Central Re — Management Reports 2020

Apr 22, 2020

CENTRAL REINSURANCE CORPORATION

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Central Re

Your reliable partner

Apr. 22, 2020

Disclaimer

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

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

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

• This document may not be directly or indirectly reproduced, redistributed or forwarded to any other person and may not be published in whole or in part for any purpose.

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Outline

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Introduction
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Industry Overview Business Overview Performance Overview

Future Prospect

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Introduction

Basic Information Business Scope

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Basic Information

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

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Basic Information

• Paid up Capital ： TWD 5.904 Billion

• No. of Employee ： 139

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

• Credit Ratings ：

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

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Basic Information

 Shareholders’ Structure

As of March 30, 2020

Structure	Government Agencies	Financial Institutions	Financial Institutions	Other Juridical Person	Domestic Natural Persons	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total
Percentage	20.37%	0.00%		60.23%	17.17%		2.23%	100%
Market Share Year 2019 P&C Insurance Life Insurance Gross Prem. Written in Taiwan 177.13 3,466.68 Ceded Premium 53.61 21.58 Retro Share (%) 30.3 0.6 Central Re’s Premium 10.6 2.93 Market Share in Taiwan (%) 19.8 13.6 Unit：TWD Billions；%
Year 2019			P&C Insurance			Life Insurance
Gross Prem. Written in Taiwan			177.13			3,466.68
Ceded Premium			53.61			21.58
Retro Share (%)			30.3			0.6
Central Re’s Premium			10.6			2.93
Market Share in Taiwan (%)			19.8			13.6

 Market Share

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Business Scope

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

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

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Outline

Introduction

Business Overview

Performance Overview

Future Prospect

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Industry Overview

Market Development

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Market Trend
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Industry Overview

 Market Development ：

• Domestic Market

 There are 54 insurance companies in Taiwan, of which 27 are life insurance companies, 24 are non-life insurance companies and 3 are reinsurance companies, including Central Re, General Re (Taiwan Branch) and RGA (Taiwan Branch).

• Overseas Reinsurance Market: London, Singapore, China…

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Industry Overview

 Global Reinsurance Market

 The unexpected magnitude of loss development from wind events in Asia and the United States, as well as ongoing concern regarding the impacts of climate change on future losses, have slowed the influx of alternative capital. Meanwhile, the weakened risk-adjusted return on capital has motivated underwriters to reassess pricing and capacity allocation strategies.

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Industry Overview

 Market Trend:

• Domestic P&C

 According to Non-Life Insurance Association, mainly due to the growth in Auto insurance, overall gross premiums written has grown by 7% as of December 2019, compared to the same period last year. In addition, Casualty insurance, Personal accident/ Health insurance and Engineering insurance have also grown significantly.

• Domestic Life

• The market for protection products is expected to grow in response to the regulatory policies.

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Outline

Introduction

Industry Overview

Performance Overview

Future Prospect

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Business Overview

Business Portfolio

Gross Premium Written

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Business Portfolio

Gross Premium Written By Line

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Business Portfolio

Gross Premium Written By Region

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Gross Premium Written

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Unit ： TWD Billions
20
16.8
15.4
14.6
14.2 14.0
15
10
5
0
2015 2016 2017 2018 2019
Domestic Overseas
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Outline

Introduction

Industry Overview

Business Overview

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Performance Overview
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Future Prospect

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Performance Overview

Operating Performance

Key Profitability Ratios Dividend Policy

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Operating Performance Unit ： TWD Millions 1,600 1,389 1,400 1,231 1,214 1,171 1,200 1,063 1,050 1,104 1,000 845 766 800 657 600 396 400 171 200 0 2016 2017 2018 2019 Net income Investment Income Underwriting Profit 中央再保險公司 Central Re*

Unit ： TWD Millions

• Underwriting profit excludes Compulsory Automobile Liability Insurance (CALI) and Operating Expense.

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Capital Structure

Unit ： TWD Billions

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16
14.8
14.0 14.0
14
12.3
12
10
8
6
4
2
0
2016 2017 2018 2019
Paid-up Capital Equalization Reserve Capital Surplus, Retained Earnings & Other Equity Interest
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• Equalization Reserve excludes CALI.

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Total Assets

Unit ： TWD Billions

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40
39.2
37.3
36.5
35
33.6
30
25
2016 2017 2018 2019
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Asset Allocation

Equity 16.0%

2019/12/31

Unit ： TWD Billions

Cash & Cash Fixed Income Equivalents 45.3% 38.7%

Cash & Cash Equity Fixed Equivalents & Fund Income 12.8 5.3 15

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Key Profitability Ratios

Key Profitability Ratios	Key Profitability Ratios	Key Profitability Ratios	Key Profitability Ratios	Key Profitability Ratios	Key Profitability Ratios
2015 2016 2017 2018 2019 Combined Ratio1 (%) 91.9 90.1 88.3 88.6 89.3 ROA (%) 2.28 2.29 3.96 2.85 2.89 ROE (%) 8.14 8.13 13.39 9.35 9.51 Net Profit Margin (%) 5.44 5.70 9.52 7.06 6.86 EPS2 (TWD) 1.30 1.30 2.35 1.78 1.87
	2015	2016	2017	2018	2019
Combined Ratio1 (%)	91.9	90.1	88.3	88.6	89.3
ROA (%)	2.28	2.29	3.96	2.85	2.89
ROE (%)	8.14	8.13	13.39	9.35	9.51
Net Profit Margin (%)	5.44	5.70	9.52	7.06	6.86
EPS2 (TWD)	1.30	1.30	2.35	1.78	1.87

Note 1: Combined Ratio excludes CALI and Operating Expense. Note 2: The earnings per share has been retroactively adjusted after capital increase.

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Dividend Policy

• Under the Company's Articles of Incorporation, the current year's earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 20% of the remaining amount shall be set aside as legal reserve. Afterwards, the Company shall recognize or reverse special reserve in accordance with regulations, and accumulate unappropriated earnings of the prior period. Appropriation of the remainder shall be proposed by the Board of Directors and resolved by the stockholders.

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

 Past 5 years ：

	Year	2016	2017	2018	2019	2020*
	Cash Dividends	0.7	0.5	1	0.9	0.9
	Stock
	中央再保險公司 Dividends	0	0	0.5	Centra 0	l Re 0

。 *Earnings distribution has not yet been ratified at the stockholders’ meeting

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Outline

Introduction

Industry Overview Business Overview

Performance Overview

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Future Prospect
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Future Prospect

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Competitive Advantage
Business Strategies
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Competitive Advantage

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

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

 Extremely strong capital adequacy

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

From Rating Agency

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• Strong risk-adjusted capitalization

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

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

• Strong liquidity profile

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Future Prospect

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Implement good corporate governance

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Enhance compliance
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Business Strategies

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Devote to talent development
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Strengthen Risk Management
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Fulfill corporate social responsibilities

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Business Strategies

 Domestic Business

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Focus on better customer service

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

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Optimize the retrocession strategy and expand the underwriting capacity

 International business

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Keep prudent underwriting strategy (Focus on bottom line more than top line) Expanding new territories/new clients/product lines to increase portfolio diversification

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Arrange Cat excess of loss program to ensure steady underwriting result

 Investment Business

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

 Monitor the development of 2019-nCoV pandemic

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Q ＆ A
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