Central Reinsurance Corporation Annual Report 2020

	Retention earned	premiums	(5)=(3)-(4)	13,837,803 $	2,587,616		16,425,419 $		Retention earned	premiums	(5)=(3)-(4)	12,582,898 $	2,544,435		15,127,333 $
Year ended December 31, 2020	Net change in	Retention premiums unearned premium reserve	(3)=(1)-(2) (4)	14,482,939 $ 645,136 $	2,600,177 12,561		17,083,116 $ 657,697 $	Year ended December 31, 2019	Net change in	Retention premiums unearned premium reserve	(3)=(1)-(2) (4)	12,983,906 $ 401,008 $	2,571,593 27,158		15,555,499 $ 428,166 $
	Gross Reinsurance	premiums written premiums ceded	Category of insurance (1) (2)	Non-Compulsory insurance 15,807,678 $ 1,324,739 $	Compulsory insurance 2,600,177 -		18,407,855 $ 1,324,739 $		Gross Reinsurance	premiums written premiums ceded	Category of insurance (1) (2)	Non-Compulsory insurance 14,183,935 $ 1,200,029 $	Compulsory insurance 2,571,593 -		16,755,528 $ 1,200,029 $

Central Reinsurance Corporation Annual Report 2020 225

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

Calculation of retention reinsurance claims paid are shown below:	rance claims paid are shown below:	rance claims paid are shown below:	rance claims paid are shown below:	rance claims paid are shown below:
Balance sheets for compulsory automobile liability insurance are as follows: Reinsurance Reinsurance Retention reinsurance claims paid claims recovery claims paid Categoryof insurance (1) (2) (3)=(1)-(2) Non-Compulsory insurance 7,427,730 $ 685,892 $ 6,741,838 $ Compulsory insurance 2,734,354 - 2,734,354 10,162,084 $ 685,892 $ 9,476,192 $ Reinsurance Reinsurance Retention reinsurance claims paid claims recovery claims paid Category of insurance (1) (2) (3)=(1)-(2) Non-Compulsory insurance 7,489,186 $ 586,974 $ 6,902,212 $ Compulsory insurance 2,792,444 - 2,792,444 10,281,630 $ 586,974 $ 9,694,656 $ YearendedDecember31,2020 YearendedDecember31,2019 December31,2020 December31,2019 Assets Cash and cash equivalents 4,033,524 $ 4,165,212 $ Due from reinsurers and ceding companies 432,492 427,264 4,466,016 $ 4,592,476 $ Liabilities Unearned premium reserve 1,536,354 $ 1,523,793 $ Claims reserve 2,185,552 2,133,275 Equalization reserve 744,110 935,408 4,466,016 $ 4,592,476 $	YearendedDecember31,2020
	Reinsurance Reinsurance Retention reinsurance claims paid claims recovery claims paid (1) (2) (3)=(1)-(2) 7,427,730 $ 685,892 $ 6,741,838 $ 2,734,354 - 2,734,354 10,162,084 $ 685,892 $ 9,476,192 $ YearendedDecember31,2019		Retention reinsurance claims paid (3)=(1)-(2)
			6,741,838 $ 2,734,354
			9,476,192 $
			Retention reinsurance claims paid (3)=(1)-(2)
			$	6,902,212 2,792,444
			$	9,694,656
				December31,2019
Assets Cash and cash equivalents Due from reinsurers and ceding companies Liabilities Unearned premium reserve Claims reserve Equalization reserve		December31,2020
		4,033,524 $ 432,492		4,165,212 $ 427,264
		4,466,016 $		4,592,476 $
		1,536,354 $ 2,185,552 744,110		1,523,793 $ 2,133,275 935,408
		4,466,016 $		4,592,476 $

(5) Balance sheets for compulsory automobile liability insurance are as follows:

Note: As of December 31, 2020 and 2019, certain time deposits, which both amounted to $0, included above as cash and cash equivalents of compulsory automobile liability insurance did not meet the definition of cash equivalents, consequently they are presented under other financial assets.

226 Central Reinsurance Corporation Annual Report 2020

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

Operating revenues Reinsurance premiums Net change in unearned premium reserve ( Retention earned premiums Interest income Operating costs Reinsurance claims paid Net change in claims reserve Net change in equalization reserve (	Year ended December31,2020 2,600,177 $ 12,561) ( 2,587,616 7,717 2,595,333 $ 2,734,354 $ 52,277 191,298) ( 2,595,333 $	Year ended December31,2019 2,571,593 $ 27,158) 2,544,435 12,267 2,556,702 $ 2,792,444 $ 14,106 249,848) 2,556,702 $

13. RISK MANAGEMENT

The Company has established risk management policy being the highest directive of promoting enterprise risk management, to efficiently identify, assess, respond and monitor all the risks assumed and to ensure that all risks are within the limitations as planned. Reasonable consideration relationship between risk and reward has been taken into account to maximize the value of equity, maintain the capital adequacy and solvency capability and strengthen the long-term operations of business. The Company has set up risk management committee which is in charge of executing risk management decisions made by the Board of Directors, as well as independent risk management unit which is responsible for executive affairs in daily monitoring, assessment and evaluation of risks.

With regard to various circumstances of the risk management and the monitoring specification, the Company implemented “Risk Managing Mechanism” covering market, credit, liquidity, operation, insurance, asset and liability, emerging market, money laundering, terrorist financing and other risks. In addition, in order to better improve the strategic risk management efficiency, risk quantitative module, finance of risk variance are put to use to analyze various businesses. In addition, the Company sets up risk capacity and risk bearing as the basis for risk management, and promoting the modularization of various risks to continually strengthen the efficiency of risk management at the same time.

(1) Financial instruments

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

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

Central Reinsurance Corporation Annual Report 2020 227

B. Significant financial risks and degrees of financial risks
(a) Market risk
- i. Foreign exchange risk
  - To hedge cash flow fair value risk arising from fluctuations in exchange rates, the Company undertakes derivative financial instruments such as FX swap contracts and forward foreign exchange contracts to hedge recognized assets and liabilities denominated in foreign currencies.

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

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

December 31, 2020

Assets Monetary items CAD CNY EUR HKD ILS JPY KRW THB USD Non-monetary items CNY EUR HKD USD Liabilities Monetary items CNY EUR INR JPY KRW THB USD	Foreign currency amount (in thousands) 3,639 $ 384,445 7,779 62,103 25,701 755,190 5,203,346 265,877 443,344 130,868 9,415 194,655 39,425 171,020 3,657 402,225 1,382,834 12,387,866 86,753 134,007	Exchangerate 22.364 4.380 35.042 3.678 8.877 0.276 0.026 0.952 28.508 4.380 35.042 3.678 28.508 4.380 35.042 0.390 0.276 0.026 0.952 28.508	Bookvalue
			81,383 $ 1,683,890 272,582 228,384 228,148 208,735 136,545 253,076 12,638,837 573,208 329,923 715,846 1,123,941 749,076 128,162 156,964 382,218 325,079 82,576 3,820,262

228 Central Reinsurance Corporation Annual Report 2020

December 31, 2019

	Foreign currency
	amount
	(in thousands) Exchangerate			Bookvalue
Assets
Monetary items
CAD	3,453	23.073	$	79,678
CNY	272,948	4.321		1,179,388
EUR	2,607	33.743		87,954
HKD	43,268	3.866		167,290
ILS	11,638	8.706		101,315
JPY	338,013	0.277		93,652
KRW	3,581,612	0.026		93,293
THB	207,906	1.008		209,507
TRY	25,665	5.061		129,890
USD	417,781	30.106		12,577,701
Non-monetary items
CNY	195,879	4.321		846,379
HKD	157,389	3.866		608,526
USD	29,984	30.106		902,713
Liabilities
Monetary items
CNY	167,493	4.321		723,723
EUR	4,088	33.743		137,942
HKD	15,409	3.866		59,576
INR	203,055	0.422		85,766
JPY	1,634,756	0.277		452,935
KRW	5,758,821	0.026		150,003
TRY	12,697	5.061		64,258
USD	134,920	30.106		4,061,889
(ii) Sensitivity analysis of foreign exchange risk for monetary financial assets and liabilities
listed in the table below	is performed for reasonably possible		changes in foreign
exchange rates with other	conditions held constant and without		considering foreign
exchange derivatives for hedge, the effects on profit		or loss before tax for the years
ended December 31, 2020	and 2019 are as follows:
	Year ended		Year ended
	December31,2020 December31,2019
Foreign currencies to NTD
appreciate by 1%	92,739 $ $			92,674
Foreign currencies to NTD
depreciate by 1%	92,739) ( (			92,674)

Central Reinsurance Corporation Annual Report 2020 229

ii. Price risk
(i) The values of financial instruments may be changed by economic situations, industrial circumstances, market capital flows and government monetary policies. To hedge market value risk exposures, the Company adopts diversified assets allocation strategy taking into account the current trends of financial markets to flexibly adjust assets portfolio under the provisions of Article 146 (1) ~ (8) of the Insurance Act, regulating the limits of funds utilization ratios and accordingly, disperse the market value risk.
(ii)The Company adopts the FX swap contracts and forward foreign exchange contracts to hedge exchange rate fluctuations risk on foreign-currency denominated assets. As the gain (loss) arising from exchange rate changes will mostly offset against the loss (gain) on hedged objectives, the Company estimates no material market value risk would arise. The Company is exposed to price risk because of investments in stock-related futures, which have fair value in the active market and are used for hedging purposes. The Company sets limits to control the transaction volume to reduce its market risk.
(iii) The Company’s investments comprise equity securities and REITs, etc. Their fair value would change due to the change of the prices of equity securities. If the prices of these equity securities and REITs had increased/decreased by 5% and 1% with all other variables held constant, the effects on profit and loss and equity in the years ended December 31, 2020 and 2019 are as follows:

December 31,2020	December 31,2020	December 31,2020
Changes in variables	Changes in profit or loss beforetax	Changes in other comprehensive income (beforetax)
Changes in variables	Changes in profit or loss beforetax	Changes in other comprehensive income (beforetax)
Increased/ decreased by 1%	7,506 $	50,935 $

iii. Interest rate risk

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

230 Central Reinsurance Corporation Annual Report 2020

Financial assets at fair value through profit or loss	December 31,2020	December 31,2020
	Changes in variables	Changes in profit or loss	Changes in other comprehensive income
	Increase/decrease 50 basis points	Decrease $6,688/ Increase $6,688	-

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

Central Reinsurance Corporation Annual Report 2020 231

(ii) Accounts receivable (excluding bond interest receivable) and other financial assets at amortized cost
- When contractual payments (excluding the debt instruments) are more than 30 days past due but less than 90 days, then it is classified as the credit risk increases significantly.
(iii) For the financial assets mentioned above, in order to accurately measure the impacts that Covid-19 has had on it due to a significant increase in credit risk, further and supplemental considerations would be needed.
v. The Company uses the following indicators to assess whether a financial asset has a credit impairment:
(i) A breach of contract, such as a default or delinquency in interest or principal payments; when a contract (excluding the debt instruments) is overdue more than 90 days, it is deemed breached.
(ii) The issuer enters into bankruptcy or reorganization that significantly affects its business.
vi. The Company wrote-off the financial assets partially or entirely to the extent of the amount which cannot be reasonably expected to be recovered. The indicators for reasonably expected to be unrecoverable include:
(i) The recourse procedure has ceased.
(ii)The debtor’s assets or income is evaluated to be insufficient to repay outstanding payments.

232 Central Reinsurance Corporation Annual Report 2020

vii. The Company uses credit ratings (including forward-looking information), probability of default and loss given default figures periodically	published by international credit rating agencies to estimate expected credit loss of bond interest receivable and debt instruments at amortized	cost. Information about expected loss rate is as follows:	December 31, 2019 December 31, 2020	Lifetime	Significant increase	12 Months in credit risk 12 Months	Bond interest receivable	Group 1 0.0000% - 0.0000%	Group 2 0.0000%~0.0248% - 0.0000%~0.0276%	Group 3 0.0182%~0.0372% - 0.0184%~0.1103%	Group 4 0.0745%~0.1365% - 0.0742%~0.1423%	Group 5 - 0.2482% -	Debt instruments at	amortized cost	Group 1 0.0000% - 0.0000%	Group 2 0.0000%~0.0248% - 0.0000%~0.0276%	Group 3 0.0182%~0.0372% - 0.0184%~0.1103%	Group 4 0.0745%~0.1365% - 0.0742%~0.1423%	Group 5 - 0.5608% -	Group 1: S&P AAA or equivalents.	Group 2: Over S&P AA- or equivalents.	Group 3: Over S&P A- or equivalents.	Group 4: Over S&P BBB- or equivalents.	Group 5: Under S&P BBB- or equivalents.

Central Reinsurance Corporation Annual Report 2020 233

cost as of December 31, 2020 and 2019:	December 31, 2019 December 31, 2020	Lifetime	Significant increase	12 Months in credit risk 12 Months	Bond interest receivable	Group 1 9,027 $ - $ 10,223 $	Group 2 35,100 - 40,624	Group 3 47,354 - 55,454	Group 4 5,054 - 5,961	Group 5 - 114 -	96,535 $ 114 $ 112,262 $	Debt instruments at	amortized cost	Group 1 1,321,755 $ - $ 1,733,824 $	Group 2 3,842,693 - 4,503,069	Group 3 5,635,741 - 6,417,427	Group 4 1,126,143 - 1,352,171	Group 5 - 200,000 -	11,926,332 $ 200,000 $ 14,006,491 $

234 Central Reinsurance Corporation Annual Report 2020

Movements of loss allowance for bond interest receivable and investments in debt instruments at amortized cost as of December 31, 2020 and 2019 are as follows: 2020 2019

			2020	2019
Bond interest receivable At January 1 Provision Recovery At December 31 Debt instruments at amortized cost At January 1 Transfer to credit risk has increased significantly Provision Recovery At December 31		12 Months	Lifetime Significant increase in credit risk	12 Months
		31 $ - 8) ( 23 $	- $ - - - $ Lifetime Significant increase in credit risk 2020	57 $ - 26) ( 31 $ 2019 12 Months
		12 Months
	4,176 $ 285) ( - 667) ( 3,224 $		- $ 285 837 - 1,122 $	3,565 $ - 611 - 4,176 $

viii. The Company considers expected loss rate based on historical and current information and takes into account forecasts of future economic conditions to estimate expected credit loss of accounts receivable (excluding bond interest receivable) and other financial assets at amortized cost. As of December 31, 2020 and 2019, the Company’s accounts receivable (excluding bond interest receivable) and other financial assets at amortized cost are not overdue or past due no more than 30 days. The Company therefore assessed credit risk as low and do not recognize loss allowance for credit loss. The book value as of December 31, 2020 and 2019, are as follows:

31, 2020 and 2019, are as follows:
Accounts receivable (excluding bond interest) Other financial assets Refundable deposits under other assets	December 31,2020	December 31,2019
	12 Months	12 Months
	357,376 $ 499,556 321,980	212,960 $ 100,000 150,700

(c) Liquidity risk

i. The Company uses time deposits to adequately adjust its cash flows. When conducting investment evaluation, the Company will take into account the liquidity of financial instruments in secondary markets and may allocate some funds to lower-liquidity but higher-yield-rate financial instruments on condition that the risk is controlled. Even if those financial instruments are sold in the short-term, there is a less likelihood that liquidity risk

Central Reinsurance Corporation Annual Report 2020 235

would arise due to the selling price being significantly lower than the fair value. However, those financial instruments are not intended to be sold in the short-term.
ii. The notional principal of FX swap contracts and forward foreign exchange contracts is normally used as a calculation basis of receivables and payables for these transactions, and is not the actual settlement amount, except for new undertaking or non-renewing transactions. The actual settlement amount is usually lower than the notional principal. The Company has paid margins in advance before undertaking stock-related futures transactions, and daily evaluates the unsettled futures positions. In case additional margins have to be paid later on, the Company has sufficient working capital to fulfill its payment obligations. Accordingly, the Company estimates no material cash flow risk would arise.
iii. The table below analyzes the Company’s non-derivative financial liabilities and net-settled derivative financial liabilities into groupings based on the remaining period at the end of the reporting period to the contractual maturity date.
(i) Non-derivative financial liabilities

			Due after one year	Due after one year
December31,2020	Dueinone year		throughthree years			Total
Accounts payable	$	420,347	$	575	$	420,922
Deposits-in (under other
liabilities)		2,872		2,683		5,555
			Due after one year
December31,2019	Dueinone year		through three years			Total
Accounts payable	$	456,011	$	532	$	456,543
Deposits-in (under other
liabilities)		3,244		2,230		5,474
Net-settled derivative financial		liabilities
		Due in	Due after three months
December31,2020		threemonths		throughone year		Total
FX swap contracts	$	1,006	$	8,376	$	9,382
Forward foreign exchange
contracts		21,571		791		22,362
Futures		696		-		696
		Due in	Due after three months
December31,2019		threemonths		throughone year		Total
FX swap contracts	$	242	$	-	$	242
Forward foreign exchange
contracts		4,937		197		5,134
Futures		4,719		-		4,719

(ii) Net-settled derivative financial liabilities

(2) Risk management of insurance contracts

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

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

236 Central Reinsurance Corporation Annual Report 2020

and thus actual claims may be more than expected.

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

(a) Underwriting policy
The reinsurance portfolio of the Company consists of various types of reinsurance and businesses from different countries and territories. The insurance types include life insurance, property and casualty insurance and others which are in compliance with regulatory requirement. The Company’s development direction is to actively deepen the domestic market and steadily expand the international market to diversify risks of regional concentration.
(b) Retrocession strategy
In consideration of financial strength, capacity and the operation strategies, the Company arranges retrocession to increase the capacity, diversify risks, mitigate retained risk and increase business competitiveness. Furthermore, the Company has purchased catastrophe cover to minimize the exposure to catastrophe loss which may greatly impact the Company’s financial performance. Stringent evaluation of the reputation and credit rating of the reinsurer is taken into account when the Company arranges a retrocession contract. Although the Company adopts various prescribed methods to control insurance risk, given the random and unpredictable nature of insured incidents, deviation may occur between the actual result and the expectation derived from historical experience.

B. Concentration of insurance risk

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

Year Type	Year ended December 31,2020	Year ended December 31,2020	Year ended December 31,2019	Year ended December 31,2019
	Reinsurance premiums	Retention premiums	Reinsurance premiums	Retention premiums
Domestic inward property reinsurance business	63.38%	62.16%	63.25%	62.52%
Domestic inward life reinsurance business	15.96%	16.85%	17.45%	17.95%
Subtotal-Domestic inward reinsurance business	79.34%	79.01%	80.70%	80.47%
Foreign inwardreinsurance business	20.66%	20.99%	19.30%	19.53%
Total	100.00%	100.00%	100.00%	100.00%

C. Sensitivity analysis of insurance risk

The retention earned premium income of the Company (excluding the compulsory automobile liability insurance business) for the years ended December 31, 2020 and 2019 were $13,837,803 and $12,582,898, respectively. If the change of combined ratio of the Company is 1%, the estimated effect on gains and losses of underwriting for the years ended December 31, 2020 and 2019 would be approximately $138,378 and $125,829, respectively.

Central Reinsurance Corporation Annual Report 2020 237

(a) As of December 31, 2020, the following table indicates the loss development pattern of the Company’s inward business:	Year of underwriting 2015 2016 2017 2018 2019 2020 Total	Non-statutory insurance	Accumulated estimated claim amount	At the end of the year 5,067,741 $ 4,823,223 $ 4,676,211 $ 4,930,116 $ 5,429,011 $ 6,182,109 $	After the first year 7,521,055 7,371,808 7,200,462 8,375,507 8,960,138	After the second year 7,049,813 7,038,930 7,175,700 8,368,857	After the third year 6,892,499 6,840,249 7,025,963	After the fourth year 6,804,183 6,705,805	After the fifth year 6,732,022	Accumulated estimated claim amount 6,732,022 6,705,805 7,025,963 8,368,857 8,960,138 6,182,109 43,974,894 $	Accumulated claim payment 6,043,724) ( 6,253,749) ( 6,160,254) ( 6,785,397) ( 5,230,020) ( 526,236) ( 30,999,380) (	Accumulated unpaid claim 688,298 452,056 865,709 1,583,460 3,730,118 5,655,873 12,975,514	Accumulated unpaid	claim before 2014 2,587,258	Subtotal 15,562,772	Provision for statutory insurance	claims reserve (Note) - - 25,405 450,294 1,086,640 623,232 2,185,571	Total 17,748,343 $	Note: Statutory insurance includes compulsory automobile liability insurance, residential earthquake insurance and nuclear insurance.

238 Central Reinsurance Corporation Annual Report 2020

(b) As of December 31, 2020, the following table indicates the loss development pattern of the Company’s retention business:	Year of underwriting 2015 2016 2017 2018 2019 2020 Total	Non-statutory insurance	Accumulated estimated claim amount	At the end of the year 4,796,487 $ 4,501,311 $ 4,427,596 $ 4,566,834 $ 4,965,602 $ 5,507,600 $	After the first year 7,012,164 6,787,551 6,686,191 7,512,520 8,197,721	After the second year 6,605,203 6,519,989 6,712,808 7,418,997	After the third year 6,459,501 6,321,303 6,546,353	After the fourth year 6,371,512 6,192,607	After the fifth year 6,303,221	Accumulated estimated claim amount 6,303,221 6,192,607 6,546,353 7,418,997 8,197,721 5,507,600 40,166,499 $	Accumulated claim payment 5,633,408) ( 5,770,944) ( 5,740,076) ( 6,082,639) ( 4,782,257) ( 525,281) ( 28,534,605) (	Accumulated unpaid claim 669,813 421,663 806,277 1,336,358 3,415,464 4,982,319 11,631,894	Accumulated unpaid	claim before 2014 2,502,579	Subtotal 14,134,473	Provision for statutory insurance	claims reserve (Note) - - 25,405 450,294 1,086,640 623,232 2,185,571	Total 16,320,044 $	Note: Statutory insurance includes compulsory automobile liability insurance, residential earthquake insurance and nuclear insurance.

Central Reinsurance Corporation Annual Report 2020 239

(c) As of December 31, 2019, the following table indicates the loss development pattern of the Company’s inward business:	Year of underwriting 2014 2015 2016 2017 2018 2019 Total	Non-statutory insurance	Accumulated estimated claim amount	At the end of the year 4,482,819 $ 5,067,741 $ 4,823,223 $ 4,676,211 $ 4,930,116 $ 5,429,011 $	After the first year 7,292,566 7,521,055 7,371,808 7,200,462 8,375,507	After the second year 6,837,791 7,049,813 7,038,930 7,175,700	After the third year 6,618,827 6,892,499 6,840,249	After the fourth year 6,551,918 6,804,183	After the fifth year 6,475,167	Accumulated estimated claim amount 6,475,167 6,804,183 6,840,249 7,175,700 8,375,507 5,429,011 41,099,817 $	Accumulated claim payment 5,969,031) ( 5,969,193) ( 6,159,813) ( 5,819,517) ( 5,247,972) ( 527,271) ( 29,692,797) (	Accumulated unpaid claim 506,136 834,990 680,436 1,356,183 3,127,535 4,901,740 11,407,020	Accumulated unpaid	claim before 2013 2,428,911	Subtotal 13,835,931	Provision for statutory insurance	claims reserve (Note) - 31 28,983 277,211 879,231 947,975 2,133,431	Total 15,969,362 $	Note: Statutory insurance includes compulsory automobile liability insurance, residential earthquake insurance and nuclear insurance.

240 Central Reinsurance Corporation Annual Report 2020

Total									37,956,097	27,489,234)	10,466,863		2,345,706	12,812,569		2,133,431		8	14,946,008
									$	(									$
2019			4,965,602 $						4,965,602	526,479) (	4,439,123					947,975
2018			4,566,834 $	7,512,520					7,512,520	4,715,608) (	2,796,912					879,231
2017			4,427,596	6,686,191	6,712,808				6,712,808	5,419,038)	1,293,770					277,211
			$							(
2016			4,501,311	6,787,551	6,519,989	6,321,303			6,321,303	5,680,960)	640,343					28,983
			$							(
2015			4,796,487 $	7,012,164	6,605,203	6,459,501	6,371,512		6,371,512	5,560,765) (	810,747					31
2014			4,218,773 $	6,809,108	6,420,151	6,214,332	6,147,683	6,072,352	6,072,352	5,586,384) (	485,968					-
Year of underwriting	Non-statutory insurance	Accumulated estimated claim amount	At the end of the year	After the first year	After the second year	After the third year	After the fourth year	After the fifth year	Accumulated estimated claim amount	Accumulated claim payment	Accumulated unpaid claim	Accumulated unpaid	claim before 2013	Subtotal	Provision for statutory insurance	claims reserve (Note)	Loss allowance of ceded claims	reserve	Total

Central Reinsurance Corporation Annual Report 2020 241

14. THE OBJECTIVE, POLICY AND PROCEDURE OF CAPITAL MANAGEMENT

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

In practice, Taiwan insurance enterprises usually measure whether the capital is adequate by using the capital adequacy ratio. Pursuant to Article 143-4 of Insurance Act, an insurance enterprise's ratio of selfowned capital to risk-based capital may not be lower than 200%. The Company calculates the capital adequacy ratio every six months in accordance with “Regulations Governing Capital Adequacy of Insurance Companies” to ensure that it can continuously meet the statutory capital requirement. In accordance with “Regulations Governing Capital Adequacy of Insurance Companies”, capital adequacy ratio is calculated as self-owned capital divided by risk-based capital. Self-owned capital is the total capital approved by the competent authority, which includes recognized owners’ equity and other adjustment items as regulated by the competent authority; risk-based capital is the total capital calculated based on the extent of risk that an insurance enterprise assumes in its actual operations. Capital adequacy ratios of the Company as of December 31, 2020 and 2019 were all at capital adequacy level. In addition, the net worth ratio of the Company is 31.39% and 30.72% as of December 31, 2020 and 2019, respectively, in accordance with the Article 15 of the “Regulations Governing the Preparation of Financial Reports by Insurance Enterprises”.

15. OTHER DISCLOSURES

(1) Information of significant transactions

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

(2) Information related to long-term investments

None.

(3) Investments in Mainland China and business transactions

None.

242 Central Reinsurance Corporation Annual Report 2020

(4) Major shareholders information

Major shareholders information
Shares Names of majorshareholders	Number of sharesheld	Shareholding ratio(%)
Evergreen Marine Corporation EVA Airways Corporation Evergreen International Corporation Ministry of Finance Evergreen International Storage and Transport Corporation	207,419,251 117,543,773 51,228,414 49,866,466 35,203,008	35.13% 19.90% 8.67% 8.44% 5.96%

Note: Major shareholders information on this exhibit refers to the shareholders who own 5% or more shares of the Company on the last business day of each quarter.

16. SEGMENT INFORMATION

(1) General information

The Company operates business only in reinsurance services. The Company allocates resources and

assesses performance of the Company as a whole, and has identified that the Company has only one reportable operating segment.

(2) Product information

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

(3) Geographical information

Premium income of the Company from domestic and foreign clients for the years ended December 31, 2020 and 2019 are as follows:

31, 2020 and 2019 are as follows:
Domestic inward reinsurance Foreign inward reinsurance		Year ended December31,2020		Year ended December31,2019
		$ 14,605,616 3,802,239 $ 18,407,855		$ 13,521,648 3,233,880 $ 16,755,528

(4) Major customer information

There are specific customers of Compulsory Motor Insurance Pool that contributed over 10% of the total revenue stated on the Company’s statement of comprehensive income. In 2020 and 2019, the premium income from these customers amounted to $2,600,177 and $2,571,593, constituting 14.13% and 15.35% of the related totals, respectively.

17. BORROWINGS RESULTED FROM PAYMENT OF CLAIMS

None.

18. ACQUISITION, CONSTRUCTION, IDLELIZATION AND SALES OF MAIN OPERATING ASSETS AND REAL ESTATE INVESTMENTS

None.

19. IMPORTANT LAWSUITS IN PROGRESS OR ADJUDICATED

None.

Central Reinsurance Corporation Annual Report 2020 243

IMPORTANT CONTRACTS SIGNED, DISCHARGED BY PERFORMANCE, AGREEMENT, OR
BREACHED
Aside from regular contracts related to the insurance business, the Company had no important contracts signed, discharged by performance, agreement, or breached.
INVESTMENT ITEMS AND INVESTMENT CEILINGS WITH THE INVESTMENT FUNDS
BEING HANDLED AND MANAGED BY THE SECURITIES INVESTMENT TRUST COMPANIES OR SECURITIES INVESTMENT CONSULTING COMPANIES
None.
ADJUSTMENT OF ORGANIZATION AND SIGNIFICANT CHANGE OR REFORM OF
MANAGEMENT MECHANISM
None.
EFFECTS OF SIGNIFICANT CHANGES IN GOVERNMENT LAWS
None.
INFORMATION ON DISCOUNTINUED OPERATIONS
None.
MAJOR OPERATIONS, ASSETS, AND LIABILITIES RECEIVED FROM OR TRANSFERRED TO OTHER INSURANCE BUSINESSES

None.

244 Central Reinsurance Corporation Annual Report 2020

7. REVIEW OF FINANCIAL POSITION, FINANCIAL PERFORMANCE, AND RISK ASSESSMENT

7.1 Financial Position

Financial Position Comparison and Analysis

inancial Position Comparison and Analysis	inancial Position Comparison and Analysis	inancial Position Comparison and Analysis
			NT$ thousands�%
Year			Difference
	2020	2019
Items
			Amount	%

Cash and Cash Equivalents	15,001,586	12,603,772	2,397,814	19.02
Account Receivable	454,002	325,191	128,811	39.61
Financial Assets	19,081,388	19,595,470	(514,082)	(2.62)
Reinsurance Contract Assets	6,065,459	5,066,416	999,043	19.72
Property and Equipment	206,513	204,631	1,882	0.92
Intangible Assets	5,240	8,866	(3,626)	(40.90)
Other Assets	1,899,400	1,357,677	541,723	39.90
Total Assets	42,713,588	39,162,023	3,551,565	9.07
Account Payable	420,922	456,543	(35,621)	(7.80)
Financial Liabilities	32,440	10,095	22,345	221.35
Insurance Liabilities	28,491,167	26,234,743	2,256,424	8.60
Provisions	779	18,011	(17,232)	(95.67)
Other Liabilities	359,043	413,508	(54,465)	(13.17)
Total Liabilities	29,304,351	27,132,900	2,171,451	8.00
Capital	5,903,888	5,903,888	-	-
Capital Reserve	300,000	300,000	-	-
Retained Earnings	6,635,437	5,654,071	981,366	17.36
Other Equity	569,912	171,164	398,748	232.96
Total Equity	13,409,237	12,029,123	1,380,114	11.47

Central Reinsurance Corporation Annual Report 2020 245

�Analysis and explanation of the reason for increases or decreases:

(Only those with a change of more than 20% between two periods and a change in

the amount up to NT$10 million will be taken into consideration in the analysis)

Account Receivable more than last year: Mainly due to the increase in account receivable for sale of securities.
Other assets more than last year: Mainly due to the increase in end of period refundable deposits and end of period reinsurance liability reserve.
Financial Liabilities more than last year: Mainly due to the increase in the valuation loss of derivative financial instruments.
Provisions compared less than last year: Mainly due to the decrease in accrued pension liabilities at the end of the current period.
Other Equities more than last year: Mainly due to the increase in other comprehensive income on reclassification using overlay approach for the current period.
�Influence of changes in financial position for the 2 most recent fiscal years: No significant impact on the financial position.
Future response plan�Not applicable.

246 Central Reinsurance Corporation Annual Report 2020

7.2 Financial Performance

Financial performance Comparison and Analysis

			NT$ thousands�%	NT$ thousands�%
Year Items	2020	2019	Difference Amount	Change percentage (%)
Operating Revenue	17,656,923	16,092,924	1,563,999	9.72
Operating Costs	15,467,129	14,230,716	1,236,413	8.69
Operating Expenses	403,480	354,972	48,508	13.67
Net Operating Income	1,786,314	1,507,236	279,078	18.52
Non-Operating
Income and Expenses	2,322	275	2,047	744.36
Income before Tax	1,788,636	1,507,511	281,125	18.65
Income Tax Expense	272,907	403,386	(130,479)	(32.35)
Net Income	1,515,729	1,104,125	411,604	37.28

Analysis and explanation of the reason for increases or decreases: (Only those with a change of more than 10% between two periods will be taken into consideration in the analysis)
Operating Expenses more than last year: Mainly due to the increase in business tax and bad debt expenses for the current period.
Non-operating income and expenses more than last year: Mainly due to the accounts payable for the current period reclassified to miscellaneous income.
Net Operating Income and Income before Tax more than last year: Mainly due to the increase in underwriting benefits and net gain from investment for the current period.
Income tax expense less than last year: mainly due to the decrease in taxable income for the current period.
In summary, net Income for the current period increased compared with the prior period.
A sales volume forecast for the coming year and the basis therefor: Please refer to "1.5 Summary of the 2021 Business Plan" on page 8.
Influence of changes in financial performance for the 2 most recent fiscal years: No significant impact on the financial performance.
Future financial business response plan: Not applicable.

Central Reinsurance Corporation Annual Report 2020 247

7.3 Cash Flows

Cash flow review and analysis

Cash flow analysis

NT$ thousands

Beginning cash balance	Cash flows from operation activities	Cash flows from investing and financing activities	h l	Remedies for	Remedies for
			Cas surpus (insufficient) amount	insufficient cash
				Investment plan	Financial plan
12,603,772	2,938,186	(540,372)	15,001,586	-	-

Analysis of changes in cash flow this year:
The net cash inflow from operating activities of NT$2,938,186 thousand was mainly due to business operations.
The net cash outflow from investment and financing activities of NT$540,372 thousand was mainly due to the distribution of cash dividends.
Corrective measures to be taken in response to illiquidity: None.
Liquidity analysis for the coming year

NT$ thousands

	Estimated net Cash flows from operation activities	Estimated net Cash flows from investing and financing activities	Estimated net Cash surplus (insufficient) amount	Estimated Remedies for insufficient cash	Estimated Remedies for insufficient cash
Beginning
				Investment plan	Financial plan
cash balance

15,001,586	2,282,178	(778,012)	16,505,752	-	-

7.4 Impact of Major Capital Expenditures on Finance and Business Operations during 2020

None.

7.5 Investment Policy in the Last year, Main Causes for Profit or Losses, Improvement Plans and Investment Plans for the Coming Year

None.

248 Central Reinsurance Corporation Annual Report 2020

7.6 The Analysis and Assessment of Risk Management in the last year up to the publication date of this report

Impact of interest rate, exchange rate, and inflation on the company’s earnings, and responsive measures:

The Company adopts the dynamic hedging strategy to the exchange rate risks from businesses and investment-related foreign currencies to reduce the impact of foreign exchange market fluctuations on the company. Although the global economy has gradually recovered from the epidemic, interest rates have also risen from low points. However, the bonds held by the Company are mostly of good credit ratings and positions held to maturity. The expected interest rate risk has no significant impact on the Company's overall bond evaluation.

In view of the drastic changes in the financial environment in recent years, the Company will, based on the two goals of overall investment risk control and stable returns, appropriately adjust the investment positions allocation and hedging measures to reduce the impact of the investment fluctuation factors.

Policies on high-risk and highly leveraged investments, loans to third parties, endorsements / guarantees, and trading of derivatives; describe the main causes of any profit or loss incurred and future responsive measures:

The Company's investments are carried out after careful evaluation of the price risk, liquidity risk, credit risk, and exchange rate risk. To date, the Company has not engaged in high-risk and highly leveraged investments, nor has it provided loans, endorsements or guarantees to other parties.

All derivatives transactions are for hedging. Relevant transactions are handled in accordance with the "Procedures for Transaction of Financial Derivatives" and "Investment Risk Management Operational Guidelines" established by the Company.

Future research and development plans and projected expenses: Please refer to page 139.
Financial impacts and responsive measures due to change of local and foreign regulations in recent years: None.
Financial impacts and responsive measures due to technological or industrial changes: None.
Crisis management, impacts, and responsive measures due to change of corporate image: None.

Central Reinsurance Corporation Annual Report 2020 249

Expected benefits, potential risks and responsive measures in relation to mergers and acquisitions undertaken: None.
Expected benefits, potential risks and responsive measures associated with plant expansions: None.
Risks and responsive measures associated with purchases or sales concentration: Regarding the analysis of the premium income for the year of 2020, if evaluated by the customer on the one hand, the premium income from Compulsory Motor insurance Pool accounted for 14.13%, which was the highest, and the rest were less than 10%; in respect of retrocession business, the Company will, by considering the credit rating of its counterparties, mainly choose reputable insurance companies or brokers as its partners and thus have very low credit risk. On the other hand, if analyzed by business area, the Company's domestic assumed business accounted for 79.34% and foreign assumed business accounted for 20.66%. In the future, the Company will continue to expand its overseas business prudently make its business portfolio more complete and risks more diversified. The Company belongs to the reinsurance industry, so the disclosure of purchase-related matters is not applicable.
Impacts, risks and responsive measures following a major transfer of shareholding by directors, or shareholders with more than 10% ownership interest: None.
Impacts, risks and responsive measures associated with a change of management: None.
Major litigations, non-contentious cases, or administrative litigations involving the company or any director, supervisor, president, person-in-charge or major shareholder with more than 10% ownership interest, whether concluded or pending judgment, that are likely to pose significant impact to shareholders' equity or security prices of the company. Disclose the nature of dispute, the amount involved, the date the litigation first started, the key parties involved, and progress as of the publication date of this annual report: None.
Other material risks and responsive measures:
Describe the information security risk assessment & analysis measures to be taken in response: In 2020, the Company indeed follow Article 6 and Article 6-1 of the “Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises” and the Self-regulations of Information

250 Central Reinsurance Corporation Annual Report 2020

Security established by the industry association, the overall implementation of information security this year is that the Company implemented them effectively. The Company’s information security risk is relatively low.

7.7 Other Importance Disclosure

None.

Central Reinsurance Corporation Annual Report 2020 251

8. SPECIAL DISCLOSURE

8.1 Summary of Affiliated Companies

In 2020, the affiliation report prepared in accordance with “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” set by the Financial � Supervisory Commission Please refer to pages 258 to 261.

8.2 Private Placement of Securities in the most recent year up to the publication date of this report

None.

8.3 Holding or Disposal of the Company’s share by subsidiaries in the most recent year up to the publication date of this report

None.

8.4 Other importance supplementary information

None.

8.5 Other Disclosure

Any events in 2020 and as of the date of this annual report had significant impacts on shareholders’ right or security prices as stated in item 3 paragraph 2 of Article 36: None.

Risk Management:

Risk Management Framework and Policies:
(1) Risk Management Framework and Organization:

The board of directors is the highest decision maker of risk management and holds the ultimate responsibility for establishing the Company's risk management system and operation.

A Risk Management Committee (RMC) has been assembled directly under the board of directors. The independent director serves as the convener of RMC. The committee is responsible for the company's overall risk management, laying down risk management policies, framework, and organizational function, and regularly submitting reports to the board of

252 Central Reinsurance Corporation Annual Report 2020

directors and implementing the board's risk management decisions.

The risk management unit is responsible for daily risk monitoring, measurement, evaluation, and reporting affairs at the operational level. Collecting the overall risk management information quarterly submit it to the Risk Management Committee for review and discussion, and report to the Chairman and board of directors.

The head of business unit is responsible for daily risk management and reports of the subordinate units and supervises the regular delivery of relevant risk management information to the risk management unit. The business unit is responsible to identify, measure, and monitor risks according to their scope of responsibility and business nature.

The Audit Office of the board of directors is responsible for auditing the implementation of each unit's risk management and to ensure the effectiveness of the company's internal control system and make recommendations in a timely manner.

(2) Risk Management Policies:

In order to establish a risk management mechanism, implement risk management functions, and ensure capital adequacy and solvency, and achieve the company's sustainable development goals, the Company has established risk management policies which approved by the board of directors in 2010 as the highest guiding principle for promoting risk management. The policies include risk management strategies, risk management objectives, risk management organizations and responsibilities, risk appetite and tolerance, main risk categories, risk management processes and information, communication and documentation matters.

Methods of Measuring and Controlling Risks and Quantitative Information on Exposure:

(1) Strategy and Process:

The Company's risk management strategy is based on the risk management framework to effectively implement risk management processes to achieve risk management objectives. The risk management framework includes risk management culture, risk control procedures, emerging risk management, risk and economic capital models, and strategic risk management. The main tasks include: conducting risk management education for board members and all

Central Reinsurance Corporation Annual Report 2020 253

colleagues in the company, and regularly in accordance with the "Risk Management Best Practice Principles for Insurance Enterprises” to conduct self-assessment to continuously strengthen the awareness and management of the risks of each business unit; updating relevant regulations on risk management, establishing risk management self-assessment operations, and setting risk limit early warning mechanisms to ensure risk management work and monitoring operations; performing catastrophe risk stress tests on a regular basis to examine the risk accumulation and its impact on the Company's solvency; continuing to build risk models and understanding models’ limitations, so as to accurately grasp the Company's risks and solvency levels ; regularly monitoring the risk appetite management, risk tolerance and catastrophe accumulation risk, reinsurance business credit risk, RBC risk capital, funds allocations statutory ratio, liquidity, market risk value, credit risk, value-at-risk of the exchange rate, and other limit management. Additionally, the focus of work for each risk category is described as follows:

Insurance risk:

Conducting business pricing, underwriting and claims processing in accordance with the polices of underwriting and claims adjusting system and procedures; assessing the each single risk and the cumulative catastrophe risk of single accident event in accordance with the reinsurance risk management plan, and considering the company’s capacity, arranging catastrophe reinsurance protection; identifying and measuring catastrophic events that may cause major losses to the company, and regularly monitoring catastrophe risk tolerance; setting up the company's method for setting aside various reserves in accordance with regulations and the characteristics of the business, and performing reserve testing to assess the reserve adequacy.

Market risk:

Regularly conducting risk assessments, and evaluating the holding position of each investment asset, and use Value at Risk (VaR) to calculate the maximum loss that may occur in the investment product positions over a given time period for a given confidence interval, so that the overall market risk can be controlled within the upper limit of the total risk value.

Credit risk:

254 Central Reinsurance Corporation Annual Report 2020

The Company may consider the overall financial market situation, regularly assessing the concentration of credit risk in the use of funds; establish a credit monitoring mechanism for the company's reinsurers to control the reinsurance credit risk.

Operational risk:

Developing internal controls and continuously tracking the establishment of each unit's operational risk management mechanism, and enhancing operational risks and loss events collection; researching and developing the internal loss database; establishing the operational risk Key Risk Indicators (KRI) and self-assessment mechanism for each unit.

(2) Scope of risks report and measuring system:
Insurance risk:

The Company may regularly conduct statistics on the relevant reports of facultative reinsurance and treaty reinsurance and report them to the senior management by the responsible unit. The overall company’s reports for the premium risk capital limit, the risk tolerance of the business in each region, the value at risk of each economic capital model, and so on, are regularly collected and reported by the risk management unit.

Market risk:

The market risk control report shows the evaluation of the profit and loss of the investment assets at market prices or net values with regard to the risk factors such as market interest rate, exchange rate, price change, etc. It calculates the VaR and the stress tests are also regularly conducted. The Company may regularly conduct the back-testing of the actual change in the profit and loss of the market risk-related product positions and the estimated value at risk to examine the adequacy of the model. Reports of the asset risk capital limit and liquidity limit, etc. are collected and reported by the risk management unit on a regular basis.

Credit risk:

Evaluating the credit ratings of the counterparty, investment target or securities issuer, guarantee agency or debtor with which the funds are used, and reviewing the concentration of credit risk; regularly reviewing the credit rating of the insurance company or reinsurance company with which the retrocession business is conducted, and evaluating the impact of

Central Reinsurance Corporation Annual Report 2020 255

ineligible retrocession.

Operational risk:

Each unit conducts a self-examination, and prepares the operational risk event report depending on the situation; the risk management unit consolidates the reports and also performs the tracking and controlling.

(3) Policies for hedging and risk mitigation:
In respect of insurance risk, according to the underwriting guidelines of each line of business and the maximum tolerance limit, reducing the risk of undertaking business by retrocession business.
In respect of market risk, the hedging strategy is based on the dynamics of the overall financial environment, to flexibly adjust asset allocation to avoid the risk of huge changes in the market price;
In respect of risk, establishing standards for the concentration of credit risk of the counterparties or issuers, and the credit ratings of reinsurers, and regularly checking and monitoring;
In respect of operational risk, regularly performing each unit’s internal control and self-auditing, regulatory compliance self-assessment, risk management self-assessment, and other operations; in addition, the internal audit conducts a periodic audit on the implementation status of the operational risk management system.
(4) Ways to perform risk management:

The Company may aim to comply with the Insurance Act, the Risk Management Best-Practice Principles for Insurance Industry, and the relevant regulations, consider the company's overall risks, establish a risk management mechanism for all categories of risk, and adopt sound investment strategies, rigorous underwriting guidelines, proper reinsurance arrangements, and internal controls and management regulations for each business to reduce operating risks.

Effectively identifying, measuring, responding to and monitoring the risks of the entire company takes, implementing the risk limit early warning mechanism, ensuring that the risk control taken by the company is under the tolerable risk levels, and considering the reasonable consideration between risks and rewards, creating the maximum value of shareholders’ equity value, and maintaining self-owned capital adequacy and proper solvency capacity to

256 Central Reinsurance Corporation Annual Report 2020

improve the company’s long-term business operations.

Enhancing the effectiveness of the company’s strategic risk management, using risk quantification models to analyze the degree of the risk changes in the insurance, investment, and other businesses as an important reference for formulating business strategies, and setting the risk tolerance as the basis for the management of the catastrophes and market risks of the insurance business. In addition, promoting the modularization of various types of risk continuously improves the effectiveness of risk control.

Central Reinsurance Corporation Annual Report 2020 257

CENTRAL REINSURANCE CORPORATION Independent Auditors’ Review report of Affiliation Report

To Central Reinsurance Corporation

According to company’s declaration, the company’s 2020 affiliation report was prepared in accordance with Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises. There is no material discrepancy between the disclosed information and the relevant information disclosed in the notes to the financial statements of the period. The declaration is as attached.

The CPAs have compared the affiliation report prepared by the company with Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises, and the notes to the company's 2020 financial statements. No material discrepancies have been found in the affiliation reports.

Chen, Hsien-I Lee, Hsiu-Ling For and on behalf of PricewaterhouseCoopers, Taiwan March 18, 2021

258 Central Reinsurance Corporation Annual Report 2020

Directors, supervisors or managerial officers appointed to the subordinate company by the controlling company	Name	Yang, Cheng-Tui Tai, Jiin-Chyuan Cheng, Ching-Fen
	Title	Chairman Director Director & President
Controlling company’s shareholding and pledges situation	Number of shares pledged	-
	Shareholding ratio	35.13%
	Number of shares held	207,419,251
The reasons for the control		The shareholding reaches the control capacity
The name of the controlling company		Evergreen International Corporation

Central Reinsurance Corporation Annual Report 2020 259

2. Business transactions between the subordinate company and the

controlling company

2.1 Purchase (sale) of goods�None.

2.2 Property transactions�None.

2.3 Financing�None.
2.4 Asset leasing�None.

2.5 Other significant business transactions�

In 2020, the company incurred NT$14,317 thousand of related expenses and NT$1,245 thousand of accounts payable due to system service charge, fees paid to stock transfer agent and printing expenses, etc..

Endorsements and guarantees between the subordinate company and the controlling company�None.
Other matters with a significant effect on finances and business�None.

260 Central Reinsurance Corporation Annual Report 2020

CENTRAL REINSURANCE CORPORATION

Declaration of Affiliation Reports

The affiliation report in 2020 (From January 1, 2020 to December 31, 2020) was prepared in accordance with Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises. There is no material discrepancy between the disclosed information and the relevant information disclosed in the notes to the financial statements of the period.

Central Reinsurance Corporation Chairman: Yang, Cheng-Tui March 18, 2021

Central Reinsurance Corporation Annual Report 2020 261

Implementation of Internal Control System Internal Control System Statement

Central Reinsurance Co., Ltd.

Internal Control System Statement

The findings of internal-inspections of the Internal Control System of the Company for the period from January 1, 2020 to December 31, 2020 are as follow:

I. The Company acknowledges that the Company's Board of Directors and managers are responsible for establishing, implementing, and maintaining an adequate. Its goals are to provide reasonable assurance on the target achievement on the results of operations, financial reporting, and legal compliance. The goal of operations is to pursue results and efficiency in operations including profitability, performance and asset security; the goal of financial reporting is to ensure reliability of external financial reporting; the goal of legal compliance is to ensure compliance with relevant laws and regulations. The legal compliance system is part of the internal control system dedicated to achieving legal compliance goals. Financial records and statements are prepared in accordance with the Insurance Act and related regulations based on consistent basis of preparation and they are results of the internal control system for financial reporting.

II. There are inherent limitations regardless the most well designed internal control system. An effective internal control system can only reasonably ensure the achievement of the aforementioned 3 goals. The effectiveness of the internal control system may be subject to changes due to surroundings and circumstances beyond our control. Nevertheless, the Company's internal control system contains self-monitoring mechanisms and the Company takes immediate remedial actions in response to any identified deficiencies.

III. The Company determines the effectiveness of the design and implementation of its internal control system in accordance with the "Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises" (hereinafter referred to as the "Regulations") promulgated by the Financial Supervisory Commission. The aforementioned judgment is also based on the items for evaluating the effectiveness of the internal control system in the "Regulations." The criteria

262 Central Reinsurance Corporation Annual Report 2020

adopted by the Regulations identify five key components of managerial internal control: 1. Control environment; 2.Risk assessment; 3.Control activities; 4. Information and communication; and 5.Monitoring. Each component includes a number of items for evaluation. Please refer to the "Regulations" for information on the items.

IV. The company has evaluated the effectiveness of the design and implementation of its internal control system according to the previously mentioned criteria.

V. Based on the above-mentioned results, the Company believes that the design and implementation of the internal control system (including operations, financial reporting, and compliance of applicable laws) during the period of the period are effective. In addition to the items listed in the schedule, it can reasonably ensure the Board of Directors and managers know the extent of which the operating goals have been achieved, the goals for financial reporting and compliance with the laws have been achieved; it is also believed that the financial records and statements are prepared in accordance with the insurance law and relevant regulations. The basis for the reports was consistent and the correctness was reasonable.

VI. This statement shall become the primary content of the Annual Report and prospectus. Any falsehood, concealment, or other illegality in the content made public will involve legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act as well as regulations related in the Insurance Act.

VII. This Statement has been approved by the meeting of Board of Directors on March 18, 2021.

Respectively submitted to Financial Supervisory Commission Undersigned:

Chairman: Yang, Cheng-Tui President: Cheng, Ching-Fen Chief Auditor: Lin, Cheng-Yen Chief Compliance Officer: Wang, Cheng-Sung March 18, 2021

Central Reinsurance Corporation Annual Report 2020 263

Statement on Internal AML/CFT Control

On behalf of Central Reinsurance Corporation, we hereby undertake that from January 1, 2020 to December 31, 2020 our Company has duly complied with relevant regulations governing anti-money laundering and countering the financing of terrorism in establishing an internal control system, implementing risk management, designating an independent and objective internal unit to conduct audit, and submitting the audit report periodically to the Company's Board of Directors and Audit Committee. Following prudent evaluation each unit of the Company has effectively implemented internal controls for anti-money laundering and countering the financing of terrorism during the year.

Central Reinsurance Corporation

Financial Supervisory Commission

Undersigned: Chairman: Yang, Cheng-Tui President: Cheng, Ching-Fen Chief Auditor/Auditor: Lin, Cheng-Yen Chief AML/CFT Compliance Officer: Su, Chin-Chu

Date: February 24, 2021

264 Central Reinsurance Corporation Annual Report 2020

CPA Review Report CPA Internal Control System Audit Report

To Central Reinsurance Co., Ltd:

Attached is a part of the statement of Central Reinsurance Co., Ltd. regarding its internal control system (including the report forms filed to the competent authority in accordance with the Company's legal compliance system and financial reporting internal control system) on March 18, 2021 stating that the internal control system was effectively designed. The statement had been audited by the CPA. The establishment and maintenance of a suitable internal control system is the responsibility of a company's management level. The responsibility of the CPA is to issue audit opinions regarding the insurance company's internal control system statement.

The CPA has conducted the audit in accordance with Tai-Cai-Bao No. 0900751422 Letter issued by the Ministry of Finance on December 20, 2001, No. 0930014734 Letter issued by the Ministry of Finance on March 30, 2004 and No. 10602506430 Letter issued by the Ministry of Finance on January 15, 2018. The procedures included understanding the Company's internal control system, evaluating the process of the management level's assessment on the overall internal control system's effectiveness, testing and evaluating the effectiveness of the design and implementation of the internal management system, and other audit procedures as the

CPA deems necessary. We believe that our audits provide a reasonable basis for our opinions on this audit.

Any internal control system has inherent constraints. Hence, it is possible that the aforementioned internal control system of Central Reinsurance Co., Ltd. will not be able to prevent or detect errors or frauds that have already taken place. In addition, future environment may change, and compliance to the internal control system may also decrease; hence, an effective internal control system in this period may not be as effective in the future.

In opinion of the accountant, Central Reinsurance Co., Ltd.'s statement that

Central Reinsurance Corporation Annual Report 2020 265

the design and implementation of the internal control system related to financial reporting(including the accuracy of reporting data to the competent authority in accordance with the internal control system of financial reporting) and ensuring the safety of assets (so that assets were not obtained, used and disposed without authorization) are effective , in accordance with the evaluation items of the effectiveness of internal control system issued "Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises" and "Regulations Governing Establishment of Internal Control Systems by Public Companies" by the Financial Supervisory Commission, and a part of legal compliance system (according to the items specified in the Letter No. 0930014734 issued by the Ministry of Finance), which are reasonable in all major aspects. The design and implementation of the legal compliance system (according to the items specified in the Letter No. 0930014734 issued by the Ministry of Finance) are designed and implemented in accordance with relevant laws and regulations.

PricewaterhouseCoopers, Taiwan Chan, Hsien-I, CPA Lee, Hsiu-Ling, CPA

March 18, 2021

266 Central Reinsurance Corporation Annual Report 2020

Nanjing East Rd,

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AI assistant

Central Re — Annual Report 2021

52207_rns_2021-08-04_b8b502c7-8997-483a-b8e9-1722f3c542d7.pdf

2020

CONTENTS

1. LETTER TO SHAREHOLDERS

Dear Shareholders,

of quality business.

Chairman

1.1 Implementation of the Business Plan

1.1.1Business Performance:

1.1.2Financial Management:

1.1.2.1 Capital Management:

1.1.2.2 Reserve Adequacy:

1.1.2.3 Fund Investment:

1.1.3Credit Ratings:

1.2 Budget Implementation and Financial Status

1.3 Profitability Analysis

1.4 Research & Development

1.4.1Research & Development/Customer Service

1.4.2Talent Development

1.5 Summary of the 2021 Business Plan

1.5.1 Business Strategies

1.5.2 Sales Forecast and Basis

1.5.3 Important Production and Sales Policies

1.6 Future Development Strategies

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

1.7.1 External Competition

1.7.2 Regulatory Environment

1.7.2.1 Insurance Act

1.7.3 Macro Environment

2. COMPANY PROFILE

2.1 Date of Incorporation

2.2 Company History

3. CORPORATE GOVERNANCE REPORT

3.1 Organization

3.1.1Organizational Chart

3.1.2Major Corporate Functions

3.2.1.1 Major Shareholders of Institutional Shareholders

3.2.1.2 Major Shareholders of the Company’s major Institutional Shareholders

3.2.1.3 Professional qualifications and independence analysis of directors

3.2.4 Employee’s Compensation of the Management Team

3.3 Implementation of Corporate Governance

3.3.1 The Composition and Operations of the Board of Directors

of directors. The attendance of directors is as follows:

3.3.2 Execution status of evaluation of Board of Directors

3.3.3 Annual Tasks and Implementation Status of the Audit Committee

3.3.3.3 A total of 7 (A) meetings of the Audit Committee were held in 2020. The

(2) Between independent directors and CPAs

Communication method

3.3.5 The Composition and Operations of the Remuneration Committee

3.3.5.1 Professional Qualifications and Independence Analysis of Remuneration

Committee Members

3.3.10 Disclosures relating to the execution of internal control system:

3.3.12 Material Resolutions of Shareholders’ Meeting and Board of Directors Meeting

1. Major Resolutions of Shareholders’ Meeting

3.4 Information on CPA Professional Fees

3.5 Replacement of CPA

3.5.1 Regarding the former CPA

3.7.2Information of Stock Transfer: None.

3.7.3Information of Stock Pledged: None.

3.8 Relationship among the Top Ten Shareholders

3.9 The total number of shares and total equity stake held in any single

enterprise by the company, its directors, managerial officers, and any companies controlled either directly or indirectly by the company

4. CAPITAL OVERVIEW

4.1 Capital and Shares

4.1.1 Source of Capital Stock

Type of Stock

4.1.2 Shareholders Structure

4.1.3 Diffusion of Ownership and List of Principal Shareholders

�Preferred shares: None.

4.1.4 List of Principal Shareholders

4.1.5 Disclosure of the Share Prices and Related Information for the Past Two

Fiscal Years

4.1.6 Dividend Policy and Earnings Distribution Implementation Status

4.1.6.1 Dividend Policy

4.1.6.2 Earnings Distribution Implementation Status

4.1.8 Compensation of employees and directors:

4.1.9 Status of a company repurchasing its own shares: None.

4.2 Corporate Bonds

Central Re Annual Report 2021