FIRST INS — Annual Report 2020

Dec 28, 2020

Stock ID: 2852

The First Insurance Co., Ltd.

Financial Statements and Independent Auditor's Report 2020 and 2019

Address: 11F, No. 54, Section 1, Zhongxiao East Road, Taipei City TEL: (02)23913271

• 1 -

§TABLE OF CONTENTS§

ITEM 1. Cover page 2. Table of contents 3. Independent auditor's report 4. Balance Sheet 5. Statement of comprehensive income 6. Statement of changes in equity 7. Cash flow statement 8. Notes to financial statements (1) Corporate history (2) Financial statement approval date and procedures (3) Application of new and amended standards and interpretations (4) Summary of significant accounting policies (5) Sources of uncertainty to significant accounting judgments, estimates, and assumptions (6) Notes to major accounts (7) Related party transactions (8) Pledged assets (9) Major contingent liabilities and unrecognized contractual commitments (10) Losses from major disasters (11) Other matters (12) Major post-balance sheet events (13) Information on foreign currency-denominated financial assets and liabilities and exchange rate (14) Other disclosures 1. Information related to significant transactions 2. Information related to invested businesses 3. Information relating to investments and business activities in the Mainland China 4. Dominant shareholders (15) Segment information 9. Details of major accounts 10. Independent Auditors’ Report	PAGE 1 2 4~6 7 8~10 11 12~13 14 14 14~18 18~29 29 29~68, 70~95 69~70 - 70 70 70 70 70 95 95 95 96 96 97~133 134~135	SERIAL NUMBER OF NOTES TO FINANCIAL STATEMENTS
		- - - - - - - 1 2 3 4 5 6~38 31 - 32 33 34 35 36 39 39 39 39 40 - -

• 2 -

11.	Other	disclosures
	(1)	Business activities	136~143	-
	(2)	Market price, dividend and	143~146	-
		ownership diversity
	(3)	Key financial information	147~150	-
	(4)	Analysis of financial position,	151~152	-
		performance and cash flow
	(5)	Auditor's information	153	-

• 3 -

Independent Auditor's Report

To stakeholders of The First Insurance Co., Ltd.:

Audit opinion

We have audited the balance sheet of The First Insurance Co., Ltd. as of December 31, 2020 and 2019, the statement of comprehensive income, statement of changes in equity, and cash flow statement for the periods January 1 to December 31, 2020 and 2019, and the accompanying footnotes (including a summary of major accounting policies).

In our opinion, all material disclosures of the financial statements mentioned above were prepared in accordance with Regulations Governing the Preparation of Financial Reports by Insurance Enterprises, international financial reporting standards approved and published by the Financial Supervisory Commission, the International Accounting Standards and interpretations thereof, and presented a fair view of the financial position of The First Insurance Co., Ltd. as of December 31, 2020 and 2019, and business performance and cash flow for periods January 1 to December 31, 2020 and 2019.

Basis of audit opinion

We have conducted our audits in accordance with "Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants" and the generally accepted auditing standards. Our responsibilities as an auditor under the abovementioned standards will be explained in the Responsibilities paragraph. All relevant personnel of the accounting firm have followed CPA code of ethics and maintained independence from The First Insurance Co., Ltd. when performing their duties. We believe that the evidence obtained provide an adequate and appropriate basis for our opinion.

Key audit issues

Key audit issues are matters that we considered to be the most important, based on professional judgment when auditing the 2020 financial statements of The First Insurance Co., Ltd. These issues have already been addressed when we audited and formed our opinions on the financial statements. Therefore we do not provide opinions separately for individual issues.

Key audit issues concerning the 2020 financial statements of The First Insurance Co., Ltd. are as follows:

Estimation of not reported (NR) and not settled (NS) reserves

The First Insurance Co., Ltd. has an actuarial team that estimates NR/NS reserves based on previous claims and expenses incurred by the various types of insurance, using methods that conform with actuarial principles. The book value of claim reserves (presented as insurance liability) as of December 31, 2020 amounted to NT$2,713,890 thousand, of which NT$671,429 thousand were insurance by not yet reported (IBNR). Because the amount was presented based on the actuarial estimate, any change of assumption or any misjudgment may cause significant changes to profit and loss, and therefore has been listed as a key audit issue for the current year.

For more details on the accounting policy and methodology adopted for claim reserve provisioning, please refer to Note 4(12) and Note 5 of the financial statements. For details on amounts and changes, please refer to Note 38(3) of the financial statements.

• 4 -

We have performed tests to gain insight about the design and execution of various procedures and controls the Company had adopted to estimate NR/NS reserves. In addition, we obtained data on direct claims paid by the First Insurance Co., Ltd., for various insurance categories and retained materials related to actual losses to verify the integrity of data used in the actuarial estimate. In addition, our actuarial experts assisted us in evaluating whether the methodologies and assumptions undertaken to provide for NR/NS reserves were compliant with laws and establishing proprietary models for validating the rationality of the NR/NS reserves provided by the Company.

Responsibilities of the management and governing body to the financial statements

Responsibilities of the management were to prepare and ensure fair presentation of financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Insurance Enterprises, international financial reporting standards approved and published by the Financial Supervisory Commission, the International Accounting Standards and interpretations thereof, and exercise proper internal control practices that are relevant to the preparation of financial statements so that the financial statements are free of material misstatements caused by fraud or error.

The management's responsibilities when preparing financial statements also involved: assessing the ability of The First Insurance Co., Ltd. to operate, disclose information and account for transactions as a going concern unless the management intends to liquidate or cease business operations, or is compelled to do so with no alternative solution.

The governing body of The First Insurance Co., Ltd. (including the Audit Committee) is responsible for supervising the financial reporting process.

Responsibilities of the auditor when auditing financial statements

The purposes of our audit were to obtain reasonable assurance of whether the financial statements were prone to material misstatements caused by fraud or error, and issue a report of our audit opinions. We considered assurance to be reasonable only if it is highly credible. However, audit tasks conducted in accordance with generally accepted auditing principles do not necessarily guarantee detection of all material misstatements within the financial statements. Misstatements can be attributed to fraud or error. Misstatements are considered material if the individual amount or aggregate total is reasonably expected to affect economic decisions of the financial statement user.

When conducting audits in accordance with generally accepted audit principles, we exercised judgments and raised doubts as deemed professionally appropriate. We also performed the following tasks as an auditor:

1. Identifying and assessing risks of material misstatement due to fraud or error; designing and executing appropriate responsive measures for the identified risks; and obtaining adequate and appropriate audit evidence to support audit opinions. Fraud may involve conspiracy, forgery, intentional omission, untruthful declaration or breach of internal control, and our audit did not find any material misstatement where the risk of fraud is greater than the risk of error.

2. Developing the required level of understanding on relevant internal controls and designing audit procedures that are appropriate under the prevailing circumstances, but without providing an opinion on the effectiveness of the internal control system of The First Insurance Co., Ltd.

3. Assessing the appropriateness of accounting policies adopted by the management, and the rationality of accounting estimates and related disclosures made.

4. Forming conclusions regarding the appropriateness of management's decision to account for the business as a going concern, and whether there are doubts or uncertainties about the ability of The First Insurance Co., Ltd. to operate as a going concern, based on the audit evidence obtained. We are bound to remind financial statement users and make related

5. 5 -

disclosures if material uncertainties exist regarding the above-mentioned events or circumstances and amend audit opinions when the disclosures are no longer appropriate. Our conclusions are based upon audit evidence obtained as of the audit report date. However, occurrences of future events or circumstances may still render The First Insurance Co., Ltd. no longer capable of operating as a going concern.

1. Assessing the overall presentation, structure and contents of the financial statements (including related footnotes), and whether certain transactions and events are presented appropriately in the financial statements.

We have communicated with the governing body about the scope, timing and significant findings (including significant defects identified in the internal control) of our audit.

We have also provided the governance body with a declaration of independence stating that all relevant personnel of the accounting firm have complied with auditors' professional ethics, and communicated with the governance body on all matters that may affect the auditor's independence (including protection measures).

After communicating with the governance body regarding the 2020 financial statements of The First Insurance Co., Ltd, we have identified the key audit issues. These issues have been addressed in our audit report except for: 1. Certain topics that are prohibited by law from disclosing to the public; or 2. Under extreme circumstances, topics that we decided not to communicate in the audit report because of higher negative impacts they may cause than the benefits they bring to the public interest.

Deloitte Taiwan CPA Alice Huang CPA Wan-Yi Liao Approval reference of the Securities and Approval reference of the Financial Futures Bureau Supervisory Commission Tai-Cai-Zheng-VI-Zi No. 0920131587 Jin-Guan-Zheng-Shen-Zi No. 1010028123

March 26, 2021

• 6 -

The First Insurance Co., Ltd. Balance Sheet

As at December 31, 2020 and 2019

Unit: NTD thousands

Code 11000 12100 12200 12500 12000 14110 14145 14180 14190 14200 14000 15100 15200 15300 15000 16000 16700 17300 17800 18300 18700 18000 1XXXX Code 21100 21200 21400 21500 21600 21000 21700 23800 24100 24200 24400 24500 24000 27100 28000 25300 25900 25000 2XXXX 31000 33100 33200 33300 33000 34000 3XXXX	Assets Cash (Notes 4 and 6) Receivables Notes receivable - Net (Notes 4, 12 and 38) Premiums receivable - Net (Notes 4, 12, 31 and 38) Other receivables (Notes 4 and 12) Total receivables Investment Financial assets at fair value through profit and loss (Notes 4 and 7) Financial assets carried at cost after amortization (Notes 4, 9 and 10) Other financial assets (Notes 4, 6 and 11) Financial assets at fair value through other comprehensive income (Notes 4, 8 and 10) Investment properties (Notes 4 and 13) Total investment Reinsurance Contracts Assets Claims recoverable from reinsurers - Net (Notes 4, 12, 14 and 38) Reinsurance accounts receivable - Net (Notes 4, 12, 14 and 38) Reinsurance reserve assets (Notes 4, 14 and 38) Total reinsurance contract assets Property, plant, and equipment (Notes 4 and 15) Right-of-use asset (Notes 4 and 16) Intangible assets (Notes 4 and 17) Deferred income tax assets (Notes 4 and 26) Other assets Guarantee deposits paid (Notes 8 and 18) Other assets - Others (Note 19) Total other assets TOTAL ASSETS Liabilities and equity Payables Notes payable Insurance claims and benefits payable (Notes 4 and 38) Commission payable (Notes 4 and 38) Reinsurance accounts payable (Notes 4 and 38) Other payables (Note 20) Total payables Current income tax liabilities (Note 4) Lease liabilities (Notes 4 and 16) Insurance liabilities (Notes 4, 5, 21 and 38) Unearned premium reserve Claim reserve Special reserve Deficiency reserve Total insurance liabilities Provision for employee benefits (Notes 4 and 22) Deferred income tax liabilities (Notes 4 and 26) Other liabilities Guarantee deposits received Other liabilities - Others (Note 23) Total other liabilities Total liabilities Share capital (Note 24) Retained earnings (Note 24) Legal reserve Special reserve Undistributed earnings Total retained earnings Other equity items (Note 24) Total equity Total liabilities and equity	December 31,202	0 % 11 1 1 1 3 12 11 17 18 6 64 1 1 12 14 4 - - - 4 - 4 100 - - 1 2 1 4 - - 24 17 10 - 51 1 1 - 1 1 58 19 8 12 1 21 2 42 100	December 31,201	9
		Amount $ 1,775,324 143,485 172,791 64,696 380,972 1,940,277 1,758,600 2,751,824 2,948,951 898,209 10,297,861 131,034 175,340 1,844,525 2,150,899 661,560 4,400 44,106 51,618 631,818 27,429 659,247 $ 16,025,987 $ 5,822 2,986 115,625 343,501 209,682 677,616 1,012 4,445 3,819,705 2,713,890 1,696,659 6,712 8,236,966 142,972 92,934 14,530 93,428 107,958 9,263,903 3,011,638 1,362,943 1,916,502 178,675 3,458,120 292,326 6,762,084 $ 16,025,987		Amount $ 1,860,014 139,251 278,527 45,607 463,385 1,645,093 1,529,333 2,663,153 3,185,743 943,248 9,966,570 166,082 215,587 1,888,150 2,269,819 620,038 4,320 7,203 52,582 562,858 50,025 612,883 $ 15,856,814 $ 12,186 - 110,162 436,418 166,502 725,268 49,329 4,139 3,726,659 2,491,233 1,669,565 24,293 7,911,750 170,179 92,934 15,114 76,840 91,954 9,045,553 3,011,638 1,246,749 1,740,117 405,734 3,392,600 407,023 6,811,261 $ 15,856,814	%
					12 1 2 - 3 10 10 17 20 6 63 1 1 12 14 4 - - - 4 - 4 100 - - - 3 1 4 - - 23 16 11 - 50 1 1 - 1 1 57 19 8 11 2 21 3 43 100

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

Chairman: C. H. Lee

Manager: Chu-Minn Leu

Head of Accounting: Fei-Fen Hsiao

• 7 -

The First Insurance Co., Ltd. Statement of Comprehensive Income For periods from January 1 to December 31, 2020 and 2019

Unit: NTD thousands, except EPS which is in dollars

Code Operating revenues (Note 4) 41110 Written premiums (Notes 31 and 38) 41120 Reinsurance premiums (Note 38) 41100 Premium revenues 51100 Less: Reinsurance expenses (Note 38) 51310 Less: Net change in unearned premium reserve 41130 Retained earned premiums (Note 38) 41300 Reinsurance commissions received (Note 38) 41400 Service fee Net investment gains 41510 Interest income (Note 25) 41521 Gains on financial assets or liabilities at fair value through profit and loss 41527 Realized gains/losses on financial assets at fair value through other comprehensive income (Note 8(1)) 41550 Gain (loss) on exchange (Note 25) 41570 Gains (losses) on investment property (Note 25) 41585 Expected credit impairment loss and reversal gain on investment 41500 Total net investment gains Other operating revenues 41890 Other operating revenues - Others 41000 Total operating revenues Operating Cost Retained claims and benefits (Notes 31 and 38) 51200 Insurance claim and benefit payments 41200 Less: Claims recovered from reinsurers 51260 Total retained claims and benefits paid		2020		% 120 7 127 30 ) 4) 93 5 - 2 2 ) 2 1 ) 1 - 2 - 100 67 16) 51		2019		% 113 7 120 32 ) - 88 5 - 2 3 1 - 1 - 7 - 100 73 22) 51	Variation percentage (%)
		Amount $ 7,062,884 403,665 7,466,549 1,776,313 ) 239,129) 5,451,107 287,853 24,561 87,428 122,296 ) 100,807 30,059 ) 53,245 954 90,079 1,072 5,854,672 3,930,294 957,899) 2,972,395				Amount $ 6,875,054 404,585 7,279,639 1,925,618 ) 8,615) 5,345,406 287,665 24,477 95,210 168,034 92,357 16,063 ) 55,980 4,835) 390,683 966 6,049,197 4,387,778 1,319,005) 3,068,773
									3 - 3 ( 8 ) 2,676 2 - - ( 8 ) ( 173 ) 9 87 ( 5 ) 120 ( 77 ) 11 ( 3 ) ( 10 ) ( 27 ) ( 3 )
	( (		( (		( (		(
	( (		( (		( (
	(		(		(		(

(Continued next page)

• 8 -

(Continued from previous page)

Code Net change in other liabilities (Note 38) 51320 Net change in claim reserves 51340 Net change in special claim reserves 51350 Net change in premium deficiency reserves 51300 Total net change in other liabilities 51510 Commission expenses (Note 38) 51600 Service charges (Note 38) Other operating costs 51810 Contribution to insurance stabilization fund (Note 38) 51830 Interest expenses 51850 Loss on exchange - non-investment (Note 25) 51890 Other operating costs - Others 51800 Total other operating costs 51000 Total operating costs 60000 Gross profit Operating expenses (Notes 25 and 31) 58100 Selling expenses 58200 Administrative expenses 58300 Staff training expenses 58000 Total operating expenses 61000 Operating profit Non-operating income and expenses 59400 Asset retirement loss 59500 Recovery of bad and overdue debts 59920 Sundry income 59990 Sundry expenses (Note 16) 59000 Total non-operating income and expenses 62000 Pre-tax profit from continuing operations 63000 Income tax expenses (Notes 4 and 26)		2020	% 2 - - 2 17 2 - - - - - 72 28 22 2 - 24 4 - - - - - 4 1		2019		% 2 ) - - 2) 16 2 - - - - - 67 33 20 2 - 22 11 - - - - - 11 2	Variation percentage (%)
		Amount $ 112,637 27,094 10,017) 129,714 982,117 139,699 14,142 36 8,124 502 22,804 4,246,729 1,607,943 1,304,170 93,042 2,680 1,399,892 208,051 2,710 ) 20 697 113) 2,106) 205,945 53,063			Amount $ 113,104 ) 6,035 ) 5,756) 124,895) 946,137 139,269 13,758 41 2,017 - 15,816 4,045,100 2,004,097 1,234,408 101,880 3,619 1,339,907 664,190 476 ) - - 89) 565) 663,625 82,657
	(			( ( ( (		(		200 549 74 204 4 - 3 ( 12 ) 303 - 44 5 ( 20 ) 6 ( 9 ) ( 26 ) 4 ( 69 ) 469 - - 27 273 ( 69 ) ( 36 )
						(
	( ( (			( ( (

(Continued next page)

• 9 -

(Continued from previous page)

Code 66000 Current net income Other comprehensive income (Note 24) 83100 Items not reclassified into profit and loss 83110 Remeasurement of defined benefit plan (Notes 4 and 22) 83180 Income tax on items not reclassified into profit and loss (Note 26) 83190 Gains/losses on valuation of equity instruments at fair value through other comprehensive income Total items not reclassified into profit and loss 83200 Items likely to be reclassified into profit and loss 83290 Gains/losses on debt instruments at fair value through other comprehensive income 83000 Other comprehensive income - current (net, after tax) 85000 Total comprehensive income - current Earnings per share (Note 27) 97500 Basic 98500 Diluted	2020	% 3 - - - - 1 1 4	2019	% 9 - - 7 7 - 7 16	Variation percentage (%)
	Amount 152,882 1,288 ( $ 258 ) 34,436 35,466 51,592 87,058 $ 239,940 $ 0.51 $ 0.51		Amount 580,968 ( 1,799 ) $ 360 387,894 386,455 22,498 408,953 $ 989,921 $ 1.93 $ 1.93
					( 74 ) 172 ( 172 ) ( 91 ) ( 91 ) 129 ( 79 ) ( 76 )

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

Chairman: C. H. Lee

Manager: Chu-Minn Leu

Head of Accounting: Fei-Fen Hsiao

• 10 -

The First Insurance Co., Ltd. Statement of Changes in Equity

For periods from January 1 to December 31, 2020 and 2019

Unit: NTD thousands

Code A1 Balance as of January 1, 2019 Appropriation and distribution of earnings: B1 Legal reserve B3 Special reserve B5 Cash dividend D1 2019 net income D3 2019 other comprehensive income D5 2019 total comprehensive income Q1 Disposal of equity instruments at fair value through other comprehensive income (Note 8(1)) Z1 Balance as at December 31, 2019 Appropriation and distribution of earnings: B1 Legal reserve B3 Special reserve B5 Cash dividend D1 2020 net income D3 2020 other comprehensive income D5 2020 total comprehensive income Q1 Disposal of equity instruments at fair value through other comprehensive income (Note 8(1)) Z1 Balance as of December 31, 2020	Share capital(Note24) $ 3,011,638 - - - - - - - 3,011,638 - - - - - - - $ 3,011,638	Retained earnings (Note24)	Retained earnings (Note24)	Undistributed earnings $ 243,074 ( 90,358 ) ( 209,612 ) ( 147,570 ) 580,968 ( 1,439) 579,529 30,671 405,734 ( 116,194 ) ( 176,385 ) ( 289,117 ) 152,882 1,030 153,912 200,725 $ 178,675	Other equity items (Note 24) Unrealized gains/losses on financial assets at fair value through other comprehensive income $ 27,302 - - - - 410,392 410,392 ( 30,671) 407,023 - - - - 86,028 86,028 ( 200,725) $ 292,326	Totalequity
		Legal reserve $ 1,156,391 90,358 - - - - - - 1,246,749 116,194 - - - - - - $ 1,362,943	Special reserve $ 1,530,505 - 209,612 - - - - - 1,740,117 - 176,385 - - - - - $ 1,916,502
						$ 5,968,910 - - ( 147,570 ) 580,968 408,953 989,921 - 6,811,261 - - ( 289,117 ) 152,882 87,058 239,940 - $ 6,762,084
					(
					(

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

Manager: Chu-Minn Leu

Chairman: C. H. Lee

Head of Accounting: Fei-Fen Hsiao

• 11 -

The First Insurance Co., Ltd. Cash Flow Statement

For periods from January 1 to December 31, 2020 and 2019

Unit: NTD thousands

Code Cash flow from operating activities A10000 Pre-tax profit for the current period A20000 Adjustments: A20010 Income, expenses and losses A20100 Depreciation A20200 Amortization A20900 Interest expenses A21200 Interest income A21300 Dividend income A21400 Net change of various reserves - current A21830 Expected credit impairment loss (reversal gain) on investment A22500 Loss on disposal of property, plant and equipment A22700 Loss on disposal of investment property A22900 Gain on lease modification A24100 Unrealized loss on foreign exchange A50000 Change in assets/liabilities related to operating activities A51110 Notes receivable A51120 Premiums receivable A51130 Other receivables A51140 Gains on financial assets or liabilities at fair value through profit and loss A51141 Financial assets at fair value through other comprehensive income A51145 Debt instrument investments measured at cost after amortization A51160 Other financial assets A51170 Reinsurance Contracts Assets A51190 Guarantee deposits paid A51990 Other assets A52110 Notes payable A52120 Claims payable (Continued next page)	2020 $ 205,945 26,108 10,512 150 ( 87,428) ( 110,529) 325,216 ( 954) 2,505 205 ( 4 ) 35,700 ( 4,234) 105,736 3,047 ( 325,892) 252,992 ( 230,000 ) ( 120,715 ) 118,920 ( 2,649 ) ( 6,477) ( 6,364 ) 2,986	2019
		$ 663,625 20,928 6,771 130 ( 95,210) ( 127,887) ( 675,348) 4,835 476 - - 14,506 23,904 116,919 133,402 2,022,786 ( 2,118,191) ( 197,521) ( 100,208) 637,537 4,251 ( 28,474 ) 12,186 ( 4,445)

• 12 -

(Continued from previous page)

Code A52140 Commission payable A52150 Reinsurance accounts payable A52160 Other payables A52200 Provisions for employee benefits A52240 Guarantee deposits received A52990 Other liabilities A33000 Cash inflow from operating activities A33100 Interests received A33200 Dividends received A33300 Interests paid A33500 Income tax paid AAAA Net cash inflow from operating activities Cash flow from investing activities B02700 Acquisition of property, plant and equipment B04500 Acquisition of intangible assets BBBB Net cash outflow from investing activities Cash flow from financing activities C04020 Repayment of lease principal C04500 Cash dividends paid CCCC Net cash outflow from financing activities DDDD Effect of changes in the exchange rate on cash and cash equivalents EEEE Increase (decrease) in cash for the current period E00100 Opening cash balance E00200 Closing cash balance	2020 $ 5,463 ( 92,917) 43,180 ( 25,919) ( 584) 16,588 140,587 101,204 110,529 ( 150) ( 100,674) 251,496 ( 22,507) ( 18,342) ( 40,849) ( 2,564) ( 289,117) ( 291,681) ( 3,656 ) ( 84,690) 1,860,014 $ 1,775,324	2019
		$ 2,981 ( 51,403 ) ( 3,381) ( 9,504 ) - ( 15,074) 238,591 89,612 127,887 ( 130) ( 59,039) 396,921 ( 8,589 ) ( 3,019) ( 11,608) ( 1,853) ( 147,570) ( 149,423) ( 2,774) 233,116 1,626,898 $ 1,860,014

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

Chairman: C. H. Lee

Manager: Chu-Minn Leu

Head of Accounting: Fei-Fen Hsiao

• 13 -

The First Insurance Co., Ltd. Notes to financial statements For periods from January 1 to December 31, 2020 and 2019

(Unless otherwise specified, all amounts are presented in NTD thousands)

1. Corporate history

The First Insurance Co., Ltd. (the Company) was founded in September 1962. It is primarily involved in the offering of non-life insurance products, particularly fire insurance, cargo insurance and automobile insurance. The Company has branches established in Taichung, Kaohsiung, Tainan, Taoyuan and New Taipei City.

On November 28, 2000, the Company received approval from Securities and Futures Commission, Ministry of Finance, to list for trading on Taiwan Stock Exchange Corporation.

This financial report is presented using the Company's functional currency (NTD).

1. Financial statement approval date and procedures

This financial report was passed during the Board of Directors meeting dated March 26, 2021.

1. Adoption of new and amended standards and interpretations

2. (1) The first-time adoption of International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), and interpretations (IFRIC) and announcements (SIC) thereof approved by the Financial Supervisory Commission ("FSC") (collectively referred to as "IFRSs" below)

Adoption of FSC-approved amended IFRSs did not result in any material change to the Company's accounting policies.

• (2) FSC-approved IFRSs adopted in 2021

New/Amended/Modified Standards and Effective date of IASB Interpretations announcement Amendments to IFRS 4 regarding "Extension of the Effective from the Temporary Exemption from Applying IFRS 9" announcement date

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16 - "Interest Rate Benchmark Reform – Phase II"

Amendments to IFRS 16, “Reduction of Rent Due to COVID-19”

Effective during the annual reporting periods beginning on or after January 1, 2021

Effective during the annual reporting periods beginning on or after Monday, June 1, 2020

• 14 -

(3) IFRSs published by IASB but yet to be approved by FSC New/Amended/Modified Standards and Interpretationspretationsretations

New/Amended/Modified Standards and Effective date of IASB Interpretationspretationsretations announcement (Note 1) "Improvements for years 2018-2020" Saturday, January 1, 2022 (Note 2) Amendments to IFRS 3 regarding "Updating a Saturday, January 1, 2022 Reference to the Conceptual Framework" (Note 3) Amendments to IFRS 10 and IAS 28 - "Sale or Undetermined Contribution of Assets between an Investor and its Associate or Joint Venture" IFRS 17 - "Insurance Contracts" Sunday, January 1, 2023 Amendments to IFRS 17 Sunday, January 1, 2023 Amendments to IAS 1 - "Classification of Liabilities Sunday, January 1, 2023 as Current or Non-current" Amendments to IAS 16 - "Property, Plant and Saturday, January 1, 2022 Equipment: Proceeds before Intended Use" (Note 4) Amendments to IAS 37 - "Onerous Contracts - Cost Saturday, January 1, 2022 of Fulfilling a Contract" (Note 5) Amendments to IAS 1, “Disclosure of Accounting Sunday, January 1, 2023 Policies” (Note 6) Amendments to IFRS 8, “Definition of Accounting Sunday, January 1, 2023 Estimates” (Note 7)

• Note 1: Unless otherwise specified, all new/amended/modified standards and interpretations above shall take effect from the financial year that begins after the specified date.

• Note 2: The IFRS 9 amendment will apply to the exchange or modification of financial liability that occurs in financial years starting on and after January 1, 2022. Amendments to IAS 41 - "Agriculture" will apply to fair value assessments for financial years starting on and after January 1, 2022. Amendments to IFRS 1 - "First-time Adoption of IFRSs" will apply retrospectively in financial years starting on and after January 1, 2022.

• Note 3: These amendments are applicable to business combinations that take place in financial years starting on and after January 1, 2022.

• Note 4: These amendments will apply to property, plant and equipment that reach the management's intended location and state on and after January 1, 2021.

• Note 5: These amendments will apply to all contracts with outstanding obligations as of January 1, 2022.

• Note 6: The amendments shall prospectively apply to the annual reporting period beginning on or after January 1, 2023.

• Note 7: The amendments shall apply to the changes to the accounting estimates or policies occurring during the annual reporting period beginning on or after January 1, 2023.

• 15 -

IFRS 17 - "Insurance Contracts" and amendments

Accounting treatment of insurance contracts stated under IFRS 17 will supersede IFRS 4 - "Insurance Contracts." Key amendments to IFRS 17 are as follows:

Level of aggregation for insurance contracts

IFRS 17 requires the Company to identify portfolios of insurance contracts. A portfolio refers to contracts that are subject to similar risks and management. Contracts within a specific product line would be expected to share similar risks and hence would be expected to be in the same portfolio if they are managed together. Each portfolio of insurance contracts issued by the Company shall be divided into a minimum of:

• (a) A group of contracts that are onerous at initial recognition;

• (b) A group of contracts that, at initial recognition, have no significant possibility of becoming onerous subsequently; and

• (c) A group of the remaining contracts in the portfolio.

The Company is not permitted to include contracts issued more than one year apart in the same group, and shall apply appropriate recognition and measurement rules of IFRS 17 for the portfolios it has determined.

Recognition

The Company shall recognize a group of insurance contracts it issues from the earliest of the following:

• (a) The beginning of coverage start date for the group of contracts;

• (b) The date when the first payment from a policyholder in the group becomes due; and

• (c) For a group of onerous contracts, when the group becomes onerous.

Measurement at initial recognition

On initial recognition, the Company shall measure a group of insurance contracts at the total of fulfillment cash flows and contractual service margin. Fulfillment cash flow (“FCF”) comprises future cash flow estimates, adjustments for time value of money (“TVM”) and financial risks associated with future cash flows, and risk adjustments for non-financial risk. Contractual service margin represents unearned profit from a group of insurance contracts that the Company will recognize as it provides services in the future. Unless the group of contracts is onerous, contractual service margin is measured upon initial recognition of a group of insurance contracts at an amount that results in no income or expenses arising from:

• (a) Initial recognition of FCF;

• (b) All cash flows originating from the group of contracts as of the given day; and

• (c) De-recognition of the following items on the initial date of recognition:

• (i) All cash flow assets acquired from insurance; and

• (ii) All other assets or liabilities previously recognized on cash flows from the group of contracts.

Subsequent measurement

On subsequent measurement, the carrying amount of a group of insurance contracts at the end of each reporting period shall be the book value sum of the liability for remaining coverage and liability for incurred claims. Liability for remaining coverage includes FCF related to future services, the CSM, and FCF related to past service allocated to the group at that date. If a group of insurance contracts becomes onerous (or more onerous), the loss shall be recognized in profit or loss immediately.

Onerous contracts

• 16 -

An insurance contract is onerous at initial recognition if the amount of FCF allocated to insurance contract plus cash flows previously received and recognized on insurance plus all cash flows arising from the contract at initial recognition result in a net outflow. In which case, the Company shall recognize a loss in profit or loss for the net outflow, so that carrying amount of liability for the group of contracts equals the FCF and that CSM of the group is zero. The CSM cannot increase and no revenue can be recognized, until the onerous amount previously recognized has been reversed in profit or loss.

Premium allocation approach

The Company may simplify measurement for a group of insurance contracts using the Premium Allocation Approach (PAA) if any of the following conditions is met at the inception of the group of insurance contracts:

• (a) The Company reasonably expects that the size of liability for remaining coverage generated from PAA to be a reasonable approximation of the general model, or

(b) The coverage period of each contract in the group is one year or less. Where, at the inception of the group, the Company expects significant variances in the FCF before a claim is incurred that would affect the measurement of liabilities for remaining coverage, such contracts are not eligible for condition (a).

• When using PAA, the liability for remaining coverage is calculated as:

• (a) Premiums collected at initial recognition;

• (b) Less cash flows acquired from all insurance on the given day; and

• (c) Plus or minus de-recognition of the following items on the date of initial recognition:

• (i) All cash flow assets acquired from insurance; and

• (ii) All other assets or liabilities previously recognized on cash flows from the group of contracts.

Subsequently, carrying amount of the liability shall be adjusted for premiums received, amortization of cash flows acquired on insurance, minus the amount recognized as insurance revenue for services rendered in that period, and minus all investment components paid or transferred to the liability for incurred claims.

Investment contracts with a discretionary participation feature

An investment contract with a discretionary participation feature (DPF) is a financial instrument that does not include a transfer of significant insurance risk. These contracts are subject to IFRS 17 only if the Company issues investment contracts with DPF and insurance contracts at the same time.

Modification and derecognition

If the terms of an insurance contract are modified, the Company shall de-recognize the original contract and recognize the modified contract as a new contract if there is a substantive modification that meets any of the specified criteria.

The Company shall de-recognize an insurance contract when it is extinguished or if any substantive modification is made.

Transition

In general, the Company shall fully adopt IFRS 17 on a retrospective basis. However, where it is impracticable to do so, the Company shall have the option of using either the modified retrospective approach or the fair value approach.

Under the modified retrospective approach, the Company shall utilize reasonable and supportable information and maximize the use of information that would have been used to apply a full retrospective approach, but need only use

• 17 -

information available without undue cost or effort. If reasonable and supportable information is unavailable, the Company shall apply the fair value approach instead.

Under the fair value approach, the Company determines CSM at the transition date as the difference between the fair value of a group of insurance contracts at that date and the FCF measured at that date.

Apart from the impacts mentioned above, the Company continues to evaluate how amendments of the above standards and interpretations will affect its financial position and business performance as of the publication date of the financial statements. Outcomes of these assessments will be disclosed once they are concluded.

1. Summary of significant accounting policies

2. (1) Statement of compliance

This financial report has been prepared in accordance with Regulations Governing the Preparation of Financial Reports by Insurance Enterprises and FSC-approved IFRSs.

• (2)

• Basis of preparation

This financial report has been prepared based on historical cost, except for financial instruments carried at fair value.

Fair value measurement can be rated on a level of 1 to 3 depending on the ease of observation and significance of inputs:

1. Level 1 input: Refers to quotations that can be obtained from an active market (unadjusted) on the measurement date for asset or liability of equivalent nature.

2. Level 2 input: Refers to inputs that can be observed directly (i.e. price) or indirectly (i.e. established from price) for an asset or liability, other than Level 1 quotations.

3. Level 3 input: Refers to inputs that cannot be observed for an asset or liability.

(3) Classification of current and non-current assets and liabilities

• Due to the distinctive nature of its business activities, the Company does not

• classify assets and liabilities into current or non-current categories, but instead presents its accounts in the order of relative liquidity.

• (4) Foreign currencies

Monetary foreign currency accounts are converted using closing exchange rates as of every balance sheet date. Exchange differences arising from settlement or translation of monetary accounts are recognized in profit and loss in the year occurred.

Foreign currency-denominated non-monetary items carried at fair value are converted using exchange rates as of the date of fair value assessment; exchange differences are recognized in the current profit and loss. However, items with fair value changes recognized in other comprehensive income shall also have exchange differences recognized in other comprehensive income.

Foreign currency-denominated non-monetary items carried at historical cost are converted using exchange rate as of the date of initial transaction. No further re-calculation shall be made.

• (5) Property, plant and equipment Property, plant and equipment are initially recognized at cost, and subsequently

• presented at cost after accumulated depreciation and impairment.

Each significant part of the property, plants, and equipment is separately depreciated on a straight-line basis over its useful life, except no depreciation is provided for own land. The Company reviews the estimated useful life, residual

• 18 -

value and depreciation method at least once at the end of each year. Impacts of changes in accounting estimates are applied prospectively.

Gains or losses arising from decommissioned property, plant and equipment are calculated as the difference between disposal proceeds and the asset's book value, and are recognized in profit and loss in the year occurred. (6) Investment property

Investment properties are real estate properties held for rental income or capital gain, or both. Investment properties also include land held on hand that the Company has yet to determine their future uses.

Investment properties are initially recognized at cost (including transaction cost) and subsequently presented at cost after accumulated depreciation and impairment. Depreciation is provided on a straight-line basis.

The difference between the disposal proceeds and book value of decommissioned investment property is recognized in profit and loss. (7) Intangible assets

Intangible assets that are acquired through separate purchase with limited useful life are recognized at cost at initiation, and subsequently presented at cost less accumulated amortization and impairment. Intangible assets are amortized on the straight-line basis over its useful life. The Company reviews the estimated useful life, residual value and method of amortization at least on the last day of each year. It prospectively recognizes the effect of changes in accounting estimates.

The difference between the disposal proceeds and book value of intangible assets removed is recognized in current profit and loss.

• (8) Impairment of property & equipment and intangible assets (except goodwill)

The Company evaluates all property & equipment and intangible assets (except goodwill) for signs of impairment every balance sheet date. Assets that exhibit any sign of impairment will have recoverable amount estimated. If the recoverable amount cannot be estimated on an individual basis, the Company will instead estimate the recoverable amount for the entire cash-generating unit. For shared assets, amortization is allocated on a reasonable and consistent basis to individual cash-generating units.

Recoverable amount is the higher between "fair value less selling costs" and the "utilization value." If recoverable amount of an asset or cash-generating unit falls below its book value, the book value of that particular asset/cash-generating unit shall be reduced to the recoverable amount with impairment losses recognized in profit and loss.

When impairment losses are reversed on a later date, the book value of corresponding assets/cash-generating units shall be adjusted upwards to the recoverable amount. However, the increased book value shall not exceed the book value (less amortization or depreciation) of the asset/cash-generating unit before impairment losses were recognized in the first place. Reversal of impairment loss is recognized in profit and loss.

(9)

Financial instruments

Financial assets and financial liabilities are recognized on balance sheet when the Company becomes a party of the contract.

When recognizing financial assets and liabilities at initiation, those that are not designated to be carried at fair value through profit and loss are measured at fair value plus transaction costs that are directly attributable to the acquisition or issuance of financial assets/liabilities. Transaction costs that are directly attributable to the

• 19 -

acquisition or issuance of financial assets/liabilities are recognized in profit and loss at the time incurred.

1. Financial assets

Regular transactions of financial asset are recognized on or removed from balance sheet based on principles of trade date accounting.

• (1) Measurement categories

Financial assets held by the Company are distinguished into the following categories: financial assets at fair value through profit and loss, financial assets carried at cost after amortization, debt instruments at fair value through other comprehensive income, and equity instruments at fair value through other comprehensive income.

A. Financial assets at fair value through profit and loss

Financial assets at fair value through profit and loss mainly comprise financial assets that are mandatory to be measured at fair value with fair value changes recognized through profit and loss. Financial assets that are mandatory to be measured at fair value with fair value changes recognized through profit and loss include: equity instruments that the Company has not specified to carry at fair value through other comprehensive income, and debt instruments that do not satisfy the criteria to be carried at cost after amortization or at fair value through other comprehensive income.

Financial assets at fair value through profit and loss are measured at fair value, with gains and losses (including any dividends or interests generated from the financial asset) recognized in profit and loss. See Note 30 for details regarding the fair value method.

B. Financial assets carried at cost after amortization

Financial asset investments that satisfy both the following conditions are carried at cost after amortization:

• a. The financial asset is held for a specific business model, and the purpose of which is to hold the financial asset and collect contractual cash flow; and

• b. The contractual terms give rise to cash flows on specific dates, and the cash flows are intended solely to pay principals and interests accruing on outstanding principals.

For financial assets carried at cost after amortization (including cash and cash equivalents, accounts receivable carried at cost after amortization etc.), the effective interest method is used to determine the book value at initiation. They are subsequently presented net of impairments and amortization. Any gain/loss from currency exchange incurred on these financial assets is recognized through profit and loss.

Except for the two circumstances explained below, interest income is calculated by multiplying the book value of financial asset with effective interest rate:

• a. Acquisition or creation of credit-impaired financial assets; in which case interest income is calculated by multiplying the cost of financial assets after amortization with credit-adjusted effective interest rate.

• b. Financial assets that were not credit-impaired at the time of acquisition or origination, but become credit-impaired on a later

• 20 -

date; in which case interest income is calculated by multiplying the cost of financial assets after amortization with the effective interest rate.

Financial assets are considered credit-impaired if the issuer or debtor exhibits major financial distress, default, likely bankruptcy, financial restructuring or any financial difficulty that may render the financial asset no longer available on the active market.

Cash equivalents include time deposits with less than 3 months until maturity that are highly liquid, readily convertible into defined amounts of cash, and less prone to the risk of fair value changes. Cash equivalents are held for the purpose of meeting the Company's short-term cash commitments.

C. Debt instruments at fair value through other comprehensive income

Debt instrument investments are classified as financial assets at fair value through other comprehensive income if they satisfy both the following conditions:

• a. The financial asset is held for a specific business model, and the purpose of which involves collection of contractual cash flow and resale of the financial asset; and

• b. The contractual terms give rise to cash flows on specific dates, and the cash flows are intended solely to pay principals and interests accruing on outstanding principals.

Debt instruments at fair value through other comprehensive income are measured at fair value. Book value changes that are attributed to interest income (calculated using the effective interest method), gain/loss on currency exchange and provision/reversal of impairment loss are recognized through profit and loss. All other changes are recognized through other comprehensive income and reclassified into profit and loss when the investment is disposed on a later date.

D. Equity instruments at fair value through other comprehensive income

For equity instruments that are neither held for trading nor recognized/received as a consideration for business acquisition, the Company is entitled to an irrevocable option to account them at fair value through other comprehensive income at initial recognition.

Equity instruments at fair value through other comprehensive income are measured at fair value; subsequent fair value changes are recognized through other comprehensive income and accumulated under other equity. At the time of disposal, cumulative gains/losses are transferred directly into retained earnings and not reclassified into profit and loss.

Dividends from equity instruments at fair value through other comprehensive income are recognized in profit and loss when the entitlement to receive is confirmed, unless the dividends clearly represent a partial recovery of the investment cost.

(2)

Impairment of financial assets

On each balance sheet day, the Company assesses impairment losses on financial assets carried at cost after amortization (including notes receivable - net and premiums receivable - net) and debt instruments at

• 21 -

fair value through other comprehensive income based on expected credit losses.

Loss provisions on receivables are recognized based on expected credit loss and "Regulation on Asset Valuation, Overdue Collection and Loan Loss Provisioning by Insurance Companies." For other financial assets, the Company first evaluates whether there is significant increase in credit risk since initial recognition. If there is no significant increase in credit risk, loss provisions are recognized based on 12-month expected credit losses; if there is significant increase in credit risk, loss provisions are recognized based on expected credit losses over the remaining duration.

Expected credit losses represent average credit losses weighed against the risk of default. 12-month expected credit losses represent the amount of credit losses that the financial instrument is likely to incur due to default event in the next 12 months, whereas expected credit losses for the remaining duration represent the amount of credit losses that the financial instrument is likely to incur due to all possible default events for the remaining duration.

All impairment losses on financial assets are recognized with book value adjusted through the allowance account. However, loss provisions on debt instruments at fair value through other comprehensive income are recognized through other comprehensive income and do not reduce their book amount.

• (3) Removal of financial assets

Financial assets can be removed from balance sheet only if all contractual cash flow entitlements have ended, or if the asset has been transferred with virtually all risks and returns assumed by another party.

When a financial asset is removed, the difference between book value and the sum of the consideration received plus any cumulative gains or losses previously recognized under other comprehensive income is recognized in profit and loss.

1. Financial liabilities

2. (1) Subsequent measurements

Financial liabilities are carried at cost after amortization using the effective interest method.

• (2) Removal of financial liabilities

When a financial liability is removed, the difference between book value and the consideration paid (including any non-cash assets transferred or any additional liabilities borne) is recognized in profit and loss.

• (10) Ceded reinsurance

The Company makes reinsurance arrangements in accordance with insurance regulations and as needed for its business activities in order to limit possible losses arising from exposure to certain risks. For ceded insurance coverage, the Company may not deny its obligations to insured parties on the basis that its reinsurers have failed to fulfill their obligations.

The Company recognizes reinsurance premiums expense for ceded reinsurance coverage depending on the nature of reinsurance contract. The financial reports have been prepared after taking into consideration the policy period, which matches premium revenues. Reinsurance premiums expenses are estimated on each balance

• 22 -

sheet date using rational and systematic methods. All associated revenues (such as: reinsurance commission revenues) are also recognized during the same period. The Company does not defer gains/losses on reinsurance.

Reinsurance reserve assets include: unearned premium reserve, ceded claim reserve and deficiency reserve for ceded coverage. These reserves are made in accordance with Regulations Governing Reserve Provisioning by Insurance Enterprises and terms of the respective reinsurance contracts, and represent the Company's entitlements over the reinsurers.

The Company assesses reinsurance reserve assets, claims recoverable from reinsurers, and reinsurance accounts receivable balances above on a regular basis for signs of impairment or non-recovery. If there is objective evidence to suggest that the Company may be unable to recover all reinsurance contract assets due to occurrence of an event after initial recognition, the Company will recognize cumulative impairments for the recoverable amount that falls short of the book value of the reinsurance reserve assets, provided that impact to the amounts recoverable from reinsurer due to the above event can be measured reliably. Appropriate amounts of doubtful debt are provided for balances of claims recoverable from reinsurers and reinsurance accounts receivable that are no longer deemed recoverable. (11) Acceptance of residual assets and right of subrogation

The Company recognizes entitlement over insurance claims when such claims become certain (highly likely inflow of future economic benefits) and the amount of which can be measured reliably.

(12) Insurance liabilities

The Company provides insurance liabilities for various insurance contracts according to "Regulations Governing Reserve Provisioning by Insurance Enterprises," "Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance," "Enforcement Rules for the Risk Spreading Mechanism of Residential Earthquake Insurance" and "Regulations for the Management of the Various Reserves for Nuclear Risks Insurance by Non-life Insurance Enterprises." All insurance liabilities have been verified by FSC-certified actuaries. The basis of provision for various insurance liabilities is explained below:

1. Unearned premium reserve

The Company makes provision of unearned premium reserve for unexpired contracts and existing insurance risks by calculating unexpired risks of each insurance contract. The Company adopts the 24th Method and other methods to provide for and recover unearned premium reserves. 2. Claim reserves

The Company makes claim reserves using actuarial methods based on past experience and payments. The Company makes two different types of claim reserve: Reported but unpaid claims and Unreported claims. The amount of reserve for Reported but unpaid claims is estimated on a case-by-case basis and provided for different insurance categories.

Claim reserves on mandatory automobile liabilities insurance are provided according to "Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance."

• 23 -

Claim reserves on policy-based residential earthquake insurance are provided according to "Enforcement Rules for the Risk Spreading Mechanism of Residential Earthquake Insurance."

Claim reserves on nuclear risks insurance are provided according to "Regulations for the Management of the Various Reserves for Nuclear Risks Insurance by Non-life Insurance Enterprises."

1. Special claim reserves

There are two types of special claim reserve: "Special claim reserves for major incidents" and "Special claim reserves for change of risk." Provisions made before January 1, 2011 will continue to be presented as liabilities, whereas new provisions made on and after January 1, 2011 net of income taxes are presented as special reserve under other equity items. Starting from January 1, 2011, offsets or recoveries can be made to special claim reserves that are presented as liabilities. Once the liability has been depleted, the remainder of the offset/recovery net of income taxes can be charged against special claim reserves that are presented under other equity items.

(1) Special claim reserves for major incidents

Special claim reserves for major incidents are provided using the percentages specified by the competent authority.

Any occurrence of government-announced major incident that causes individual insurance companies to pay retained claims amounting to NT$30 million across all insurance categories, and the entire non-life insurance industry to pay claims amounting to NT$2 billion or above across all insurance categories, may be offset against special claim reserves for major incidents.

Insurance companies that have made special claim reserves for major incidents for more than 15 years may devise a reserve recovery system with the involvement of certified actuaries, and implement with the acknowledgment of the competent authority.

• (2) Special claim reserves for change of risk

If the balance of actual claim after offsetting against special claim reserves for major incidents of a particular insurance category is lower than expected claims, the Company shall provide special claim reserves for change of risk on the difference according to rules of the competent authority.

If the balance of actual claim after offsetting against special claim reserves for major incidents of a particular insurance category is higher than expected claims, the Company may offset the difference against special claim reserves for change of risk. If there are insufficient special claim reserves for change of risk to offset a particular insurance category, the Company may offset the excess against special claim reserves for change of risk of other insurance categories. The insurance category and amount of offset shall comply with the rules and are subject to acknowledgment of the competent authority.

The Company shall recover amounts of special claim reserves for change of risk that exceed the requirements imposed by the competent authority per insurance category.

Deficiency reserve

The Company assesses future possible claims and expenses for each category of unexpired contracts and existing insurance risks. If the estimated

• 24 -

claims and expenses exceed unearned premium reserves plus expected premium revenues, a deficiency reserve shall be provided on the difference for that insurance category.

1. Liabilities adequacy reserve

With regards to contracts that are subject to liability adequacy test under IFRSs 4, the Company performs adequacy tests for recognized insurance liabilities by estimating future cash flows based on information available on each balance sheet date. Liability adequacy reserves are provided for any shortfalls revealed by the test.

(13) Liability adequacy test On each balance sheet date, the Company follows the practical actuarial principles published by Actuarial Institute of Chinese Taipei to estimate future cash flows of individual insurance contracts. Any shortfall in the book value of recognized insurance liabilities identified from the above is recognized as current expense/loss.

• (14) Revenue recognition

The Company recognizes revenues according to IFRSs 4 - "Insurance Contracts."

Revenue and acquisition cost of insurance coverage:

For direct written coverage, premium revenues are recognized on all underwritten and modified coverage approved in the current period. For assumed reinsurance coverage, reinsurance premium revenues are recognized based on the invoice delivery date. Reinsurance premium revenues accruing as of the balance sheet date are estimated using rational and systematic methods. All associated acquisition costs (e.g.: commission expense, agency charge, fee and reinsurance commission expense) are recognized in the period incurred and not deferred.

The Company makes provision of unearned premium reserve for unexpired contracts and existing insurance risks by calculating unexpired risks of each insurance contract.

Unearned premium reserves on mandatory automobile liabilities insurance are provided according to "Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance."

Unearned premium reserves on residential earthquake insurance are provided according to "Enforcement Rules for the Risk Spreading Mechanism of Residential Earthquake Insurance."

Unearned premium reserves on nuclear risks insurance are provided according to "Regulations for the Management of the Various Reserves for Nuclear Risks Insurance by Non-life Insurance Enterprises."

Methods for providing unearned premium reserves are determined by actuarial personnel for the various types of insurance coverage, unless otherwise regulated by law (no change can be made without the authority's approval). The amount of unearned premium reserve is subject to verification and certification by actuarial personnel.

Taxes on insurance revenues are recognized on an accrual basis according to the Value-added and Non-value-added Business Tax Act, the Stamp Tax Act and relevant regulations.

(15) Cost of insurance claims

For direct written coverage, the cost of insurance claims comprises claims payments (including claim-related expenses) incurred and approved in the current period. Amounts that have been ascertained by the claims department but not yet paid by the accounting/finance department and amounts that are not yet ascertained

• 25 -

by the claims department are estimated on a case-by-case basis for each insurance category, and recognized as the net change in reported but unpaid claim reserves.

For assumed reinsurance coverage, claims payable to reinsurers are recognized based on the invoice delivery date. Reinsurance claims payable accruing as of the balance sheet date are estimated using rational and systematic methods and recognized as the net change in claim reserves.

For direct written and assumed reinsurance coverage, the amount of unreported insurance claims is calculated category-by-category based on previous claims and expenses using actuarial methods, and recognized as net change in unreported claim reserves.

With regards to claims recoverable from reinsurers on ceded reinsurance coverage, any claims (including claim-related expenses) received are recognized as claims recovered from reinsurers, whereas unpaid and unreported claims (including claim-related expenses) are recognized as net change in claim reserves.

The Company does not apply discounting when calculating claim reserves.

Claim reserves on mandatory automobile liabilities insurance are provided according to "Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance."

Claim reserves on residential earthquake insurance are provided according to "Enforcement Rules for the Risk Spreading Mechanism of Residential Earthquake Insurance."

Claim reserves on nuclear risks insurance are provided according to "Regulations for the Management of the Various Reserves for Nuclear Risks Insurance by Non-life Insurance Enterprises." (16) Leases The Company evaluates whether a contract meets the criteria of (or contains arrangements characterized as) lease on the day of establishment.

1. Where the Company is the lessor

All other lease arrangements are classified as operating lease.

In an operating lease arrangement, the amount of proceeds received net of incentives are recognized as income on a straight-line basis over the lease tenor. All initial direct costs incurred in relation to the establishment of operating lease are added to the book value of the underlying asset, and recognized as expenses using the straight-line basis over the lease tenor.

1. Where the Company is the lessee

The Company recognizes right-of-use assets and lease liabilities from the lease start date for each lease arrangement, except for exempted low-value and short-term leases where expenses are recognized on a straight-line basis over the lease tenor.

Right-of-use assets are measured at cost at initiation (including the initial amount of lease liability, lease payments made before the lease start date less the amount of lease incentives received, initial direct cost and estimated cost of recovery for the underlying asset), and subsequently at cost less accumulated depreciation and impairment with adjustments made to the remeasurement account for lease liability.

Right-of-use assets are depreciated on a straight-line basis from the lease start date until the end of useful life or until expiry of the lease tenor, whichever the earlier.

Lease liabilities are carried at the present value of lease payments. Lease payments are discounted at the implicit interest rate if it can be determined

• 26 -

easily. If the interest rate cannot be determined easily, the lessee's incremental borrowing rate is used instead.

Subsequently, lease liability is carried at cost after amortization using the effective interest method, whereas interest expense is amortized over the lease tenor. If there is any change to the lease tenor or to the index or fee rate relevant for determining lease payment, the Company will remeasure its lease liabilities and make corresponding adjustments to right-of-use asset. If, however, the book value of right-of-use asset has already been reduced to zero, any subsequent remeasurements are recognized through income statement. With respect to the lease modification not presented as the lease individually, the lease liability remeasurement resulting from the decrease in the scope of lease decreased the right-of-use assets and recognized the gain or loss from termination of the lease in part or in whole, while the lease liability remeasurement resulting from other modifications adjusted the right-of-use assets only. Lease liabilities are presented individually on the standalone balance sheet.

• (17) Employee benefits

• Short-term employee benefit

Liabilities associated with short-term employee benefits are measured at non-discounted amount of cash that the Company expects to pay in exchange for employees' service.

1. Retirement benefits

For defined contribution plans, the amount of contributions made to pension funds over the duration of employees' service are recognized as current period expenses.

For defined benefit plans, the cost of benefit (including service cost, net interest and effect of remeasurement) is estimated using the Projected Unit Credit Method. Service costs (including current service costs) and net interests on net defined benefit plan liabilities are recognized as employee welfare expense at the time incurred or whenever the plan is amended, curtailed or repaid. Effects of remeasurement (including actuarial gains/losses, change in plan asset limits, and return on plan assets net of interest) are recognized under other comprehensive income and added to retained earnings at the time of occurrence. This amount is not reclassified into profit and loss in subsequent periods.

Net defined benefit plan liabilities represent the shortfall of contributions made to the defined benefit plan.

• (18) Income tax

Income tax expense represents the sum of current income tax and deferred income tax.

1. Current income tax

The current income tax payable is calculated based on the taxable income of the current period. The taxable income may differ from pre-tax profit presented in the statement of comprehensive income because some of the gains, expenses and losses are taxable or deductible in other years, while some are tax-exempted or eligible for tax deductions. The Company's current income tax liabilities are calculated using the tax rate applicable as of the balance sheet date.

• 27 -

The Company determines the current gain (loss) in accordance with the laws and regulations formulated in the jurisdiction where the income tax return is filed and, with this as a basis, calculate the income tax payable (receivable).

The additional income tax on undistributed earnings calculated according to the Income Tax Act of the Republic of China is recognized in the year when the related resolution is made at the shareholders’ meeting.

Adjustments to income taxes reported in previous years are recognized as income tax expenses in the period the adjustment is made. 2. Deferred income tax

Deferred income taxes are tax effects of temporary differences, given rise by the different book value of assets and liabilities presented in the financial statement and those reported for tax filing. Tax impacts arising from taxable temporary differences are recognized as deferred income tax liabilities; deferred income tax assets are recognized under the condition that the Company is very likely to generate taxable income to realize them in the future.

Book value of deferred income tax asset is re-assessed on every balance sheet date. The Company will reduce book value if it is not highly likely to generate enough taxable income to realize part or all of the assets. Temporary differences that were not initially recognized as deferred income tax assets are also subject to re-assessment on every balance sheet date. These differences may be recognized to increase the book value of deferred income tax asset if the Company considers it highly likely to generate taxable income for full or partial recovery of such asset.

Deferred income tax assets and liabilities are estimated using expected tax rate applicable at the time the liability/asset is expected to be settled/realized. This expected tax rate is determined based on the tax rate and tax laws prevailing as of the balance sheet date. Deferred income tax liabilities and assets represent tax impacts of the method by which the Company expects to recover/settle the book value of its assets and liabilities as of the balance sheet date.

1. Current and deferred income tax for the year

Current and deferred income taxes are recognized in profit and loss, except in cases where items giving rise to the difference are recognized under other comprehensive income; in which case, both current and deferred income taxes shall also be recognized under other comprehensive income.

(19) Coinsurance organization, coinsurance and guarantee fund arrangements

1. Coinsurance contract for mandatory automobile liabilities insurance

The Company has signed a "Mandatory Automobile Liabilities Coinsurance Contract" with all peers that have been approved by the competent authority to engage in mandatory automobile liabilities insurance service. The contract requires all underwritten mandatory automobile liabilities insurance coverage to be subject to coinsurance. Violators will be subject to default penalty, and all contract participants have agreed to auditing by representatives of the coinsurance team. Assumed coinsurance coverage is calculated on a pure premium basis, and allocated at the agreed coinsurance percentage. Coinsurance participants may not exit the arrangement unless due to liquidation or business cessation. Participants will automatically exit the coinsurance arrangement if they stop providing automobile liabilities insurance service. In which case, natural expiry shall apply to unexpired liabilities.

• 28 -

• Coinsurance contract for residential earthquake insurance

The Company and all industry peers approved by the competent authority to engage in residential fire insurance service have been granted membership to the Residential Earthquake Insurance Fund (Earthquake Insurance Fund), a coinsurance organization. The members have jointly established a "Residential Earthquake Coinsurance Contract" requiring all underwritten residential earthquake insurance coverage to be subject to coinsurance. All contract participants have agreed to audit by representatives of the coinsurance team. Assumed coinsurance coverage is calculated on a pure premium basis; participants bear coinsurance liability for the coverage they assume individually, and are not jointly responsible for the liabilities of others. Participants may exit the coinsurance arrangement by notifying the Earthquake Insurance Fund 3 months before commencement of the next policy year. Exited participants will continue to assume existing shared liabilities until the end of the current year, and shared liabilities outstanding thereafter will be transferred to other coinsurance members. Members shall notify the Earthquake Insurance Fund to withdraw from coinsurance if dissolved due to winding up, dissolution, or business combination. In such case, all assumed coverage remaining in the current year will be transferred to other members of the coinsurance organization starting from the date of winding up/dissolution/business combination announced by the competent authority. The coinsurance organization will convene meetings to discuss the method of transfer. For members that withdraw from the coinsurance due to business combination, any assumed coverage remaining in the current year will be undertaken by surviving companies.

5. Sources of uncertainty to significant accounting judgments, estimates, and assumptions

When applying accounting policies, the management is required to make judgments, estimates, and assumptions based on historical experience or other relevant factors in situations where information cannot be easily obtained from available sources. The actual outcome may differ from initial estimates.

The Company deems the effect of the COVID-19 on the economy as a consideration of significant accounting estimates. The management will continue to review the estimates and basic assumptions. If a revision of accounting estimate affects only the current period, the effect shall be recognized only for the current period. If a revision of accounting estimate affects current and future periods, the effect shall also be recognized for current and future periods. Insurance liabilities from insurance contracts

Claim reserves arising from insurance contracts are estimated on each balance sheet date according to insurance regulations. These amounts are verified by FSC-certified actuaries, but due to the estimations involved, the actual amount of liability may be higher or lower than the amount estimated.

6. Cash

liability may be higher or lower than the Cash	amount estimated.
Petty cash and cash on hand Check and current deposit	December 31,2020 $ 669 1,774,655 $ 1,775,324	December 31,2019
			$ 357 1,859,657 $ 1,860,014

Foreign currency deposits are placed with domestic banks. As at December 31, 2020 and 2019, the Company held NT$2,751,824 thousand and NT$2,663,153 thousand

• 29 -

of time deposit, respectively, that had an initial maturity date of more than 3 months (refer to Note 11).

1. Financial assets at fair value through profit and loss

December 31, 2020 December 31, 2019 Mandatory at fair value throughout profit and loss Non-derivative financial assets - TWSE/TPEx listed shares $ 304,872 $ 735,535 - Beneficiary certificates 1,442,491 434,142 - Securitized beneficiary certificates 192,914 424,851 - Bank debentures - 50,565 Subtotal $ 1,940,277 $ 1,645,093 8. Financial assets at fair value through other comprehensive income December 31, 2020 December 31, 2019 Investment in equity instruments $ 2,457,881 $ 2,676,438 Investment in debt instruments 491,070 509,305 $ 2,948,951 $ 3,185,743 (1) Investment in equity instruments December 31, 2020 December 31, 2019 Domestic investments TWSE/TPEx listed shares $ 1,569,283 $ 1,730,675 Unlisted shares 888,598 945,763 $ 2,457,881 $ 2,676,438

The Company held said listed shares and non-listed common shares as strategic investments and not for trading purposes. Therefore, it opted to account them at fair value through other comprehensive income.

To diversify risks, the Company made a series of adjustments to its investment position from January 1 to December 31, 2020 and 2019. Listed common shares with a total fair value of NT$1,465,109 thousand and NT$209,894 thousand were sold during the process. As a result, NT$200,725 thousand and NT$30,671 thousand of unrealized gains on financial assets at fair value through other comprehensive income previously presented as other equity items were charged to retained earnings according to IFRS 9 in the respective years.

For the periods from January 1 to December 31, 2020 and 2019, the Company recognized NT$100,807 thousand and NT$92,357 thousand as the revenue from cash dividend and acquired NT$46,125 thousand and NT$5,347 thousand as the stock dividends, respectively.

• (2) Investment in debt instruments

dividends, respectively. Investment in debt instruments
Domestic investments Government bonds Less: Amount placed as guarantee deposit	December 31,2020 $ 1,075,242 ( 584,172) $ 491,070	December 31,2019
	(	(	$ 1,027,166 517,861) $ 509,305

• 30 -

Information on government bond investments as at the	Information on government bond investments as at the	balance sheet date:
	December 31,2020	December 31,2019
Face value of investment	$ 909,000	$ 909,000
Coupon interest rate	1.125%~5.000%	1.125%~5.000%
Average maturity	7.09 years	8.09 years

Please refer to Note 10 for information relating to credit risk management and impairment assessment of debt instruments at fair value through other comprehensive income.

Please refer to Note 18 for the amount of government bonds placed as guarantee deposits for insurance business as of December 31, 2020.

1. Financial assets carried at cost after amortization

deposits for insurance business as of December 31, 2020. Financial assets carried at cost after amortization
December 31,2020 December 31,2019 Domestic investments Bank debenture (1) $ 1,444,470 $ 1,516,154 Corporate bond (2) 330,000 30,000 Subtotal 1,774,470 1,546,154 Less: loss provisions ( 15,870) ( 16,821) $ 1,758,600 $ 1,529,333 (1) Information on bank debenture investments as of the balance sheet date: December 31,2020 December 31,2019 Domestic investments Face value of investment $ 1,440,000 $ 1,510,000 Effective interest rate 1.250%~2.600% 1.550%~3.000% Average maturity 3.34 years 3.82 years	December 31,2019
	(
	$ 1,510,000 1.550%~3.000% 3.82 years

• (2) In November 2016, the Company purchased NT$30,000,000 of cumulative subordinated corporate bonds issued by Mercuries Life Insurance at face value. The bonds offered a yield of 3.7%.

• (3) In June, July, and August 2020, the Company purchased NT$100,000,000 of subordinated corporate bonds issued by CTBC Holding, NT$100,000,000 of ordinary corporate bonds issued by SERCOMM, and NT$100,000,000 of ordinary common bonds issued by Taiwan Cogeneration at yields of 1.05%, 1.00%, and 1.00%, respectively.

• (4) Please refer to Note 10 for information relating to credit risk management and impairment assessment of financial assets carried at cost after amortization.

• Credit risk management of debt instrument investments

Debt instrument investments are classified as financial assets at fair value through other comprehensive income and financial assets carried at cost after amortization:

• 31 -

December 31, 2020

December 31, 2020
Cost Loss provisions Cost after amortization Fair value adjustment December 31, 2019 Cost Loss provisions Cost after amortization Fair value adjustment	At fair value through other comprehensive income $ 985,017 ( 255) 984,762 90,480 $ 1,075,242 At fair value through other comprehensive income $ 988,541 ( 258) 988,283 38,883 $ 1,027,166		At cost after amortization $ 1,774,470 15,870) $ 1,758,600 At cost after amortization $ 1,546,154 16,821) $ 1,529,333		Total
		(		(	$ 2,759,487 16,125) 2,743,362 90,480 $ 2,833,842 Total
	(	(		(	$ 2,534,695 17,079) 2,517,616 38,883 $ 2,556,499

Please refer to paragraph 2. Credit risk in Note 30 - (4) Purpose and policy of financial risk management for the Company's credit risk management policy on debt instruments.

11. Other financial assets

instruments. Other financial assets
Time deposit with initial maturity of more than 3 months - NTD - Foreign currency Interest rate range - NTD Interest rate range - Foreign currency	December 31,2020 $ 2,074,000 677,824 $ 2,751,824 0.070%~1.035% 0.600%~2.100%	December 31,2019
		$ 2,084,000 579,153 $ 2,663,153 0.130%~1.040% 2.100%~3.200%

• 32 -

12. (1)	Receivables Details: Note receivable-net At cost after amortization Arising from business activities Arising from non-business activities Less: loss provisions Premiums receivable-net At cost after amortization Total book value Less: loss provisions Other receivables At cost after amortization Securities settlement receivable Interest and security dividends receivable Rent receivable Commission receivable from canceled coverage Less: loss provisions Claims recoverable from reinsurers At cost after amortization Total book value Less: loss provisions Reinsurance accounts receivable At cost after amortization Total book value Less: loss provisions	December 31,2020 $ 147,155 12 ( 3,682) $ 143,485 $ 212,770 ( 39,979) $ 172,791 $ 30,708 30,823 2,063 3,661 ( 2,559) $ 64,696 $ 131,740 ( 706) $ 131,034 $ 176,833 ( 1,493) $ 175,340	December 31,2019	December 31,2019
		(	(	$ 140,767 2,057 3,573) $ 139,251 $ 318,833 40,306) $ 278,527 $ - 39,395 2,176 4,265 229) $ 45,607 $ 167,092 1,010) $ 166,082 $ 219,176 3,589) $ 215,587
		(	(
		(	(
		(	(
		(	(

Claims recoverable from reinsurers and reinsurance accounts receivable are presented under reinsurance contract assets. Please refer to Notes 14 and 38(1) for details on insurance contract receivables. (2) Notes, premiums and other receivables

• 33 -

The Company evaluates customers' credit risk based on historical transaction records and customers' financial position. The Company monitors credit risk exposure and dealings with counterparties on an ongoing basis.

The Company makes loss provisions based on the counterpart's previous payment records, financial position, aging analysis and estimation of the unrecoverable amount. Recoverability of receivables and loans is assessed regularly on an item-by-item basis according to "Regulation on Asset Valuation, Overdue Collection and Loan Loss Provisioning by Insurance Companies" and rules concerning expected credit loss stated in IFRS 9; the higher of the two amounts derived above is determined as loss provision.

If there is evidence to suggest that the counterparty is undergoing severe financial crisis and the recoverable amount cannot be reasonably estimated, such as the case of liquidation, the Company will directly offset loss provisions against accounts receivable. In which case, the Company will continue collection efforts on the receivables, and any amounts recovered will be recognized through profit and loss.

The Company takes into account customer's default history and current financial position and industry prospect. Since the Company's credit loss history showed no significant difference in loss pattern across customer groups, the loss rate is not further distinguished between customer groups, and the expected credit loss rate is simply determined as a function of historical average loss rate and historical default rate.

Notes receivable

Notes receivable
Not yet matured/redeemed/collected Returned notes Total Premiums receivable 0~90 days 91 days and above Total	December 31,2020 $ 147,167 - $ 147,167 December 31,2020 $ 89,693 123,077 $ 212,770	December 31,2019
		$ 142,818 6 $ 142,824 December 31,2019
		$ 256,064 62,769 $ 318,833

Aging analysis for premiums receivable was prepared based on contract effective date.

Other receivables

effective date. ther receivables
0~90 days 91 days and above Total	December 31,2020 $ 64,247 3,008 $ 67,255	December 31,2019
		$ 45,836 - $ 45,836

Aging analysis for other receivables was prepared based on bookkeeping date. Claims recoverable from reinsurers and reinsurance accounts receivable December 31,2020 December 31,2019 0~270 days $ 299,705 $ 385,319 271 days and above 8,868 949 Total $ 308,573 $ 386,268	Aging analysis for other receivables was prepared based on bookkeeping date. Claims recoverable from reinsurers and reinsurance accounts receivable December 31,2020 December 31,2019 0~270 days $ 299,705 $ 385,319 271 days and above 8,868 949 Total $ 308,573 $ 386,268	Aging analysis for other receivables was prepared based on bookkeeping date. Claims recoverable from reinsurers and reinsurance accounts receivable December 31,2020 December 31,2019 0~270 days $ 299,705 $ 385,319 271 days and above 8,868 949 Total $ 308,573 $ 386,268
0~270 days 271 days and above Total	December 31,2020 $ 299,705 8,868 $ 308,573
		$ 385,319 949 $ 386,268

• 34 -

Aging analysis for reinsurance accounts receivable was prepared based on bookkeeping date.

• (3) Change in loss provisions: December 31, 2020 Notes receivable

bookkeeping date. Change in loss provisions: December 31, 2020 Notes receivable	bookkeeping date. Change in loss provisions: December 31, 2020 Notes receivable	bookkeeping date. Change in loss provisions: December 31, 2020 Notes receivable
Not yet matured/redeem ed/collected Returned notes Total Loss ratio 0.5%~50% 100% - Total book value $ 147,167 $ - $ 147,167 Loss provisions ( 3,682) - ( 3,682) Cost after amortization $ 143,485 $ - $ 143,485 Premiums receivable 0~90 days 91 days and above Total Loss ratio 0.5%~1 2%~100% - Total book value $ 89,693 $ 123,077 $ 212,770 Loss provisions ( 448) ( 39,531) ( 39,979) Cost after amortization $ 89,245 $ 83,546 $ 172,791 Other receivables 0~90 days 91 days and above Total Loss ratio 0.5% 2%~100% - Total book value $ 64,247 $ 3,008 $ 67,255 Loss provisions ( 321) ( 2,238) ( 2,559) Cost after amortization $ 63,926 $ 770 $ 64,696 Claims recoverable from reinsurers and reinsurance accounts receivable 0~270 days 271 days and above Total Loss ratio 0.4%~0.5% 2%~100% - Total book value $ 299,705 $ 8,868 $ 308,573 Loss provisions ( 1,422) ( 777) ( 2,199) Cost after amortization $ 298,283 $ 8,091 $ 306,374 December 31, 2019 Notes receivable Not yet matured/redeem ed/collected Returned notes Total Loss ratio 2.5%~50% 100% Total book value $ 142,818 $ 6 $ 142,824 Loss provisions ( 3,567) ( 6) ( 3,573) Cost after amortization $ 139,251 $ - $ 139,251				Total
			(	- $ 147,167 3,682) $ 143,485 Total
			(	- $ 212,770 39,979) $ 172,791 Total
			(
Loss ratio Total book value Loss provisions Cost after amortization December 31, 2019 Notes receivable Loss ratio Total book value Loss provisions Cost after amortization		271 days and above 2%~100% $ 8,868 ( 777) $ 8,091 Returned notes 100% $ 6 ( 6) $ -
	(		(	- $ 308,573 2,199) $ 306,374 Total
	(	(	(	$ 142,824 3,573) $ 139,251

• 35 -

Premiums receivable

								Total	Total
						(	$	318,833 40,306) 278,527 Total
							$
						(	$	45,836 229) 45,607 Total
							$
			(			(	$	386,268 4,599) 381,669
							$
				2020
Notes receivable $ 3,573 115 ( 6) $ 3,682	Premiums receivable		Other receivables $ 229 2,330 - $ 2,559		Claims recoverable from reinsurers $ 1,010 - ( 304) $ 706			Reinsuranc e accounts receivable
(	(	$ 40,306 505 832) $ 39,979			(			(	$ 3,589 663 2,759) $ 1,493

• 36 -

2019

			2019
Opening balance Plus: Losses/expenses provided in the current year Less: Losses/expenses reversed in the current year Year-end balance	Notes receivable $ 4,186 - ( 613) $ 3,573	Premiums receivable $ 40,516 628 ( 838) $ 40,306	Other receivables $ 853 - ( 624) $ 229	Claims recoverable from reinsurers $ 1,803 - ( 793) $ 1,010	Reinsuranc e accounts receivable
	(	(	(	(	(	$ 1,349 2,528 288) $ 3,589

Explanation to overdue receivables and loss provisions:

1. Balances of premiums receivable as of December 31, 2020 included NT$123,077 thousand overdue, for which the Company had loss provisions totaling NT$39,531 thousand, respectively. Reinsurance accounts receivable have been assessed for impairment and unrecoverable amounts. The balance includes NT$8,868 thousand of overdue receivables, for which a loss provision of NT$777 thousand has been made.

2. Balances of notes receivable and premiums receivable as of December 31, 2019 included NT$6 thousand and 62,769 thousand that were overdue, for which the Company had made loss provisions totaling NT$6 thousand and NT$39,026 thousand, respectively. Reinsurance accounts receivable has been assessed for impairment and unrecoverable amounts. The balance includes NT$949 thousand of overdue receivables, for which a loss provision of NT$114 thousand has been made.

3. 37 -

13. Investment property

Investment property
Cost Balance as of January 1, 2020 Decrease - current period Reclassified to Property, Plant and Equipment Balance as of December 31, 2020 Increase from revaluation Balance as of January 1, 2020 Balance as of December 31, 2020 Accumulated depreciation Balance as of January 1, 2020 Depreciation Decrease - current period Reclassified to Property, Plant and Equipment Balance as of December 31, 2020 Cumulative impairment Balance as of January 1, 2020 Balance as of December 31, 2020 Net amount on December 31, 2020 Cost Balance as of January 1, 2019 Balance as at December 31, 2019 Increase from revaluation Balance as of January 1, 2019 Balance as at December 31, 2019 Accumulated depreciation Balance as of January 1, 2019 Depreciation Balance as at December 31, 2019 Cumulative impairment Balance as of January 1, 2019 Balance as at December 31, 2019 Net amount on December 31, 2019			2020
		Land $ 609,119 - 22,659) 586,460 163,480 163,480 - - - - - 15,526 15,526 $ 734,414	Buildings $ 364,598 ( 5,254) ( 22,660) 336,684 - - 172,251 6,393 ( 5,049) ( 6,878) 166,717 6,172 6,172 $ 163,795 2019		Total
	(				$ 973,717 ( 5,254) ( 45,319) 923,144 163,480 163,480 172,251 6,393 ( 5,049) ( 6,878) 166,717 21,698 21,698 $ 898,209
		Land $ 609,119 609,119 163,480 163,480 - - - 15,526 15,526 $ 757,073		Buildings $ 364,598 364,598 - - 165,313 6,938 172,251 6,172 6,172 $ 186,175		Total
						$973,717 973,717 163,480 163,480 165,313 6,938 172,251 21,698 21,698 $943,248

• 38 -

Depreciation expenses are provided on investment property on a straight-line basis over the number of useful years shown as follows:

Main structure	55 to 60 years
Renovation of exterior	41 years
wall
Renovation of interior	10 years
Other constructions	10 years

The Company's investment property as of December 31, 2020 and 2019, amounted to NT$2,672,453 thousand and NT$2,747,898 thousand, respectively. Fair value was determined by the Company's management based on actual transaction prices of properties near the investment in the one year dating back from the financial reporting date, as published on the website of the Department of Land Administration, Ministry of the Interior. The management had decided to use level 3 fair value input, and take the lowest or a range of prices transacted near the invested properties.

Investment properties are leased for 1 to 10 years. All operating lease agreements contain clauses that enable the lessor to adjust rent according to the market rate if the lessee chooses to renew lease at the end of the lease tenor. The lessees are not entitled any privileges to purchase the leased properties at the end of the lease period.

The outbreak of COVID-19 has severely impacted economic activities in 2020, and the Company agreed to reduce rent by a total of NT$1,732,000 between January and September 2020 on some leases. Based on assessment, the above reduction does not pose any material impact on the Company's ability to operate as a going concern, give rise to any additional asset impairment, or raise financing risk.

The sum of lease payments collectible on investment properties leased out through operating lease as of December 31, 2020 and 2019 is as follows:

	operating lease as of December 31, 2020	and 2019 is as follows:
14. (1)	Year 1 Year 2 Year 3 Year 4 Year 5 Reinsurance contract assets Details: Claims recoverable from reinsurers Reinsurance accounts receivable Reinsurance reserve assets	December 31,2020 $ 66,346 52,098 25,910 4,100 - $148,454 December 31,2020 $ 131,034 175,340 1,844,525 $ 2,150,899	December 31,2019
			$ 68,795 55,960 42,345 20,347 4,333 $191,780 December 31,2019
			$ 166,082 215,587 1,888,150 $ 2,269,819

With regards to ceded insurance as of December 31, 2021, the Company was required to disclose ceded claim reserve for reported and unpaid liability totaling NT$28 thousand on the sum of marine hull insurance ceded to Tugu Insurance Company Ltd., a reinsurer that did not conform with the credit grading requirements stated in Article 8 of "Regulations Governing Insurance Enterprises Engaging in

• 39 -

Operating Reinsurance and Other Risk Spreading Mechanisms."

For the sum of accident insurance ceded to Trust International Insurance and Reinsurance Company B.S.C.(C).Trust Re Labuan Branch, a reinsurer that did not conform with the credit grading requirements stated in Article 8 of "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms," the Company was required to disclose claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months totaling NT$48 thousand and ceded claim reserve for reported and unpaid liability totaling NT$3 thousand.

In addition, the Company was required to make provisions for substandard reinsurance reserve of NT$79 thousand (including NT$48 thousand of claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months, and NT$31 thousand of ceded claim reserve for reported and unpaid liability) when preparing regulatory reports; however, this NT$79 thousand of additional reserve and liability does not affect the Company's financial statements.

With regards to ceded insurance as of December 31, 2019, the Company was required to disclose claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months totaling NT$59,000 and ceded claim reserve for reported and unpaid liability totaling NT$85,000 on the sum of marine hull insurance ceded to Tugu Insurance Company Ltd., a reinsurer that did not conform with the credit grading requirements stated in Article 8 of "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms."

For the sum of commercial fire insurance ceded to ASIA CAPITAL REINSURANCE GROUP PTE LTD, a reinsurer that did not conform with the credit grading requirements stated in Article 8 of "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms," the Company was required to disclose substandard reinsurance premium expenses totaling NT$694,000.

For the sum of accident insurance ceded to Trust International Insurance and Reinsurance Company B.S.C.(C).Trust Re Labuan Branch, a reinsurer that did not conform with the credit grading requirements stated in Article 8 of "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms," the Company was required to disclose claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months totaling NT$117,000 and ceded claim reserve for reported and unpaid liability totaling NT$38,000.

In addition, the Company was required to make provisions for substandard reinsurance reserve of NT$646,000 (including NT$347,000 of ceded unearned premium reserve, NT$176,000 of claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months, and NT$123,000 of ceded claim reserve for reported and unpaid liability) when preparing regulatory reports; however, this NT$646,000 of additional reserve and liability does not affect the Company's financial statements.

(2) Please refer to Notes 12 and 38(1) for details and changes in the amount of claims recoverable from reinsurers, reinsurance accounts receivable, and related loss provisions presented above.

• 40 -

(3) Details of reinsurance reserve assets:

Details of reinsurance reserve assets:
Ceded unearned premium reserve Ceded claim reserve Deficiency reserve for ceded coverage	December 31,2020 $ 931,371 913,154 - $ 1,844,525	December 31,2019
		$ 1,077,452 803,134 7,564 $ 1,888,150

Please refer to Items (2), (3) and (5) in Note 38 - Disclosure of insurance contract-related information for more details on reinsurance reserve assets presented above.

15. Property, plant, and equipment

Cost Balance as of January 1, 2020 Increase - current period Decrease - current period Reclassification from investment property Balance as of December 31, 2020 Increase from revaluation Balance as of January 1, 2020 Balance as of December 31, 2020 Accumulated depreciation Balance as of January 1, 2020 Depreciation		2020	2020
	Proprietary land $ 308,401 - - 22,659 331,060 123,786 123,786 - -	Buildings $ 337,281 649 ( 159 ) 22,660 360,431 - - 160,788 6,965	Sundry equipment $ 52,309 21,858 ( 31,530 ) - 42,637 - - 34,279 9,956	Total
				$ 697,991 22,507 ( 31,689 ) 45,319 734,128 123,786 123,786 195,067 16,921

(Continued next page)

• 41 -

(Continued from previous page)

Decrease - current period Reclassification from investment property Balance as of December 31, 2020 Cumulative impairment Balance as of January 1, 2020 Balance as of December 31, 2020 Net amount on December 31, 2020 Cost Balance as of January 1, 2019 Increase - current period Decrease - current period Balance as at December 31, 2019 Increase from revaluation Balance as of January 1, 2019 Balance as at December 31, 2019 Accumulated depreciation Balance as of January 1, 2019 Depreciation Decrease - current period Balance as at December 31, 2019 Cumulative impairment Balance as of January 1, 2019 Balance as at December 31, 2019 Net amount on December 31, 2019		2020	2020	2020
	Proprietary land $ - - - 4,774 4,774 $ 450,072	Buildings Sundry equipment ( $ 145 ) ( $ 29,039 ) 6,878 - 174,486 15,196 1,898 - 1,898 - $ 184,047 $ 27,441 2019			Total
					( $ 29,184 ) 6,878 189,682 6,672 6,672 $ 661,560
	Proprietary land $ 308,401 - - 308,401 123,786 123,786 - - - - 4,774 4,774 $ 427,413	Buildings $ 337,142 139 - 337,281 - - 154,126 6,662 160,788 1,898 1,898 $ 174,595		Sundry equipment $ 47,133 8,450 3,274) 52,309 - - 31,421 5,656 2,798) 34,279 - - $ 18,030		Total
			(		(	$ 692,676 8,589 3,274) 697,991 123,786 123,786 185,547 12,318 2,798) 195,067 6,672 6,672 $ 620,038
			(		(

• 42 -

Depreciation expenses are provided on property, plant and equipment on a straight-line basis over the number of useful years shown as follows:

Buildings

Buildings
Main structure
- Confined masonry	35 years
- Steel-reinforced concrete	50 to 62 years
Renovation of exterior wall	41 years
Renovation of interior	8 to 19 years
Other constructions	10 to 25 years
Others	15 to 30 years
Sundry equipment	3 to 15 years

Property, plant, and equipment in 2020 and 2019 exclude capitalized interest.

The Company's property, plant, and equipment showed no sign of impairment as of December 31, 2020 and 2019.

16. Lease arrangements

• (1) Right-of-use asset

cember 31, 2020 and 2019. ase arrangements Right-of-use asset
Book value of right-of-use assets Buildings Transportation equipment Additional right-of-use asset Depreciation expense on right-of-use assets Buildings Transportation equipment	December 31,2020 $ 1,389 3,011 $ 4,400 2020 $ 3,168 $ 1,769 1,025 $ 2,794	December 31,2019
		$ 3,452 868 $ 4,320 2019
		$ 3,285 $ 1,034 638 $ 1,672

The right-of-use assets derecognized upon earlier termination of the lease contract from January 1 to December 31, 2020 was NT$294 thousand. Meanwhile, the gain from lease modification, NT$4 thousand, was recognized as miscellaneous revenue.

• (2) Lease liability

revenue. Lease liability
Book value of lease liabilities	December 31,2020 $ 4,445	December 31,2019
		$ 4,139

• 43 -

Discount rate range for lease liabilities:

(3)

Buildings Transportation equipment Interest expense on lease liabilities Buildings Transportation equipment Other lease information Short-term rent expense Total cash (outflow) from lease	December 31,2020 2.65% 2.55%~2.65% 2020 $ 70 44 $ 114 2020 $ 3,581 ($ 6,259)	December 31,2019	December 31,2019
			2.65% 2.65% 2019
			$ 57 32 $ 89 2019
			$ 4,297 $ 6,239)
	(	(

For buildings and transportation equipment rented through short-term lease that conform with relevant criteria, the Company chooses to adopt the exemption rule and forgo recognition of right-of-use asset and lease liabilities. 17. Intangible assets

Intangible assets
Cost Opening balance Additions Disposals Reclassification from prepayment for equipment purchase Closing balance Accumulated depreciation Opening balance Amortization expenses Disposals Closing balance Closing net balance	Computer software
	2020 $ 27,805 18,342 ( 19,219) 29,073 56,001 20,602 10,512 ( 19,219) 11,895 $ 44,106	2019
		$ 28,379 3,019 ( 3,593) - 27,805 17,424 6,771 ( 3,593) 20,602 $ 7,203
	(	(

The above computer software is amortized on a straight-line basis over 3~5 years. The Company's intangible assets showed no sign of impairment as of December 31, 2020 and 2019.

18. Guarantee deposits paid

2020 and 2019. Guarantee deposits paid
Guarantee deposit for insurance business - Government bonds Others	December 31,2020 $ 584,172 47,646 $ 631,818	December 31,2019
		$ 517,861 44,997 $ 562,858

According to Articles 141 and 142 of the Insurance Act, insurance enterprises are required to place guarantee deposits amounting to 15% of paid-up capital with the treasury. This guarantee deposit will not be refunded unless the insurance enterprise

• 44 -

ceases business operations and completes liquidation. The Company had placed the guarantee deposit in the form of government bonds.

19. Other assets - others

19.	Other assets-others
20. 21.	Prepayments Prepaid equipment purchase Others Other payables Salary and bonus payable Share settlements payable Leave encashment payable Pension payable Others Insurance liabilities	December 31,2020 $ 8,027 5,033 14,369 $ 27,429 December 31,2020 $ 82,261 44,643 124 1,680 80,974 $ 209,682	December 31,2019
			$ 6,371 29,073 14,581 $ 50,025 December 31,2019
			$ 84,563 16,147 415 1,670 63,707 $ 166,502
		December 31,2020	December 31,2019
	Unearned premium reserve	$ 3,819,705	$ 3,726,659
	Claim reserve	2,713,890	2,491,233
	Special reserve	1,696,659	1,669,565
	Deficiency reserve	6,712	24,293
		$ 8,236,966	$ 7,911,750

Please refer to Items (2) to (5) in Note 38 - Disclosure of insurance contract-related information for more details on insurance liabilities presented above. 22. Retirement benefit plan (1) Defined contribution plan

The Company is subject to the pension scheme introduced under the "Labor Pension Act." It is a government-managed defined contribution plan, for which the Company contributes an amount equal to 6% of employees' monthly salary into their individual pension accounts held under the Bureau of Labor Insurance.

(2)

Please see Note 25(2) for details on pension costs recognized in 2020 and 2019. Defined benefit plan

The Company is subject to the pension scheme introduced under the "Labor Standards Act," which is a government-managed defined benefit plan. Under this plan, employees' pension benefits are calculated based on their years of service and 6-month average salary leading up to their retirement. The Company makes monthly pension contributions equivalent to 6% of employees' monthly salaries into an account held under Bank of Taiwan in the Labor Pension Supervisory Committee's name. In the event that the account is estimated to be short of balance to pay workers who are expected to meet their retirement criteria in the following year, the Company will reimburse the shortfall by no later than the end of March next year. The account is managed by Bureau of Labor Funds, Ministry of Labor. The Company has no influence whatsoever over the investment strategy.

Please see Note 25(2) for details on pension costs recognized in 2020 and 2019.

• 45 -

The following amounts relating to the defined benefit plan have been recognized on the balance sheet:

recognized on the balance sheet:	recognized on the balance sheet:
December 31,2020 Present value of defined benefit obligations $ 535,292 Fair value of plan assets ( 392,320) Net defined benefit liabilities $ 142,972 Details of changes in net defined benefit liabilities (assets): Present value of defined benefit obligations Fair value of plan assets January 1, 2020 $ 568,358 ($ 398,179) Service costs Current period service costs 8,306 - Interest expense (income) 4,163 ( 3,016) Recognized through profit and loss 12,469 ( 3,016) Remeasurement Return on plan assets (excluding discounted interest income) - ( 13,163) Actuarial loss - change in demographic assumption 174 - Actuarial loss - change in financial assumption 12,022 - Actuarial gain - adjustment based on past experience ( 321) - Recognized in other comprehensive income 11,875 ( 13,163) Employer's contribution - ( 16,021) Amount paid with plan assets ( 38,059) 38,059 Amount paid on the Company's account ( 19,351) - December 31, 2020 $ 535,292 ($ 392,320)		December 31,2019
			(
	($ 398,179) - ( 3,016) ( 3,016) ( 13,163) - - - ( 13,163) ( 16,021) 38,059 - ($ 392,320)		$ 170,179 8,306 1,147 9,453 ( 13,163) 174 12,022 ( 321) ( 1,288) ( 16,021) - ( 19,351) $ 142,972
	( (
			(
	(

(Continued next page)

• 46 -

(Continued from previous page)

January 1, 2019 Service costs Current period service costs Interest expense (income) Recognized through profit and loss Remeasurement Return on plan assets (excluding discounted interest income) Actuarial loss - change in demographic assumption Actuarial loss - change in financial assumption Actuarial gain - adjustment based on past experience Recognized in other comprehensive income Employer's contribution Amount paid with plan assets Amount paid on the Company's account December 31, 2019	Present value of defined benefit obligations $ 573,355 9,042 5,630 14,672 - 499 12,926 2,281 15,706 - ( 31,678) ( 3,697) $ 568,358	Fair value of plan assets ($ 395,471) - ( 4,000) ( 4,000) ( 13,907) - - - ( 13,907) ( 16,479) 31,678 - ($ 398,179)	Net defined benefit liabilities (assets)
			$ 177,884 9,042 1,630 10,672 ( 13,907) 499 12,926 2,281 1,799 ( 16,479) - ( 3,697) $ 170,179
		( (
			(
	( (
			(
		(

The Company is exposed to the following risks due to adoption of pension scheme introduced under the "Labor Standards Act":

1. Investment risks: The Bureau of Labor Funds, Ministry of Labor, manages the labor pension fund either on its own or by engaging outside parties. The labor pension fund is being allocated into equity securities, debt securities and bank deposits local and abroad; however, the Company estimates return on plan assets at a rate no less than the 2-year time deposit rate offered by local banks.

2. Interest rate risk: A decrease in government/corporate bond yield would increase the present value of defined benefit obligations while at the same time increase the return of plan assets invested in debt instruments. The overall effect on net defined benefit obligation is partially offset.

3. 47 -

4. Salary risk: The present value of defined benefit obligations is calculated by taking into consideration the participants' future salary levels. An increase in salary level would raise the present value of defined benefit obligations.

The present value of defined benefit obligations is determined based on actuarial estimates made by certified actuaries. Below are the main assumptions used on the date of measurement:

on the date of measurement:
Discount rate Long-term average salary adjustment	December 31,2020 0.500% 2.000%	December 31,2019
		0.750% 2.000%

A reasonable change in the main actuarial assumption would increase (decrease) the present value of defined benefit obligations by the following amounts, provided that all other assumptions remain unchanged:

Discount rate Increase by 0.25% Decrease by 0.25% Expected salary increase Increase by 0.25% Decrease by 0.25%	December 31,2020 ($ 12,022) $ 12,430 $ 12,031 ($ 11,699)	December 31,2019	December 31,2019
	(	(	$ 12,927) $ 13,379 $ 12,979 $ 12,607)
	(	(

The sensitivity analysis above was prepared by changing one actuarial assumption while holding other actuarial assumptions unchanged. Changes in the present value of defined benefit obligations are also measured using the Projected Unit Credit Method. Methodology and assumption of current period's sensitivity analysis are consistent and unchanged compared to those of the previous period.

Expected contribution to plan assets in the next year Weighted average duration of defined benefit plan Other liabilities-others Amount collected on behalf Amount received in advance Equity Share capital Retained Earnings Other Equity	December 31,2020 $ 15,037 9.3 years December 31,2020 $ 91,699 1,729 $ 93,428 December 31,2020 $ 3,011,638 3,458,120 292,326 $ 6,762,084	December 31,2019
		$ 16,955 9.4 years December 31,2019
		$ 75,096 1,744 $ 76,840 December 31,2019
		$ 3,011,638 3,392,600 407,023 $ 6,811,261

1. Other liabilities - others

24.

(1) Share capital Common shares

• 48 -

Authorized shares (thousands) Authorized capital Shares issued and fully paid up (thousands) Issued share capital	December 31,2020 301,163.8 $ 3,011,638 301,163.8 $ 3,011,638	December 31,2019
		301,163.8 $ 3,011,638 301,163.8 $ 3,011,638

(2)

All issued common shares have a face value of NT$10 per share. Each share is entitled to one voting right and the right to receive dividends. Retained earnings and dividend policy

According to the earnings appropriation policy of the Articles of Incorporation: Annual surpluses concluded by the Company are first subject to taxation and reimbursement of previous losses, followed by a 20% provision or reversal of special reserve as required by the authority. The Company may retain an appropriate amount of earnings before distributing the remainder to shareholders as dividends. Refer to Note 25(3) - Employee and director remuneration for the Company's employee and director remuneration policy outlined in the Articles of Incorporation.

In addition to complying with requirements of the Insurance Act (see Note 29), the Company's dividend decisions involve several factors, including the current business environment and growth stage, its future capital requirements and long-term financial plan, and shareholders' needs for cash flow. Payment of cash dividends shall amount to no less than 10% of total dividends.

The Company shall continue providing for legal reserve until the balance equals its paid-up capital. Legal reserves can be taken to offset previous losses. The Company is permitted under Article 241 of the Company Act to distribute legal reserves that it had previously provided according to Article 145-1 of the Insurance Act back to shareholders at the existing shareholding percentage, when the Company has no cumulative losses outstanding. To do so, the Company is required to present documentary proof of its financial position and seek permission from the competent authority before a shareholder meeting in the manners outlined in Letter Jin-Guan-Bao-Cai-Zi No. 10202501991 dated February 8, 2013.

Provision and reversal of special reserves are performed in accordance with Letter Jin-Guan-Bao-Cai-Zi No. 10102508861, Letter Jin-Guan-Bao-Cai-Zi No. 10502066461, and "Q&A on Special Reserves Treatment after IFRSs Adoption" issued by the authority. If other contra equity items are reversed on a later date, the Company may distribute the amount of reversal back to shareholders.

The following are details of the 2019 and 2018 earnings appropriation resolved during annual general meetings held on June 23, 2020 and June 27, 2019, respectively:

respectively:
Legal reserve Special reserve (Note 1) Special reserve (Note 2) Dividends	Earnings appropriationplan 2019 2018 $ 116,194 $ 90,358 207,452 208,715 ( 1,843 ) 2,160 289,117 147,570	Dividends per share (NT$)
	2019 $ 116,194 207,452 ( 1,843 ) 289,117	2019 $ 0.96	2018
			$ 0.49

• 49 -

• Note 1: According to "Regulations Governing Reserve Provisioning by Insurance Enterprises," insurance enterprises are required to make new provisions of special claim reserve for major incidents and change of risk and add them to special earnings reserve at the end of each year, starting from January 1, 2011. As a result, this portion of earnings is unavailable for distribution or other purpose. New provisions amounting to NT$207,452 thousand for 2019 had been made and accounted on December 31, 2019.

• Note 2: Represents net special reserve provided (reversed) for FinTech development according to Letter Jin-Guan-Bao-Cai-Zi No. 10502066461 and Letter Jin-Guan-Bao-Cai-Zi No. 10804932431 issued by the authority.

• Earnings appropriation plan for 2020 was approved under Board of Directors

• resolution dated March 26, 2021, as follows:

Legal reserve Special reserve (Note 2) Special reserve (Note 3) Dividends	Earnings appropriationplan $ 70,927 ( 646) 178,228 105,407	Dividends per share (NT$)
		$ - - - 0.35

• Note 3: The Company has been making new provisions to special claim reserves for major incidents and change of risk on a yearly basis since January 1, 2011 according to "Regulations Governing Reserve Provisioning by Insurance Enterprises." New provisions made in 2020 amounted to NT$NT$178,228 thousand, and had already been accounted for on December 31, 2020 in compliance with the above policy.

• (3) Special reserve (including the provision of special reserve required for first-time adoption of IFRSs)

• Details of special reserve made for first-time adoption of IFRSs:

Special reserve	December 31,2020 $ 51,849	December 31,2019
		$ 51,849

Because the amount of increase in retained earnings after first-time adoption of IFRSs was relatively low, the Company only provided for special reserve on the NT$51,849 thousand increase in retained earnings that occurred following the adoption of IFRSs.

This special reserve can be reversed proportionally back into retained earnings and distributed to shareholders when the underlying assets are used, disposed or reclassified on a later date. Special reserves provided during first-time adoption of IFRSs can be used to offset losses in subsequent years. If the Company makes earnings in subsequent years at a time when the initial reason for providing special reserves no longer exists, the Company shall make up for the required amount of special reserve before distributing earnings.

In order to support the development of financial technologies and protect the interests of employees, the Company is required to make provisions totaling 0.5% to 1% of after-tax net income to special reserves when distributing earnings between 2016 and 2018. Starting from 2017, the Company may reverse the above special reserve for amounts incurred on the transfer or reassignment of employees that are related to development of financial technology.

1. Change of special reserve balance in 2020 and 2019 is explained below:

2. 50 -

2020 Opening balance Provisions in the current year Reversed in the current year Year-end balance 2019 Opening balance Provisions in the current year Year-end balance	Special reserve $ 1,681,701 178,228 - $ 1,859,929 $ 1,474,249 207,452 $ 1,681,701		Financial technology $ 6,567 - 1,843) $ 4,724 $ 4,407 2,160 $ 6,567	Provision for first-time adoption of IFRSs $ 51,849 - - $ 51,849 $ 51,849 - $ 51,849		Total
		(			(	$ 1,740,117 178,228 1,843) $ 1,916,502 $ 1,530,505 209,612 $ 1,740,117

(4) Other equity items Unrealized gains/losses on financial assets at fair value through other comprehensive income

	income
25. (1)	Opening balance Generated in current period Unrealized gains Debt instrument Equity instrument Transfer of cumulative gains/losses to retained earnings following disposal of equity instrument Closing balance Net income from continuing operations Interest income Bank deposit Financial Assets at Fair Value through Profit or Loss Debt instruments at fair value through other comprehensive income Financial assets carried at cost after amortization Others		2020 $ 407,023 51,592 34,436 200,725) $ 292,326 2020 $ 25,996 13,387 12,180 31,973 3,892 $ 87,428		2019
		(		(	$ 27,302 22,498 387,894 30,671) $ 407,023 2019
					$ 32,384 13,520 10,539 33,889 4,878 $ 95,210

• 51 -

(2) Employee benefit expenses

Employee benefit expenses	xpenses
2020 Presented as operatingcost Presented as operating expense Employee welfare expenses Salary $ 328,860 $ 550,621 Labor/health insurance premium - 58,167 Pension expense - 29,891 Remuneration to Director - 9,068 Other employee welfare expenses - 16,074 $ 328,860 $ 663,821 Retirement benefits Defined contribution plan Defined benefit plan (Note 22)		2020		Total $ 879,481 58,167 29,891 9,068 16,074 $ 992,681 2020		2019
						Presented as operating expense Total $ 543,461 $ 869,931 58,039 58,039 30,430 30,430 12,306 12,306 15,545 15,545 $ 659,781 $ 986,251 2019	Total
						$ 19,758 10,672 $ 30,430

As of December 31, 2020 and 2019, the Company employed a total of 866 and 864 employees, respectively.

• (3) Employee and director remuneration

According to the Articles of Incorporation, the Company may provide employee remuneration at no less than 1% and director remuneration at no higher than 0.6% of pre-tax profit before employee and director remuneration. However, earnings must first be taken to offset cumulative losses, if any, before the remainder is distributed as employee and director remuneration in the above percentages. Employee remuneration and director remuneration were estimated respectively at 1% and 0.6% of pre-tax profit, respectively, namely NT$2,093 thousand and NT$1,256 thousand in 2020, and also at 1% and 0.6% of said pre-tax profit, namely NT$6,744 thousand and NT$4,046 thousand in 2019, respectively. All have expensed in statements and implemented comprehensive income for the respective year.

If the amount changes after the financial statements are approved and announced to the public, the difference will be treated as a change in accounting estimate and recognized as a gain or loss in the following year.

The 2020 and 2019 employee/director remuneration were resolved at the Board of Directors meetings dated March 26, 2021 and March 26, 2020, respectively. Details follows:

Percentage

Details follows: Percentage
Employee remuneration Director remuneration	2020 1% 0.6%	2019
		1% 0.6%

• 52 -

Amount

Amount
Employee remuneration Director remuneration	2020 Cash Shares $ 2,093 $ - 1,256 -	2019
	Cash	Cash $ 6,744 4,046	Shares
	$ 2,093 1,256		$ - -

There is no difference between the amount of remuneration paid to employees and directors under the aforementioned Board resolution and the amount of employee and director remuneration recognized in the 2020 and 2019 financial statements.

Please visit the "Market Observation Post System" for more information regarding employee/director remuneration resolved during the Company's Board of Director meetings in 2021 and 2020.

(4) Depreciation and amortization

Director meetings in 2021 and 2020. (4) Depreciation and amortization
Property, Plant and Equipment Right-of-use asset Investment Property Intangible Assets Depreciation and amortization expenses by function Depreciation (classified as operating expenses) Depreciation (classified as operating costs) Amortization (classified as operating expenses) (5) Gain/loss on investment property Rental income Direct expenses associated with rental income		2020 $ 16,921 2,794 6,393 10,512 $ 36,620 $ 19,715 6,393 10,512 $ 36,620 2020 $ 66,544 13,299) $ 53,245		2019
				$ 12,318 1,672 6,938 6,771 $ 27,699 $ 13,990 6,938 6,771 $ 27,699 2019
	(		(	$ 70,015 14,035) $ 55,980

• 53 -

(6) Gain/loss on foreign exchange

					2020			2019
Total gain on foreign exchange				$	27,295		$	30,016
Total (loss)	on	foreign
exchange			(		65,478)	(		48,096)
Net gain (loss)			($		38,183)	($		18,080)
Total gain/loss	on	foreign
exchange
Gain (loss)	on exchange -
investment (Note)			($		30,059)	($		16,063)
Gain (loss)	on exchange -
non-investment			(		8,124)	(		2,017)
			($		38,183)	($		18,080)

26. (1)

Note: Derived from foreign currency time deposits. Income tax expense for continuing operations Main composition of income tax expense recognized in profit and loss 2020 2019 Current income tax Incurred in the current year $ 45,040 $ 86,462 Additional tax on undistributed earnings - 59 Adjustment of previous year figures ( 57) ( 179) Price difference in basic tax payable 7,374 - Deferred income tax Incurred in the current year 706 ( 3,685) Income tax expense recognized in profit and loss $ 53,063 $ 82,657 Reconciliation of accounting income and income tax expense: 2020 2019 Pre-tax profit from continuing operations $ 205,945 $ 663,625 Income tax expense calculated by applying statutory tax rate to pre-tax profit $ 41,189 $ 132,725 Tax impact of non-deductible expenses and losses 30 780 Price difference in basic tax payable 7,374 - Unrealized tax-exemption losses (gains) 33,202 ( 12,295)

(Continued next page)

• 54 -

(Continued from previous page)

Expected credit (reversal of gains) and impairment loss on investment Tax-exempt income Additional tax on undistributed earnings Adjustments to income tax recognized in previous years Income tax expense recognized in profit and loss	2020 ($ 191) ( 28,484) - ( 57) $ 53,063	2019
		$ 967 ( 39,400 ) 59 ( 179) $ 82,657

Statute for Industrial Innovation was amended in July 2019 under Presidential Order, and the amendment states that construction or acquisition of eligible assets or technologies can be listed as deduction for the calculation of taxable undistributed earnings starting from 2018.

• (2) Income tax recognized under other comprehensive income

Deferred income tax Incurred in the current year - Defined benefit plan remeasurement amount		2020 ($ 258)	2019
			$ 360

• (3) Deferred income tax assets and liabilities Below are changes in deferred income tax assets and liabilities:

2020

2020
DeferredIncomeTax Assets Assets carried at cost Defined benefit plan Leave encashment payable Unrealized loss on exchange Loss provisions Deferred income tax liabilities Land value increment tax	Opening balance $ 5,674 35,874 83 2,901 8,050 $ 52,582 $ 92,934	Recognized through profit andloss $ - ( 5,184 ) ( 58 ) 4,239 297 ($ 706) $ -	Recognized in other comprehensiv eincome $ - ( 258 ) - - - ($ 258) $ -	Year-end balance
			(	$ 5,674 30,432 25 7,140 8,347 $ 51,618 $ 92,934
		(	(

• 55 -

2019

2019
DeferredIncomeTax Assets Assets carried at cost Defined benefit plan Leave encashment payable Unrealized loss on exchange Loss provisions Deferred income tax liabilities Land value increment tax Unrealized gain on foreign exchange	Opening balance $ 5,674 37,414 102 - 7,609 $ 50,799 $ 92,934 2,262 $ 95,196	Recognized through profit andloss $ - ( 1,900 ) ( 19 ) 2,901 441 $ 1,423 $ - ( 2,262) ($ 2,262)	Recognized in other comprehensiv eincome $ - 360 - - - $ 360 $ - - $ -	Year-end balance
				$ 5,674 35,874 83 2,901 8,050 $ 52,582 $ 92,934 - $ 92,934
		( (

(4) Assessment of income tax return

The Company's profit-seeking enterprise income tax returns have been certified by the tax authority up till 2018.

27. Earnings per share

Earnings and the number of weighted average common shares used for calculating earnings per share are explained below: Current net income

earnings per share are explained below: Current net income
Net income used for calculating earnings per share Shares Weighted average common shares used for calculating basic earnings per share Dilutive effect of potential common shares: Employee remuneration Weighted average common shares used for calculating diluted earnings per share	2020 2019 $ 152,882 $ 580,968 Unit: thousand shares 2020 2019 301,164 301,164 188 316 301,352 301,480	2019
		301,164 316 301,480

If the Company has the option to distribute employee remuneration either in cash or in shares, then the calculation of diluted earnings per share shall be made by assuming full share-based payment. In which case, the number of potential common shares is added to the calculation of weighted-average outstanding shares as soon as they become dilutive, and this is the basis used for calculating diluted earnings per share. Dilutive effects of potential common shares will continue to be taken into account when calculating diluted EPS for next year's decision of share-based employee remuneration. 28. Cash flow information

• 56 -

Change of liabilities relating to financing activities January 1 to December 31, 2020

January 1 to	December 31, 2020	December 31, 2020
Lease liabilities January 1 to	January1,2020 Cash flow $ 4,139 ($ 2,564) December 31, 2019 January1,2019 Cash flow $ 2,707 ($ 1,853)		Changes without cash effect New leases lease modification $ 3,168 ($ 298) Changes without cash effect New leases lease modification $ 3,285 $ -	December 31, 2020
				$ 4,445 December 31, 2019
Lease liabilities	January1,2019 $ 2,707
			New leases $ 3,285
		(		$ 4,139

29. Capital risk management

Please refer to Note 37(6) for more information on managing asset and liability risks. According to the Insurance Act, the Company is required to maintain capital at no less than 200% of risk-weighted assets. Failure to maintain the abovementioned ratio will render the Company unable to distribute earnings; in addition, the Company would be required to raise capital within the due dates specified by the competent authority or have business activities and use of capital restricted in certain ways. As of December 31, 2020, the Company had maintained its capital above the percentage stated in the Insurance Act and was not subject to the above treatments.

1. Financial instruments

2. (1) Fair value information - financial instruments that are not measured at fair value The management considers that all financial assets and liabilities not measured

3. at fair value have had book values closely resembling their fair values or that their fair values cannot be determined reliably.

4. (2) Fair value information - financial instruments with fair value measured on a recurring basis

5. Fair value hierarchy December 31, 2020

ing basis Fair value hierarchy December 31, 2020
Financial Assets at Fair Value through Profit or Loss TWSE/TPEx listed shares Fund beneficiary certificates Total	Level 1 $ 304,872 1,635,405 $ 1,940,277	Level 2 $ - - $ -	Level 3 $ - - $ -	Total
				$ 304,872 1,635,405 $ 1,940,277

(Continued next page)

• 57 -

(Continued from previous page)

Financial assets at fair value through other comprehensive income TWSE/TPEx listed common shares Non-listed domestic common shares Government bonds Total Guarantee deposits paid TWSE/TPEx listed securities - Bond investments December 31, 2019 Financial Assets at Fair Value through Profit or Loss TWSE/TPEx listed shares Fund beneficiary certificates Bond investments - bank debentures Total Financial assets at fair value through other comprehensive income TWSE/TPEx listed common shares Non-listed domestic common shares Government bonds Total Guarantee deposits paid TWSE/TPEx listed securities - Bond investments	Level 1 $ 1,569,283 - 491,070 $ 2,060,353 $ 584,172 Level 1 $ 735,535 858,993 - $ 1,594,528 $ 1,730,675 - 509,305 $ 2,239,980 $ 517,861	Level 2 $ - - - $ - $ - Level 2 $ - - - $ - $ - - - $ - $ -	Level 3 $ - 888,598 - $ 888,598 $ - Level 3 $ - - 50,565 $ 50,565 $ - 945,763 - $ 945,763 $ -	Total
				$ 1,569,283 888,598 491,070 $ 2,948,951 $ 584,172 Total
				$ 735,535 858,993 50,565 $ 1,645,093 $ 1,730,675 945,763 509,305 $ 3,185,743 $ 517,861

There was no transfer of fair value measurements between Level 1 and Level 2 in 2020 and 2019.

• 58 -

• Reconciliation of level 3 fair value assessment on financial instruments 2020

2020
Financial assets Opening balance Decrease - current period Recognized through profit and loss (gain/loss on financial assets or liabilities at fair value through profit and loss) Recognized through other comprehensive income (gain/loss on valuation of equity instruments at fair value through other comprehensive income) Closing balance Unrealized gains and losses at the end of period	Measured at fair value through profit and loss Debt instrument $ 50,565 ( 50,000) ( 565) - $ - $ -	Financial assets at fair value through other comprehensive income Equity instrument $ 945,763 - - ( 57,165) $ 888,598 $ 198,792	Total
		(	$ 996,328 ( 50,000) ( 565) ( 57,165) $ 888,598 $ 198,792

• 59 -

2019

2019
Financial assets Opening balance Recognized through profit and loss (gain/loss on financial assets or liabilities at fair value through profit and loss) Recognized through other comprehensive income (gain/loss on valuation of equity instruments at fair value through other comprehensive income) Closing balance Unrealized gains and losses at the end of period	Measured at fair value through profit and loss Debt instrument $ 50,565 9 - $ 50,565 $ 565	Financial assets at fair value through other comprehensive income Equity instrument $ 700,464 - 245,299 $ 945,763 $ 255,957	Total
			$ 751,020 9 245,299 $ 996,328 $ 256,522

1. Level 3 fair value measurement technique and input

2. (1) For investments in domestic unlisted shares, fair value is calculated using the market comparable model. The market comparable model compares the subject to companies involved in the same or similar business activities. Factors such as the price of shares transacted in active market, the value multiples implied in pricing, and liquidity discount are used to determine the value of the subject. Liquidity premium/discount is a significant yet unobservable input.

3. (2) Bond investment - bank debentures are valued by calculating the present value of expected yields from the investment, which involves discounting of future expected cash flow. Future expected cash flow is a significant yet unobservable input.

4. 60 -

December 31, 2020

December 31, 2019

(3) Types of financial instrument

Financial assets

Measured at fair value through profit and loss Mandatory at fair value throughout profit and loss $ 1,940,277 $ 1,645,093 Loans and receivables (Note 1) 306,374 381,669 Financial assets carried at cost after amortization (Note 2) 6,714,366 6,560,882 Financial assets at fair value through other comprehensive income Investment in equity instruments 2,457,881 2,676,438 Investment in debt instruments (Note 3) 1,075,242 1,027,166 Financial liabilities Carried at cost after amortization (Note 4) 608,081 653,734

• Note 1: The balance includes loans and receivables carried at cost after amortization, such as claims recoverable from reinsurers and reinsurance accounts receivable.

• Note 2: Balance includes cash, investment in debt instruments carried at cost after amortization, notes receivable - net, premiums receivable - net, other receivables, other financial assets, refundable deposits (excluding insurance enterprise performance bonds placed in the form of securities), and financial assets carried at cost after amortization.

• Note 3: Balance includes debt instruments at fair value through other comprehensive income and insurance enterprise performance bonds placed in the form of securities (presented as guarantee deposits paid).

• Note 4: Balance includes notes payable, insurance claims and benefits payable, commissions payable, reinsurance account payable, other payables (excluding salary, bonus and leave encashment payable and pension payable), guarantee deposits received, and financial liabilities carried at cost after amortization.

• (4) Purpose and policy of financial risk management

For the purpose of establishing sound risk management practice, internal risk awareness, and robust risk management framework, the Company has implemented relevant principles and policies along with qualitative and quantitative methods to assess, respond and monitor potential risks. The Company's financial instruments mainly comprise equity and debt investments, receivables and payables. Key risk exposures include market risk (including exchange rate risk, interest rate risk and price risk), credit risk and liquidity risk.

1. Market risk

Market risk refers to changes in market risk factors such as exchange rate, product price, interest rate, share price etc that may reduce the Company's

• 61 -

profitability or portfolio value. The Company continues to adopt Value at Risk (VaR), stress test and market risk management tools to effectively measure, monitor and manage market risks.

There is no change in how the Company manages and assesses market risk exposure of its financial instruments.

• (1) Exchange rate risk

The Company holds assets and liabilities denominated in foreign currencies, which presents the Company with risk of exchange rate variation. As at December 31, 2020, the Company had about 4.6% of assets that were not denominated in the functional currency of the transaction entity.

The Company had the following financial assets denominated in foreign currencies that were exposed to material exchange rate risk as at the balance sheet date:

the balance sheet date:
Financial assets Monetary items Bank deposit and notes receivable USD EUR CNY (RMB) GBP HKD Other financial assets USD Financial assets Monetary items Bank deposit and notes receivable USD EUR CNY (RMB) GBP HKD Other financial assets USD CNY (RMB)	Unit: in thousands of foreign currency or NTD December 31,2020
	Foreign currency Exchange rate TWD(NTD) $ 2,111 28.480 $ 60,124 55 35.020 1,919 27 4.377 120 56 38.900 2,162 314 3.673 1,154 23,800 28.480 677,824 December 31,2019		TWD(NTD)
	Foreign currency $ 3,376 17 29 6 524 18,600 5,000	Exchange rate 29.980 33.590 4.305 39.360 3.849 29.980 4.305	TWD(NTD)
			$ 101,211 558 126 247 2,018 557,628 21,525

• 62 -

Unrealized foreign currency gain/loss of material impact:

Foreign currency USD CNY (RMB)	2020	Unrealized net loss on exchange ($ 35,700) - ($ 35,700)	2019
	Exchange rate 1:28.480 (USD:TWD) 1:4.377 (CNY:TWD)		Exchange rate 1:29.980 (USD:TWD) 1:4.305 (CNY:TWD)	Unrealized net gain on currency exchange
				($ 13,671) ( 835) ($ 14,506)
		(

Sensitivity analysis

The Company is prone to the impact of changes in USD and CNY exchange rates.

The following sensitivity analysis shows the impact of a 1% strengthening/weakening in the foreign currency against NTD (the functional currency) to the Company. 1% is the rate of sensitivity adopted by the management when reporting exchange rate risks. It also represents the management's estimate on the reasonable range of exchange rate variation. The sensitivity analysis only covered monetary items denominated in foreign currency, and the analysis was performed by making a 1% adjustment to the exchange rate applicable at the end of the period. The sensitivity analysis covered foreign currency bank deposit, other financial assets, and notes receivable. The following table shows a decrease in pre-tax profit and equity if NTD strengthens against other currencies by 1%. Effects on pre-tax profit and equity following a 1% weakening of the NTD against the respective foreign currencies would be the positive figure of the same amount.

Gain (loss) on USD Gain (loss) on CNY	2020 ($ 7,379) ( 1)	2019
		($ 6,588 ) ( 217)

(2) Interest rate risk

The book value of financial assets exposed to interest rate risks as at the balance sheet date is presented below:

December 31, 2020 December 31, 2019 Risk of cash flow changes due to interest rate - Financial assets $ 834,514 $ 777,511 Risk of fair value changes due to interest rate - Financial assets 1,075,242 1,027,166

Sensitivity analysis

The following sensitivity analysis has been prepared based on interest rate risk exposures of financial assets as at the balance sheet date. The Company had conducted the sensitivity analysis based on 1 basis-point increase/decrease in interest rate, which also represents the management's estimate on the reasonable range of interest rate variation.

• 63 -

A. Risk of cash flow changes due to interest rate

If the interest rate increased/decreased by 1 basis point, the Company's 2020 and 2019 pre-tax profit and equity would increase/decrease by NT$83 thousand and NT$78 thousand, respectively, provided that all other variables remain unchanged. Exposure to interest rate risk is mainly attributed to bank deposits (demand deposits and foreign currency deposits) held on hand. B. Risk of fair value changes due to interest rate

The Company investments in fixed rate bonds. Changes in market interest rates would cause changes in the fair value of bond investments.

If market interest rate increased/decreased by 1 basis point, other comprehensive income (pre-tax) and shareholders' equity for 2020 and 2019 would decrease/increase by NT$1,242 thousand and NT$1,229 thousand, respectively, due to changes in the fair value of debt instruments carried at fair value through other comprehensive income. (3) Other price risks

The Company is exposed to the risk of equity price variation due to investment in TWSE/TPEx-listed beneficiary securities and fund beneficiary certificates. Sensitivity analysis

The sensitivity analysis is based on equity price risks of beneficiary securities and fund beneficiary certificates outstanding as at the balance sheet date.

If prices increased/decreased by 1%, pre-tax profit or loss and shareholders' equity for 2020 and 2019 would increase/decrease by NT$19,403 thousand and NT$15,945 thousand, respectively, due to changes in the fair value of financial assets carried at fair value through profit and loss. Meanwhile, other comprehensive income (pre-tax) and shareholders' equity for 2020 and 2019 would increase/decrease by NT$24,579 thousand and NT$26,764 thousand, respectively, due to changes in the fair value of equity instruments measured at fair value through other comprehensive income.

(4)

Value at risk (VaR)

VaR measures the maximum possible losses that a portfolio may incur due to a change in market risk factor, within a specified period of time and Confidence Level. The Company currently calculates VaR of the following day (2 months) at a 95% confidence level.

The VaR model must be able to reasonably, completely and correctly assess maximum potential risks of financial instruments or investment portfolios held on hand to be considered a valid risk management model. When used for risk management, the VaR model must continuously undergo validation and back-testing to ensure that the model remains appropriate and effective in assessing the maximum potential risks of financial instruments or investment portfolios held on hand.

(5) Stress-testing

In addition to the VaR model, the Company conducts stress tests regularly to assess potential risks should an extreme event occur. Stress-testing is intended to measure potential impacts on the value of

• 64 -

investment portfolio given extreme changes in a series of financial variables.

Date: December 31, 2020

Date: December 31, 2020 Unit: NTD thousands Portfolio Risk factors Variation gains/losses Price risk - at fair Down 10% ($ 194,028) value through profit and loss Price risk - at fair Down 10% ( 245,788) value through other comprehensive income Risk of fair value A 100bps increase in the ( 124,206) changes due to yield curve interest rate Exchange rate risk - 1% strengthening of NTD ( 6,778) other financial against all foreign assets currencies

1. Credit risk

The Company is exposed to credit risks for engaging in treasury transactions, including issuer credit risk, counterparty credit risk, and asset credit risk:

• (1) Issuer credit risks are mostly prevalent in treasury debt instruments or bank deposits held on hand, and refer to the possibility of the Company suffering financial losses as a result of the issuer (or guarantor) or bank failing to fulfill repayment (or stand-in payment) obligation due to default, bankruptcy or liquidation.

• (2) Counterparty credit risks refer to the possibility of the Company suffering financial losses as a result of the transaction counterparty failing to fulfill settlement or payment obligations on the agreed date.

• (3) Asset credit risks refer to the possibility of losses suffered as a result of deteriorated credit quality, credit rating downgrade or occurrence of default event in the underlying asset of a financial instrument.

• A. Credit risk concentration analysis

  • The table below shows financial assets with the largest credit risk

  • exposures by region and industry:

• 65 -

Credit risk exposure - by region Date: December 31, 2020

Date: December 31,2020	Date: December 31,2020	Date: December 31,2020		Unit: NTD	Unit: NTD	thousands
Financial assets	Taiwan	Asia	America	Europe	Others	Total
Cash and cash equivalents	$1,775,324	$ -	$ -	$ -	$ -	$1,775,324
Financial assets at fair value through profit and loss (securitized beneficiary certificates and debt instruments)	192,914	-	-	-	-	192,914
Financial assets (debt instrument) at fair value through other comprehensive income(Note)	1,075,242	-	-	-	-	1,075,242
Financial assets carried at cost after amortization	1,758,600	-	-	-	-	1,758,600
Other financial assets (time deposit)	2,751,824	-	-	-	-	2,751,824
Total	7,553,904	-	-	-	-	7,553,904
Regional weight	100.00%	0.00%	0.00%	0.00%	0.00%	100.00%

Note: includes debt instruments placed as guarantee deposit. B. Credit risk quality grading

Credit risk quality is internally graded into Class I, II and III. Class I refers to financial assets that exhibit no significant increase in credit risk compared to the date of initial recognition; Class II refers to financial assets that exhibit significant increase in credit risk compared to the date of initial recognition; and Class III refers to financial assets that exhibit objective evidence of credit impairment.

Financial assets	I	II	III	Total
Financial assets (debt instrument) at fair value through other comprehensive income	$ 1,075,242	$ -	$ -	$ 1,075,242
Financial assets carried at cost after amortization	1,758,600	-	-	1,758,600
Total	$2,833,842	$ -	$ -	$2,833,842

Expected credit loss rates for the abovementioned Class I financial assets are 0.0258% ~ 1.9463%.

For information on credit risk management and impairment assessment of receivables, please refer to Note 12(2)~(3).

C. Criteria for significant increase in credit risk since initial recognition

A significant increase in credit risk refers to the situation where the credit rating of a financial asset on the balance sheet date is two grades lower or more than the date of initial recognition, and lower than twBBB. For bonds that are not credit-rated, the issuer's credit rating is used instead.

D. Definition of defaulted and credit-impaired financial assets

The Company assesses financial assets for objective evidence of credit impairment. If there is evidence to suggest impairment, the financial asset will be classified Class III with expected credit losses recognized over the remaining duration.

Objective evidence of credit impairment, as mentioned above, refers to any of the following occurrences:

• a. The indicative market price falls below book cost in a continuous downward trend for more than one year, unless there is reason to suggest likely recovery of the indicative market price.

• 66 -

  • b. The issuer undergoes financial distress and is de-listed or liquidated as a result.

  • c. Event of default, such as failure to pay interest or principal.

  • d. The issuer undergoes bankruptcy.

• (4) Assessment of expected credit losses

• A. Expected credit losses are estimated by multiplying the amount of credit exposure with the probability of default (PD) and loss given default (LGD).

Financial assets that are classified as Class I as at the balance sheet date shall have expected credit losses estimated over the next 12 months.

Financial assets that are classified as Class II as at the balance sheet date shall have expected credit losses estimated over the remaining duration

Financial assets that exhibit objective evidence of credit impairment as at the balance sheet date shall be classified as Class III and have expected credit losses estimated over the remaining duration.

B. Loss provisions variation chart

Reconciliation of opening and closing loss provision balance in

2020:

2020:
Investment in debt instruments Opening balance Variation Closing balance Receivables Opening balance Variation Closing balance		12-month expected credit loss	Expected credit loss over the remaining duration	Expected credit loss over the remaining duration		Impairment provided in accordance with IFRS 9 (Subtotal)	Difference with impairments provided in accordance with "Regulation on Asset Valuation, Overdue Collection and Loan Loss Provisioning by Insurance Companies"		Total
	(	$ 17,079 954) $ 16,125 $ 5,706 601) $ 5,105	$ - - $ - $ - - $ -	$ - - $ - $ - - $ -	(	$ 17,079 954) $ 16,125 $ 5,706 601) $ 5,105	$ - - $ - $ 43,001 313 $ 43,314	(	$ 17,079 954) $ 16,125 $ 48,707 288) $ 48,419
	(				(			(

1. Liquidity risk

2. (1) Definition of liquidity risk

For each financial instrument, liquidity risk is distinguished between "capital liquidity risk" and "market liquidity risk."

"Capital liquidity risk" refers to the inability to liquidate an asset or obtain sufficient funding to meet obligations upon maturity. "Market liquidity risk" refers to the possibility of incurring losses due to significant price changes when the asset held on hand is being disposed or settled in a market that lacks depth or at a time of disorder.

• (2) Liquidity risk management

• 67 -

The Company has implemented a robust capital liquidity risk management system, and adopted market liquidity risk management practices that conform to the volume of market transactions and the positions held on hand. The Company has also devised response plans for extraordinary and emergency liquidity situations where the Company may require additional capital.

• (3) The Company maintains adequate position of cash and cash equivalents to support corporate operations and to mitigate effects of cash flow variation.

The following table is a maturity analysis for non-derivative financial liabilities (including insurance claims payable, commissions payable, reinsurance account payable and other payables) with the pre-arranged repayment date. The analysis has been prepared based on the earliest date by which the Company may be required to repay, using undiscounted cash flow.

December 31, 2020

December 31, 2020
Repayable upon demand or within 1 month Non-derivative financial liabilities Non-interest bearing liabilities $ 301,272 Lease liabilities - $ 301,272 December 31, 2019 Repayable upon demand or within 1 month Non-derivative financial liabilities Non-interest bearing liabilities $ 261,262 Lease liabilities - $ 261,262	1 to 3 months $ 46,055 673 $ 46,728 1 to 3 months $ 54,168 510 $ 54,678	3 months to 1year $ 246,224 1,599 $ 247,823 3 months to 1year $ 323,190 1,790 $ 324,980	1 to 5years $ 14,530 2,303 $ 16,833 1 to 5years $ 15,114 1,961 $ 17,075	5 years and above
				$ - - $ - 5 years and above
Non-derivative financial liabilities Non-interest bearing liabilities Lease liabilities
				$ - - $ -

• 68 -

• Related party transactions (1) Name and relationship of related parties Name of related party Relationship with the Company Yi Chih Co., Ltd. Other related parties OSTA TRADING CO., LTD. Other related parties Zong Cheng Enterprise Co., Ltd. Other related parties Du Ho Enterprise Co., Ltd. Other related parties Chien Yi Industrial Co., Ltd. Other related parties Chien Cheng Development Co., Ltd. Other related parties Hua Wang Manufacturer Co., Ltd. Other related parties Hai Hwa Construction Co., Ltd. Other related parties Tsai Cheng Enterprise Co., Ltd. Other related parties Tai Jing Apartment Building Management Other related parties and Maintenance Co., Ltd. Taiwan Fuji Die Co., Ltd. Other related parties Yongji Enterprise Co., Ltd. Other related parties Chimax Development Company Other related parties Pao Shan Construction Co., Ltd. Other related parties Yiguang Enterprise Development Co., Ltd. Other related parties Chien Chi Co., Ltd. Other related parties Taiwan Real Estate Management Co., Ltd. Other related parties Jiatai Construction Co., Ltd. Other related parties Jinshi Construction Co., Ltd. Other related parties Jui San Co., Ltd. Other related parties Fu Bi Shi Construction Co., Ltd. Other related parties Yuanhu Construction Company Other related parties Other related parties Second degree relatives or closer to the company's director, Chairman, President, Manager, or spouse thereof

(2) Major transactions with related parties 1. Premium revenues Type of relatedparty 2020 Other related parties $ 3,341 2. Insurance claims paid Type of relatedparty 2020 Other related parties $ 2,814	2019
	$ 3,353 2019
	$ 157

The above insurance coverage to other related parties were underwritten with the same terms and claim criteria as non-related parties.

3.	Rental expense Type of relatedparty Other related parties	2020 $ 4	2019
			$ 6

Rental of conference room from the above related parties were undertaken at terms that were not materially different from ordinary transactions.

• 69 -

4. Premiums receivable Type of relatedparty December 31,2020 Other related parties $ 384 (3) Remuneration to the executive management 2020 Short-term employee benefits $ 43,078 Retirement benefits 4,092 $ 47,170	December 31,2019
	$ 464 2019
	$ 48,571 2,654 $ 51,225

Compensation to directors and members of the executive management is determined by the Remuneration Committee based on individual performance and market trends.

32. Major contingent liabilities and unrecognized contractual commitments

The Company is a non-life insurance company, and had no major commitment or contingent liability as at the balance sheet date apart from those mentioned in other footnotes and the following.

• (1) Major unrecognized contractual commitments

As of December 31, 2020 and 2019, the Company had the following expenses that were contracted but unpaid:

Types of unrecognized

that were contracted but unpaid: Types of unrecognized
contractual commitments System development expense Project consultancy expense	December 31,2020 $ 1,463 $ 44,625	December 31,2019
		$ 14,994 $ -

(2) Contingent liabilities

As of December 31, 2020, the Company had 7 unresolved major lawsuits concerning its insurance business. The Company was being claimed for a sum of NT$33,004 thousand, and NT$4,378 thousand of which were covered by reinsurance, while the remaining balance was covered by adequate claim reserve. These cases are currently being reviewed by court.

1. Losses from major disasters: None.

2. Other matters

Please see Note 13 for impacts of COVID-19.

1. Major post-balance sheet events: None.

2. Information on foreign currency-denominated financial assets and liabilities and exchange rate:

Please refer to paragraph 1. Market risk in Note 30(4) for foreign currency-denominated financial assets of material impact.

1. Risk management goals, policies, procedures and methods

2. (1) Risk management policies and goals

The Company has established risk management policies and procedures according to "Risk Management Best Practice Principles for Insurance Enterprises" and "Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises" to provide the foundation needed to facilitate proper risk management, business expansion, accomplishment of operational targets, and enhancement of shareholder value. These policies and procedures also provide the basis for other risk management guidelines within the Company.

• (2) Risk management framework, organization and responsibilities

• 70 -

• Risk management framework and organization

The board of directors outlines the Company's risk management policies based on overall operational strategies and the prevailing business environment. The board is ultimately responsible for overall risk management within the Company. A Risk Management Committee has been assembled under the board of directors while a Risk Management Department has been created outside of business units to enable continuous monitoring of the risk management system. The independent director serves as the convener for the Risk Management Committee. The committee's responsibilities are to supervise risk exposures and to ensure that the Company has adequate capital to meet all risks. The Risk Management Department is responsible for executing the risk management policy, consolidating risk information from all departments, and communicating/coordinating across different departments for the execution of risk policies and limits.

1. The responsibilities of each unit are listed as below: Board of Directors

2. (1) The board of directors is the highest decision maker of risk management issues, and is ultimately responsible for overall risk management within the Company.

3. (2) The board is responsible for the establishment of proper risk management systems and cultures, approval and regular review of risk management policies, and making the most efficient allocation of available resources.

4. (3) The board evaluates risks, consequences and effects from the perspective of the entire organization. It also makes decisions in line with legal capital requirements imposed by the competent authority, while taking into consideration various financial and business rules that are relevant to capital allocation.

5. (4) The board reviews risk appetite on a yearly basis and makes adjustments as deemed appropriate.

6. (5) The Chairman is authorized to approve risk management-related policies within the Company.

Risk Management Committee

• (1) The committee outlines the Company's risk management policies, framework and organization, and implements quantitative or qualitative standards for the Company's major risk exposures. The committee presents formal reports to the board of directors at least twice a year, and provides the board with relevant updates and recommendation as deemed necessary.

• (2) The committee executes the board's risk management decisions and performs full-scale review of the Company's risk management system, implementation and execution at least once a year.

• (3) The committee assists and supervises various departments in risk management activities.

• (4) The committee adjusts risk exposure category, risk limit and risk mitigation methods depending on changes in the environment.

• (5) The committee coordinates risk management practices and establishes communication and interaction across different departments.

• (6) The committee supervises overall risk management of the Company. Risk Management Department

• 71 -

• (1) The department assists in the development of risk management policy, framework and organization, and executes board-approved risk management policy.

• (2) The department assists in setting risk limits based on risk appetite.

• (3) The department is responsible for consolidating risk information from all departments, and communicating/coordinating across different departments for the execution of risk policies and limits.

• (4) The department prepares monthly risk management reports.

• (5) The department monitors breach and use of risk limit by business units at least twice a year.

• (6) The department assists in stress testing.

• (7) The department performs back testing where necessary.

• (8) The department resolves breach of risk limit by other units.

• (9) Other risk management-related affairs.

Business units

• (1) Identify risk and report risk exposure

• (2) Assess extent of impact (quantitative or qualitative) in the occurrence of risk event, and convey risk information in a timely and accurate manner.

• (3) Review risk exposure and limits at least twice a year to ensure that risk limits are properly executed within business units.

• (4) Monitor risk exposure and report limit breach, including actions taken by the business unit in response to the breach.

• (5) Assist in the development of risk model. Ensure that the business unit adopts consistent and rational assumptions and basis for its risk assessment and modeling.

• (6) Ensure that internal control procedures are effectively executed by the business unit in a manner that complies with laws and the Company's risk management policy.

• (7) Assist in the gathering of operational risk-related data.

• (8) The head of each business unit shall supervise the transfer of risk management information to the Risk Management Department, and is responsible for the daily risk management, reporting and response of the assigned unit.

• (9) The head of each business unit shall assign risk management personnel to assist them in the effective execution of risk management tasks.

Internal audit

Internal auditors are responsible for auditing business activities of high integrity risk in accordance with Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and prevailing regulations. They also assess risk management practices of various business units and the Risk Management Department, and review the design and execution of internal control system. A formal report containing internal auditors' findings is prepared and presented to the board of directors.

• (3) Control and disclosure of key risks

The Company has systems and practices in place to manage key risk categories that arise in relation to its business activities, such as market risk, credit risk, liquidity risk, assets and liabilities matching risk, insurance risk and operational risk. These systems and practices are constantly reviewed (including assessment on the effectiveness of risk management system and appropriateness of risk factors) to

• 72 -

accommodate the Company's goals, risk exposures and changes in the external environment. The board of directors is reported regularly on the Company's risk management progress, and advised on possible improvements whenever deemed necessary.

• (4) Control of insurance contract risks

Insurance contract risks can be distinguished into several risk sub-categories by stages of business activity, including product design and pricing risk, underwriting risk, reinsurance risk, disaster risk, claims risk, and reserve-related risk. Definitions of each risk sub-category are as follows:

1. Insurance risks

Insurance risk refers to the risk of loss caused by unexpected changes after the Company has collected insurance premiums, assumed the transfer of risk from insured parties and become obliged to pay claims and associated expenses.

1. Product design and pricing risks

Product design and pricing risk refers to the risk of using inappropriate or inconsistent information for product design, terms setting and pricing, or the risk of reference information becoming obsolete due to unexpected change in circumstances.

1. Underwriting risks

Underwriting risk refers to the risk of unexpected losses and expenses arising from business solicitation and underwriting review.

1. Reinsurance risks

Reinsurance risk refers to the risk of reinsurers becoming unable to fulfill obligations for undertaking risks beyond capacity without proper reinsurance arrangement, and thereby rendering the Company unable to collect premiums, claims, or expenses from reinsurers.

1. Disaster risks

Disaster risk refers to the risk of one or multiple insurance categories suffering losses due to occurrence of risk events, to the extent that may negatively affect the Company's credit rating or solvency. 6. Claims risks

• Claims risk refers to the risk of mishandling customers' claim requests.

• 1. Reserve-related risks

Reserve-related risk refers to the risk of underestimating liabilities on insurance coverage underwritten by the Company, leaving insufficient reserves to meet future obligations.

The Company has a set of "Insurance Risk Management Guidelines" and systems in place to manage insurance risks. The risk management process includes risk identification, assessment, response, monitoring and reporting.

• (5) Control of insurance risk exposure and avoidance of risk concentration

The Company has adopted practices in accordance with "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms" to manage the risks of retained, ceded and assumed insurance coverage. Reinsurance plans are devised and executed after taking into consideration the Company's risk tolerance. Please refer to Note 38(9) for retention limits of each insurance category.

• (6) Asset and liability management

The Company's insurance liabilities are of short-term nature, which makes liquidity the primary concern in asset and liability management. The Company has

• 73 -

identified three liquidity levels: Normal, Cautious and Critical based on the liquidity ratio, and applied different management practices for each of the above levels. The Company tries to maintain liquidity within the Normal level at all times. Any sign of liquidity deteriorating to the Cautious level (before the Critical level) must be reported with asset positions reviewed immediately, followed by a reassessment of asset allocation if necessary. If liquidity deteriorates to the Critical level, an emergency response meeting must be convened immediately to discuss possible solutions.

38. Disclosure of insurance contract-related information (1) Insurance contract receivables and payables: Receivables

Receivables
Insurance category Fire Insurance Marine insurance Automobile Insurance Engineering insurance Other insurance Less: loss provisions Net amount Insurance category Fire Insurance Marine insurance Automobile Insurance Engineering insurance Others Less: loss provisions Net amount Commission payable Insurance category	December 31,2020
	Notes receivable Premiums receivable $ 8,232 $ 65,959 29,368 30,188 99,915 38,551 1,621 13,217 8,019 64,855 147,155 212,770 ( 3,682) ( 39,979) $ 143,473 $ 172,791 December 31,2019						Total
							$ 74,191 59,556 138,466 14,838 72,874 359,925 43,661) $ 316,264
	(					(
	Notes receivable Premiums receivable $ 8,908 $ 106,686 29,028 35,254 97,810 56,820 409 19,388 4,612 100,685 140,767 318,833 ( 3,573) ( 40,306) $ 137,194 $ 278,527 December 31,2020 $ 12,885 7,115 75,070 1,384 19,171 $ 115,625			Premiums receivable	Total $ 115,594 64,282 154,630 19,797 105,297 459,600 ( 43,879) $ 415,721 December 31,2019		Total
	(		(			(
Fire Insurance Marine insurance Automobile Insurance Engineering insurance Other insurance Total					$ 12,148 6,992 68,042 1,158 21,822 $ 110,162

• 74 -

Reinsurance accounts receivable (payable) - retained reinsurance

Reinsurance accounts receivable (payable)-retained reinsurance	able)-retained reinsurance	able)-retained reinsurance
December 31,2020 Reinsurance accounts receivable Reinsurance accountspayable MAT $ 86,329 $ 7,159 CMP 32,725 65,333 CRC 10,275 106,346 Others 47,504 164,663 Less: loss provisions ( 1,493) - Net amount $ 175,340 $ 343,501 December 31,2019 Reinsurance accounts receivable Reinsurance accountspayable MAT $ 74,186 $ 80,288 CRC 30,048 98,455 CMP 28,954 59,612 WIL 27,288 29,817 FPH 8,198 3,324 Others 50,502 164,922 Less: loss provisions ( 3,589) - Net amount $ 215,587 $ 436,418 (2) Unearned premium reserve 1. Details of unearned premium reserve: Insurance category December 31,2020 December 31,2019 One-year commercial fire insurance $ 187,909 $ 193,492 General automobile hull insurance for private vehicle 1,044,123 914,858 General automobile liabilities insurance for private vehicle 934,617 836,070 Mandatory automobile liabilities insurance for private vehicle 258,704 255,166 Personal accident insurance 299,148 397,695 Others 1,095,204 1,129,378 $ 3,819,705 $ 3,726,659	December 31,2020
	Reinsurance accounts receivable Reinsurance accountspayable $ 86,329 $ 7,159 32,725 65,333 10,275 106,346 47,504 164,663 ( 1,493) - $ 175,340 $ 343,501 December 31,2019	Reinsurance accountspayable
	(
		Reinsurance accountspayable
		$ 80,288 98,455 59,612 29,817 3,324 164,922 - $ 436,418 December 31,2019
		$ 193,492 914,858 836,070 255,166 397,695 1,129,378 $ 3,726,659

Due to the extensive range of insurance categories involved, only categories that represented more than 5% of outstanding balance were presented above.

• 75 -

2. Details of retained unearned premium reserve:

Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance	December	31,2020
	Unearnedpremium reserve Direct insurance (1) Assumed reinsurance(2) $ 522,557 $ 35,867 68,842 1,818 2,384,510 145,357 213,214 23,545 299,476 2,203 112,961 9,355 $ 3,601,560 $ 218,145 December	Ceded unearned premium reserve Ceded reinsurance (Note)(3) $ 265,625 36,401 380,972 105,949 99,554 42,870 $ 931,371 31,2019	Retained insurance (4)=(1)+(2)-(3)
	Direct insurance (1) $ 522,557 68,842 2,384,510 213,214 299,476 112,961 $ 3,601,560
			$ 292,799 34,259 2,148,895 130,810 202,125 79,446 $ 2,888,334
	Unearnedpremium reserve Direct insurance (1) Assumed reinsurance(2) $ 556,443 $ 31,493 72,767 2,061 2,153,139 146,807 218,126 22,934 405,792 1,832 104,579 10,686 $ 3,510,846 $ 215,813	Ceded unearned premium reserve Ceded reinsurance (Note)(3) $ 302,532 37,876 356,645 110,827 231,408 38,164 $ 1,077,452	Retained insurance (4)=(1)+(2)-(3)
	Direct insurance (1) $ 556,443 72,767 2,153,139 218,126 405,792 104,579 $ 3,510,846
			$ 285,404 36,952 1,943,301 130,233 176,216 77,101 $ 2,649,207

Note: Presented as reinsurance contract assets.

1. Changes in unearned premium reserve and ceded unearned reserve

Item Amount at the beginning of year Provisions made in current year Recoveries made in current year Amount at the end of year	2020
	Unearned premium reserve $ 3,726,659 3,819,705 ( 3,726,659) $ 3,819,705	Ceded unearned premium reserve
	(	(	$ 1,077,452 931,371 1,077,452) $ 931,371

• 76 -

2019

	2019
Item Amount at the beginning of year Provisions made in current year Recoveries made in current year Amount at the end of year (3) Claim reserve 1. Details of claim reserve: Insurance category One-year commercial fire insurance General automobile hull insurance for private vehicle General automobile liabilities insurance for private vehicle Mandatory automobile liabilities insurance for private vehicle Mandatory motorcycle liabilities insurance General liabilities insurance Personal accident insurance Others	Unearned premium reserve $ 4,032,127 3,726,659 ( 4,032,127) $ 3,726,659 December 31,2020 $ 479,668 257,188 632,876 422,205 153,490 250,125 128,714 389,624 $ 2,713,890	Ceded unearned premium reserve
		(
		$ 303,266 215,473 605,136 481,165 150,177 204,552 13,577 517,887 $ 2,491,233

Due to the extensive range of insurance categories involved, only categories that represented more than 5% of outstanding balance were presented above.

• 77 -

2. Details of retained claim reserve:

Reported but not paid Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance Not reported Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance		December	31,2020
	Claim r	eserve Assumed reinsurance (2) $ 2,900 3,000 42,516 3,453 - 41,901 93,770 1,041 - 150,802 1,277 - 89 153,209 $ 246,979	Ceded claim reserve Ceded reinsurance (Note)(3) $ 320,931 11,845 110,594 113,622 17,112 16,538 590,642 - 2,072 237,465 26,758 42,146 14,071 322,512 $ 913,154	Retained insurance (4)=(1)+(2)-(3)
	Direct underwritten insurance (1) $ 509,980 32,974 761,274 245,790 32,063 44,098 1,626,179 2,608 6,569 637,273 64,311 97,701 32,270 840,732 $ 2,466,911
				$ 191,949 24,129 693,196 135,621 14,951 69,461 1,129,307 3,649 4,497 550,610 38,830 55,555 18,288 671,429 $ 1,800,736

• 78 -

Reported but not paid Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance Not reported Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance		December	31,2019
	Claim r	eserve Assumed reinsurance (2) $ 815 806 40,565 12,244 - 3,413 57,843 277 - 149,708 4,756 - 1,382 156,123 $ 213,966	Ceded claim reserve Ceded reinsurance (Note)(3) $ 172,105 7,609 109,857 124,539 7,900 16,706 438,716 23 13,026 270,406 18,495 55,212 7,256 364,418 $ 803,134	Retained insurance (4)=(1)+(2)-(3)
	Direct underwritten insurance (1) $ 342,255 39,319 693,735 248,831 16,590 47,439 1,388,169 2,753 20,830 691,511 45,754 111,320 16,930 889,098 $ 2,277,267
				$ 170,965 32,516 624,443 136,536 8,690 34,146 1,007,296 3,007 7,804 570,813 32,015 56,108 11,056 680,803 $ 1,688,099

Note: Presented as reinsurance contract assets.

• 79 -

3. Net change in claim reserves and net change in ceded claim reserves

Reported but not paid Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Others Not reported Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Others				20	20
	Direct underwr	itten insurance Recoveries(2) $ 342,255 39,319 693,735 248,831 16,590 47,439 1,388,169 2,753 20,830 691,511 45,754 111,320 16,930 889,098 $ 2,277,267	Assumed r	einsurance Recoveries(4) $ 815 806 40,565 12,244 - 3,413 57,843 277 - 149,708 4,756 - 1,382 156,123 $ 213,966	Net change in claim reserves (5)=(1)-(2) +(3)-(4) $ 169,810 ( 4,151) 69,490 ( 11,832) 15,473 35,147 273,937 619 ( 14,261) ( 53,144) 15,078 ( 13,619) 14,047 ( 51,280) $ 222,657	Ceded rei	nsurance Recoveries(7) $ 172,105 7,609 109,857 124,539 7,900 16,706 438,716 23 13,026 270,406 18,495 55,212 7,256 364,418 $ 803,134	Net change in ceded claim reserve (8)=(6)-(7)
	Provisions(1) $ 509,980 32,974 761,274 245,790 32,063 44,098 1,626,179 2,608 6,569 637,273 64,311 97,701 32,270 840,732 $ 2,466,911		Provisions(3) $ 2,900 3,000 42,516 3,453 - 41,901 93,770 1,041 - 150,802 1,277 - 89 153,209 $ 246,979			Provisions(6) $ 320,931 11,845 110,594 113,622 17,112 16,538 590,642 - 2,072 237,465 26,758 42,146 14,071 322,512 $ 913,154
								$ 148,826 4,236 737 ( 10,917) 9,212 ( 168) 151,926 ( 23) ( 10,954) ( 32,941) 8,263 ( 13,066) 6,815 ( 41,906) $ 110,020

Reported but not paid Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Others Not reported Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Others				20	19
	Direct underwr	itten insurance Recoveries(2) $ 567,654 166,107 677,158 216,752 6,927 78,219 1,712,817 5,011 7,536 790,629 34,078 79,866 9,050 926,170 $ 2,638,987	Assumed r	einsurance Recoveries(4) $ 2,786 317 38,798 15,189 - 3,615 60,705 778 - 144,849 3,764 - 1,117 150,508 $ 211,213	Net change in claim reserves (5)=(1)-(2) +(3)-(4) ($ 227,370) ( 126,299) 18,344 29,134 9,663 ( 30,982) ( 327,510) ( 2,759) 13,294 ( 94,259) 12,668 31,454 8,145 ( 31,457) ($ 358,967)	Ceded rei	nsurance Recoveries(7) $ 303,826 110,318 113,584 99,499 3,260 23,778 654,265 297 414 348,212 4,050 38,903 2,856 394,732 $ 1,048,997	Net change in ceded claim reserve (8)=(6)-(7)
	Provisions(1) $ 342,255 39,319 693,735 248,831 16,590 47,439 1,388,169 2,753 20,830 691,511 45,754 111,320 16,930 889,098 $ 2,277,267		Provisions(3) $ 815 806 40,565 12,244 - 3,413 57,843 277 - 149,708 4,756 - 1,382 156,123 $ 213,966			Provisions(6) $ 172,105 7,609 109,857 124,539 7,900 16,706 438,716 23 13,026 270,406 18,495 55,212 7,256 364,418 $ 803,134
								($ 131,721) ( 102,709) ( 3,727) 25,040 4,640 ( 7,072) ( 215,549) ( 274) 12,612 ( 77,806) 14,445 16,309 4,400 ( 30,314) ($ 245,863)

• 80 -

Changes in claim reserves and ceded claim reserves:

Changes in claim reserves and ceded claim reserves:	and ceded claim reserves:
2020 Item Claim reserve Amount at the beginning of year $ 2,491,233 Provisions made in current year 2,713,890 Recoveries made in current year ( 2,491,233) Amount at the end of year $ 2,713,890 2019 Item Claim reserve Amount at the beginning of year $ 2,850,200 Provisions made in current year 2,491,233 Recoveries made in current year ( 2,850,200) Amount at the end of year $ 2,491,233 (4) Special claim reserve 1. Details of special claim reserve: Nature Insurance category December 31, 2020 Major incident Commercial earthquake insurance $ 86,814 Typhoon and flood insurance 60,795 147,609	2020
	Claim reserve $ 2,491,233 2,713,890 ( 2,491,233) $ 2,713,890 2019		Ceded claim reserve
	(	(	$ 803,134 913,154 803,134) $ 913,154
			Ceded claim reserve
		(

(Continued next page)

• 81 -

(Continued from previous page)

Nature Change of risk	Insurance category Mandatory automobile liabilities insurance for private vehicle Mandatory commercial automobile liabilities insurance Mandatory motorcycle liabilities insurance Nuclear risks insurance Commercial earthquake insurance Typhoon and flood insurance Government-regulated earthquake insurance	December 31, 2020 $ 85,159 ( 94,832) 515,011 74,686 587,411 184,083 197,532 1,549,050 $ 1,696,659	December 31, 2019 $ 35,881 ( 102,353) 538,007 74,687 587,411 184,083 197,531 1,515,247 $ 1,669,565

1. Details of special claim reserve - mandatory automobile/motorcycle liabilities insurance:

insurance:
Item Amount at the beginning of year Provisions made in current year Recoveries made in current year Amount at the end of year		2020 $ 471,535 56,799 22,996) $ 505,338		2019
	(		(	$ 470,860 23,501 22,826) $ 471,535

1. Special claim reserve - voluntary automobile/motorcycle liabilities insurance

Item Amount at the beginning of year Provisions made in current year Recoveries made in current year Amount at the end of year	202	202	202	0
	Special claim reserve liability Major incident Change of risk Total $ 154,318 $ 1,043,712 $ 1,198,030 - - - ( 6,709) - ( 6,709) $ 147,609 $ 1,043,712 $ 1,191,321				Special reserve
	Major incident $ 154,318 - ( 6,709) $ 147,609	Change of risk $ 1,043,712 - - $ 1,043,712		Major incident $ 569,792 66,863 - $ 636,655	Change of risk $ 1,111,909 143,350 ( 31,985) $ 1,223,274		Total
	(		(		$ ( $	(	$ 1,681,701 210,213 31,985) $ 1,859,929

• 82 -

2019

Item Amount at the beginning of year Provisions made in current year Recoveries made in current year Amount at the end of year	Special claim reserve liability Major incident Change of risk Total $ 161,028 $ 1,043,712 $ 1,204,740 - - - ( 6,710) - ( 6,710) $ 154,318 $ 1,043,712 $ 1,198,030	Special claim reserve liability Major incident Change of risk Total $ 161,028 $ 1,043,712 $ 1,204,740 - - - ( 6,710) - ( 6,710) $ 154,318 $ 1,043,712 $ 1,198,030	Special claim reserve liability Major incident Change of risk Total $ 161,028 $ 1,043,712 $ 1,204,740 - - - ( 6,710) - ( 6,710) $ 154,318 $ 1,043,712 $ 1,198,030		Special reserve
	Major incident $ 161,028 - ( 6,710) $ 154,318	Change of risk $ 1,043,712 - - $ 1,043,712		Major incident $ 504,170 65,622 - $ 569,792	Change of risk $ 970,079 163,547 ( 21,717) $ 1,111,909		Total
			(		(	(	$ 1,474,249 229,169 21,717) $ 1,681,701

• Note 1: "Notes on Natural Disaster Insurance (Commercial Earthquake Insurance and Typhoon/Flood Insurance) Reserve Enhancement for Non-life Insurance Companies" issued by the competent authority in Jin-Guan-Bao-Cai-Zi No. 10102515061 dated November 9, 2012 permitted the reclassification of special claim reserves for major incidents to special claim reserves for change of risk. The Company had yet to make full provision of special claim reserves for commercial earthquake and Typhoon/flood insurance at that time, and was therefore unable to reclassify balances to special reserves.

• Note 2: If the Company had not adopted “Notes on Natural Disaster Insurance (Commercial Earthquake Insurance and Typhoon/Flood Insurance) Reserve Enhancement, Notes on Residential Earthquake Coinsurance Members' Reserves, and Rules on Nuclear Risks Insurance Reserves for Non-life Insurance Companies,” the amount of Insurance liability - Special claim reserve would have decreased by NT$953,057 thousand (net of NT$238,264 thousand tax impact) against an increase in special reserve of the same amount as of December 31, 2020; meanwhile, net income for the period from January 1 to December 31, 2020 would have fallen by NT$5,368 thousand and earnings per share would have reduced by NT$0.02.

• (5) Deficiency reserve

Vessel hull insurance Health Insurance Engineering insurance	December	31,2020
	Deficiencyreserve Direct insurance (1) Assumed reinsurance (2) $ 952 $ - 20 - 2,632 3,108 $ 3,604 $ 3,108	Deficiency reserve for ceded coverage Ceded reinsurance (Note)(3) $ - - - $ -	Retained insurance (4)=(1)+(2)-(3)
	Direct insurance (1) $ 952 20 2,632 $ 3,604
			$ 952 20 5,740 $ 6,712

• 83 -

Aviation Insurance Professional liability insurance Fishing Vessel Insurance Vessel hull insurance Health Insurance Engineering insurance	December	31,2019
	Deficiencyreserve Direct insurance (1) Assumed reinsurance (2) $ 1,424 $ - 2,376 18 8,035 307 605 - 368 - 5,153 6,007 $ 17,961 $ 6,332	Deficiency reserve for ceded coverage Ceded reinsurance (Note)(3) $ - - 7,564 - - - $ 7,564	Retained insurance (4)=(1)+(2)-(3)
	Direct insurance (1) $ 1,424 2,376 8,035 605 368 5,153 $ 17,961
			$ 1,424 2,394 778 605 368 11,160 $ 16,729

Note: Deficiency reserve for ceded coverage is presented under reinsurance contract assets.

• 84 -

(6) Retained earned premium revenue

The following shows the amount and calculation of retained earned gross premiums for the Company's mandatory and voluntary automobile liabilities insurance in 2020:

insurance in 2020:
Insurance category Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance	Premium revenues (1) $ 792,090 6,270,794 $ 7,062,884	Reinsurance Premium (2) $ 256,074 147,591 $ 403,665	Reinsurance premiums expense (3) $ 330,929 1,445,384 $ 1,776,313	Retained premium (4)=(1)+(2)-(3)
				$ 717,235 4,973,001 $ 5,690,236

For the voluntary automobile liabilities insurance, a sum of NT$12,542 thousand was contributed to the stabilization fund using applicable percentages in 2020.

2020.
Insurance category Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance Item	Direct written insurance unearnedpremium reserve Assumed reinsurance unearned premium reserve Net change in unearned premium reserve (9)=(5)-(6) Provisions(5) Recoveries(6) Provisions(7) Recoveries(8) +(7)-(8) $ 309,600 $ 309,040 $ 145,357 $ 146,807 ( $ 890 ) 3,291,961 3,201,806 72,788 69,006 93,937 $ 3,601,561 $ 3,510,846 $ 218,145 $ 215,813 $ 93,047 Ceded reinsurance Unearnedpremium reserve Net change in ceded unearned premium reserve (12)= Retained earned gross premium (13)= Provisions(10) Recoveries(11) (10)-(11) (4)-(9)+(12) $ 185,782 $ 185,437 $ 345 $ 718,470 745,588 892,015 ( 146,427) 4,732,637 $ 931,370 $ 1,077,452 ($ 146,082) $ 5,451,107			Net change in unearned premium reserve (9)=(5)-(6) +(7)-(8)
		Provisions(10) $ 185,782 745,588 $ 931,370
Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance			$ 718,470 4,732,637 $ 5,451,107

• 85 -

The following shows amount and calculation of retained earned gross premiums for the Company's mandatory and voluntary automobile liabilities insurance in 2019:

Insurance category Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance	Premium revenues (1) $ 788,254 6,086,800 $ 6,875,054	Reinsurance Premium (2) $ 258,074 146,511 $ 404,585	Reinsurance premiums expense (3) $ 327,486 1,598,132 $ 1,925,618	Retained premium (4)=(1)+(2)-(3)
				$ 718,842 4,635,179 $ 5,354,021

For the voluntary automobile liabilities insurance, a sum of NT$12,174 thousand was contributed to the stabilization fund using applicable percentages in 2019.

Insurance category Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance Item	Direct written insurance unearnedpremium reserve Assumed reinsurance unearned premium reserve Net change in unearned premium reserve (9)=(5)-(6) Provisions(5) Recoveries(6) Provisions(7) Recoveries(8) +(7)-(8) $ 309,040 $ 319,204 $ 146,807 $ 144,164 ( $ 7,521 ) 3,201,806 3,505,321 69,006 63,438 ( 297,947) $ 3,510,846 $ 3,824,525 $ 215,813 $ 207,602 ($ 305,468) Ceded reinsurance unearned premium reserve Net change in ceded unearned premium reserve (12)= Retained earned gross premium (13)= Provisions(10) Recoveries(11) (10)-(11) (4)-(9)+(12) $ 185,437 $ 191,527 ( $ 6,090 ) $ 720,273 892,015 1,200,008 ( 307,993) 4,625,133 $ 1,077,452 $ 1,391,535 ($ 314,083) $ 5,345,406	Direct written insurance unearnedpremium reserve Assumed reinsurance unearned premium reserve Net change in unearned premium reserve (9)=(5)-(6) Provisions(5) Recoveries(6) Provisions(7) Recoveries(8) +(7)-(8) $ 309,040 $ 319,204 $ 146,807 $ 144,164 ( $ 7,521 ) 3,201,806 3,505,321 69,006 63,438 ( 297,947) $ 3,510,846 $ 3,824,525 $ 215,813 $ 207,602 ($ 305,468) Ceded reinsurance unearned premium reserve Net change in ceded unearned premium reserve (12)= Retained earned gross premium (13)= Provisions(10) Recoveries(11) (10)-(11) (4)-(9)+(12) $ 185,437 $ 191,527 ( $ 6,090 ) $ 720,273 892,015 1,200,008 ( 307,993) 4,625,133 $ 1,077,452 $ 1,391,535 ($ 314,083) $ 5,345,406	Direct written insurance unearnedpremium reserve Assumed reinsurance unearned premium reserve Net change in unearned premium reserve (9)=(5)-(6) Provisions(5) Recoveries(6) Provisions(7) Recoveries(8) +(7)-(8) $ 309,040 $ 319,204 $ 146,807 $ 144,164 ( $ 7,521 ) 3,201,806 3,505,321 69,006 63,438 ( 297,947) $ 3,510,846 $ 3,824,525 $ 215,813 $ 207,602 ($ 305,468) Ceded reinsurance unearned premium reserve Net change in ceded unearned premium reserve (12)= Retained earned gross premium (13)= Provisions(10) Recoveries(11) (10)-(11) (4)-(9)+(12) $ 185,437 $ 191,527 ( $ 6,090 ) $ 720,273 892,015 1,200,008 ( 307,993) 4,625,133 $ 1,077,452 $ 1,391,535 ($ 314,083) $ 5,345,406	Net change in unearned premium reserve (9)=(5)-(6) +(7)-(8)
		Provisions(10) $ 185,437 892,015 $ 1,077,452
Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance			$ 720,273 4,625,133 $ 5,345,406

(7) Retained claims

The following shows the amount and calculation of retained claims for the Company's mandatory and voluntary automobile liabilities insurance as of December 31, 2020:

• 86 -

Insurance category Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance	Insurance claims (including claim-related expenses) (1) $ 544,928 3,098,081 $ 3,643,009	Claims paid for reinsurance (2) $ 255,387 31,898 $ 287,285	Claims recovered from reinsurers (3) $ 327,753 630,146 $ 957,899	Retained claims (4)=(1)+(2)-(3)
				$ 472,562 2,499,833 $ 2,972,395

The following shows the amount and calculation of retained claims for the Company's mandatory and voluntary automobile liabilities insurance as of December 31, 2019:

31, 2019:
Insurance category Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance	Insurance claims (including claim-related expenses) (1) $ 650,040 3,405,106 $ 4,055,146	Claims paid for reinsurance (2) $ 261,884 70,748 $ 332,632	Claims recovered from reinsurers (3) $ 379,257 939,748 $ 1,319,005	Retained claims (4)=(1)+(2)-(3)
				$ 532,667 2,536,106 $ 3,068,773

(8) Policyholders' reported claims liability

Policyholders' reported and paid/unpaid and unreported claims liability: December 31, 2020

Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance	Insurance claimspayable Reported and paid $ - - 2,045 - - 941 $ 2,986		Claim reserves
		Reported but notpaid $ 512,880 35,974 803,790 249,243 32,063 85,999 $ 1,719,949	Not reported $ 3,649 6,569 788,075 65,588 97,701 32,359 $ 993,941	Total
				$ 516,529 42,543 1,591,865 314,831 129,764 118,358 $ 2,713,890

• 87 -

December 31, 2019

Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance	Insurance claimspayable Reported and paid $ - - - - - - $ -		Claim reserves
		Reported but notpaid $ 343,070 40,125 734,300 261,075 16,590 50,852 $ 1,446,012	Not reported $ 3,030 20,830 841,219 50,510 111,320 18,312 $ 1,045,221	Total
				$ 346,100 60,955 1,575,519 311,585 127,910 69,164 $ 2,491,233

Reinsurance contract asset - claims recoverable from reinsurers for obligatory payments made to policyholders

payments made to policyholders
Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance Subtotal Less: loss provisions Net amount	2020 Actualpayments $ 1,058 1,465 78,965 10,516 39,319 417 131,740 ( 706) $ 131,034	2019 Actualpayments
			$ 4,968 17,977 76,637 11,682 49,562 6,266 167,092 1,010) $ 166,082
	(	(

Reinsurance contract asset - please refer to Note 38(3) for the amount of ceded claim reserve provided on policyholders' reported and unpaid and unreported claims liability.

• 88 -

(9)	Retention limits by insurance category Insurance category 2020 Fire Insurance $ 250,000 Engineering insurance 250,000 Liabilities insurance 150,000 Cargo insurance 75,000 Vessel hull insurance 60,000 Fishing Vessel Insurance 60,000 Automobile hull insurance 13,800 Automobile third-party liability insurance (per incident) 202,400 Automobile passenger liability insurance (per incident) 644,000 Personal accident insurance 30,000 Health insurance 2,000	2019
		$ 250,000 250,000 150,000 75,000 60,000 60,000 13,800 202,400 644,000 30,000 2,000

(10) Acquisition costs for insurance contracts

Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance		2020	2020
	Commission Expenses $ 84,579 31,945 668,016 45,758 110,128 23,312 $ 963,738	Service Charges Reinsurance commission expense $ - $ 4,880 - 583 139,699 - - 10,600 - 140 - 2,176 $ 139,699 $ 18,379 2019		Total
				$ 89,459 32,528 807,715 56,358 110,268 25,488 $1,121,816
	Commission Expenses $ 87,770 29,878 618,723 53,260 111,155 26,270 $ 927,056	Service Charges $ - - 139,269 - - - $ 139,269	Reinsurance commission expense $ 4,789 1,012 - 10,853 128 2,299 $ 19,081	Total
				$ 92,559 30,890 757,992 64,113 111,283 28,569 $1,085,406

None of the insurance contract acquisition cost above was recognized on a deferred basis.

• 89 -

(11) Insurance profitability analysis Profitability analysis for direct underwritten insurance:

2020

Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance	Premium revenues(1) $ 922,647 303,401 4,732,154 333,986 521,952 248,744 $ 7,062,884	Net change in unearned premium reserve(2) ( $ 33,886) ( 3,925) 231,371 ( 4,912) ( 106,316) 8,384 $ 90,716	Acquisition costs for insurance contracts(3) $ 84,579 31,945 807,715 45,758 110,128 23,312 $ 1,103,437	Insurance claims (including claim-related expenses) (4) $ 159,429 120,166 2,801,841 140,416 362,575 58,582 $ 3,643,009	Net change in claim reserves (5) $ 167,580 ( 20,606) 13,301 15,516 1,854 11,999 $ 189,644	Profit (loss) on insurance (6)=(1)-(2)- (3)-(4)-(5)
						$ 544,945 175,821 877,926 137,208 153,711 146,467 $ 2,036,078

Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance			2019	2019
	Premium revenues(1) $ 935,526 356,997 4,376,953 365,591 600,327 239,660 $ 6,875,054	Net change in unearned premium reserve(2) ( $ 87,286) ( 23,996) 87,459 ( 15,044) ( 279,634) 4,822 ($ 313,679)	Insurance contract Acquisition cost(3) $ 87,770 29,878 757,992 53,260 111,155 26,270 $ 1,066,325	Insurance claims (including claim-related expenses) (4) $ 307,784 317,344 2,805,190 129,714 457,620 37,494 $ 4,055,146	Net change in claim reserves (5) ( $ 227,657) ( 113,494) ( 82,541) 43,755 41,117 ( 22,900) ($ 361,720)	Profit (loss) on insurance (6)=(1)-(2)- (3)-(4)-(5)
						$ 854,915 147,265 808,853 153,906 270,069 193,974 $ 2,428,982
		(

Profitability analysis for assumed reinsurance:

Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance			2020	2020
	Reinsurance Premium (1) $ 71,739 5,850 256,074 45,276 4,364 20,362 $ 403,665	Net change in unearned premium reserve (2) $ 4,374 ( 243) ( 1,450) 611 371 ( 1,331) $ 2,332	Reinsurance commission expense (3) $ 4,880 583 - 10,600 140 2,176 $ 18,379	Reinsurance claims(4) $ 4,678 6,489 255,387 16,069 702 3,960 $ 287,285	Net change in claim reserves (5) $ 2,849 2,194 3,045 ( 12,270) - 37,195 $ 33,013	Profit (loss) on assumed reinsurance (6)=(1)-(2)- (3)-(4)-(5)
						$ 54,958 ( 3,173) ( 908) 30,266 3,151 ( 21,638) $ 62,656

• 90 -

Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance			2019	2019
	Reinsurance Premium (1)	Net change in unearned premium reserve (2)	Reinsurance commission expense (3)	Reinsurance claims(4)	Net change in claim reserves (5)	Profit (loss) on assumed reinsurance (6)=(1)-(2)- (3)-(4)-(5)
	$ 61,781 10,359 258,074 48,515 3,668 22,188 $ 404,585	$ 921 ( 1,820) 2,659 1,958 97 4,396 $ 8,211	$ 4,789 1,012 - 10,853 128 2,299 $ 19,081	$ 7,260 11,196 261,884 50,495 374 1,423 $ 332,632	( $ 2,472) 489 6,626 ( 1,953) - 63 $ 2,753	$ 51,283 ( 518) ( 13,095) ( 12,838) 3,069 14,007 $ 41,908

Current profit/loss recognized on ceded insurance contracts:

Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance			2020	2020
	Reinsurance premiums expense (1) $ 498,026 99,750 709,080 154,832 187,600 127,025 $ 1,776,313	Net change in ceded unearned premium reserve (2) ( $ 36,907) ( 1,475) 24,327 ( 4,878) ( 131,854) 4,706 ($ 146,081)	Reinsurance commission revenues(3) $ 25,772 11,204 145,168 38,850 54,891 11,968 $ 287,853	Claims recovered from reinsurers (4) $ 72,016 10,519 550,866 61,580 241,647 21,271 $ 957,899	Net change in ceded claim reserve (5) $ 148,803 ( 6,718) ( 32,204) ( 2,654) ( 3,854) 6,647 $ 110,020	(Profit) loss on ceded reinsurance (6)=(1)-(2)- (3)-(4)-(5)
						$ 288,342 86,220 20,923 61,934 26,770 82,433 $ 566,622
		(

Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance			2019	2019
	Reinsurance premiums expense (1) $ 541,684 123,930 669,072 174,606 292,174 124,152 $ 1,925,618	Net change in ceded unearned premium reserve (2) ( $ 50,687) ( 1,821) 938 ( 5,798) ( 259,448) 2,733 ($ 314,083)	Reinsurance commission revenues(3) $ 27,943 14,218 119,299 44,991 65,669 15,545 $ 287,665	Claims recovered from reinsurers (4) $ 155,184 173,857 589,364 72,288 325,697 2,615 $ 1,319,005	Net change in ceded claim reserve (5) ( $ 131,995) ( 90,097) ( 81,533) 39,485 20,949 ( 2,672) ($ 245,863)	(Profit) loss on ceded reinsurance (6)=(1)-(2)- (3)-(4)-(5)
						$ 541,239 27,773 41,004 23,640 139,307 105,931 $ 878,894
		(

(12) Information on insurance risks

1. Sensitivity analysis for insurance risks

The Company conducts sensitivity analysis on major assumptions that have the potential to affect claim reserves, such as average cost of claim, claim-related expenses and number of claim cases. Impacts on claim reserves are established by making reasonable and possible changes to one assumption while holding other major assumptions constant. For example, a change to the

• 91 -

variable "average cost of claim" would result in a proportional change in claim reserves. Detailed analysis is presented below:

Average cost of claim			December 31,2020	December 31,2020
	Single-varia ble Variation 5%	Effect on gross claims reserve Increase (decrease) $ 104,787	Effect on net claims reserve Increase (decrease) $ 71,932	Effect on pre-taxprofit Increase (decrease) ( $ 71,932 )	Pre-tax effect on owners' equity
					Increase (decrease)
					( $ 71,932 )

Note: The above analysis does not include mandatory automobile liabilities insurance, nuclear risks insurance, and government-regulated earthquake insurance.

1. Explanation to concentration of insurance risks

The Company sets retention limits depending on the risks associated with individual insurance categories. Risks are transferred away through the use of reinsurance, which reduces concentration of insurance risks and the impacts they have on the Company. Risk concentration by business category is explained below:

explained below:
Fire Insurance Marine insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance	2020	% 13.06 4.30 67.00 4.73 7.39 3.52 100.00	2020
	Direct written premiums $ 922,647 303,401 4,732,154 333,986 521,952 248,744 $ 7,062,884		Cumulative retained premiums (Note) $ 496,360 209,501 4,279,148 224,430 338,716 142,081 $ 5,690,236	%
				8.72 3.68 75.20 3.94 5.95 2.51 100.00

Note: represents the sum of premium revenue, reinsurance premium revenue and reinsurance premium expense.

Claims trends

Trend analysis for claims on direct insurance is as follows:

Year of accident ≤2015 2016 2017 2018 2019 2020			December 31,2020	December 31,2020
			Year	count
	1 $ 30,978,975 3,518,890 2,844,485 3,350,844 2,878,243 3,111,650	2 $ 31,120,332 3,768,046 3,138,851 3,575,988 3,097,609	3 $ 31,172,606 3,753,540 3,155,289 3,598,282	4 $ 31,172,925 3,755,040 3,151,219	5 $ 31,141,265 3,745,284	6
						$ 31,151,314

Note: The above table does not include mandatory automobile liabilities insurance, nuclear risks insurance, and government-regulated earthquake insurance. (13) Credit risk, liquidity risk and market risk of insurance contracts

• 92 -

• Credit risk of insurance contracts

All reinsurance contracts held by the Company are evaluated according to "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms."

With regards to ceded insurance as of December 31, 2021, the Company was required to disclose ceded claim reserve for reported and unpaid liability totaling NT$28 thousand on the sum of marine hull insurance ceded to Tugu Insurance Company Ltd., a reinsurer that did not conform with the credit grading requirements stated in Article 8 of "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms."

For the sum of accident insurance ceded to Trust International Insurance and Reinsurance Company B.S.C.(C).Trust Re Labuan Branch, a reinsurer that did not conform with the credit grading requirements stated in Article 8 of "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms," the Company was required to disclose claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months totaling NT$48 thousand and ceded claim reserve for reported and unpaid liability totaling NT$3 thousand.

In addition, the Company was required to make provisions for substandard reinsurance reserve of NT$79 thousand (including NT$48 thousand of claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months, and NT$31 thousand of ceded claim reserve for reported and unpaid liability) when preparing regulatory reports; however, this NT$79 thousand of additional reserve and liability does not affect the Company's financial statements.

With regards to ceded insurance as of December 31, 2019, the Company was required to disclose claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months totaling NT$59 thousand and ceded claim reserve for reported and unpaid liability totaling NT$85 thousand on the sum of marine hull insurance ceded to Tugu Insurance Company Ltd., a reinsurer that did not conform with the credit grading requirements stated in Article 8 of "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms."

For the sum of commercial fire insurance ceded to ASIA CAPITAL REINSURANCE GROUP PTE LTD, a reinsurer that did not conform with the credit grading requirements stated in Article 8 of "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms," the Company was required to disclose substandard reinsurance premium expenses totaling NT$694 thousand.

For the sum of accident insurance ceded to Trust International Insurance and Reinsurance Company B.S.C.(C).Trust Re Labuan Branch, a reinsurer that did not conform with the credit grading requirements stated in Article 8 of "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms," the Company was required to disclose claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months totaling NT$117 thousand and ceded claim reserve for reported and unpaid liability totaling NT$38 thousand. In addition, the Company was required to make provisions for substandard

• 93 -

reinsurance reserve of NT$646 thousand (including NT$347 thousand of ceded unearned premium reserve, NT$176 thousand of claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months, and NT$123 thousand of ceded claim reserve for reported and unpaid liability) when preparing regulatory reports; however, this NT$646 thousand of additional reserve and liability does not affect the Company's financial statements.

1. Liquidity risk of insurance contracts

The Company manages the liquidity risk of its insurance contracts in three liquidity levels: Normal, Cautious and Critical. The Company's liquidity position as of December 31, 2020 was considered to be at the Normal level, which posed no concern of liquidity risk.

1. Market risk of insurance contracts

None of the insurance contracts and reinsurance contracts issued or held by the Company involved any significant market risk.

• (14) Assets, liabilities, revenues and costs of mandatory automobile liabilities insurance

• Assets and liabilities of mandatory automobile liabilities insuranceUnit: NTD thousands

Item	Amount	Amount	Item	Amount	Amount
Assets	December 31, 2020	December 31, 2019	Liabilities	December 31, 2020	December 31, 2019
Cash and bank deposits (Note) Notes receivable Premiums receivable Claims recoverable from reinsurers Reinsurance accounts receivable Other receivables Financial assets at fair value through other comprehensive income Ceded unearned premium reserve Ceded claim reserve Payments in suspense and pending settlement Other assets	$ 1,094,147 21,525 13,020 20,922 54,074 - - 185,782 256,068 - -	$ 1,089,353 8,511 16,055 23,744 50,416 - - 185,437 296,837 - -	Notes payable Claims payable Claims payable to reinsurers Reinsurance accounts payable Unearned premium reserve Claim reserve Special reserve Receipts in suspense and pending settlement Other liabilities	$ 1,044 727 - 65,333 454,958 618,000 505,338 121 17	$ - - - 59,612 455,847 683,359 471,535 - -
Total assets	$ 1,645,538	$ 1,670,353	Total liabilities	$ 1,645,538	$ 1,670,353

Note: As at December 31, 2020 and 2019, NT$378,147 thousand and NT$373,353 thousand of which were presented as cash, while NT$716,000 thousand and NT$716,600 thousand of which were presented as other financial assets, respectively.

• 94 -

• Revenues and costs of mandatory automobile liabilities insurance

Unit: NTD thousands

	2020	2019
Revenue Pure premium revenues Reinsurance Premium Premium revenues Less: reinsurance premiums expense Net change in unearned premium reserve Retained Earned Premium Interest income Total operating revenues Operating Cost Insurance claims (including reinsurance claims, which amounted to NT$255,387 thousand and NT$261,884 thousand, respectively) Less: claims recovered from reinsurers Retained claims Net change in claim reserves Net change in special claim reserves Total operatingcosts	$ 551,505 256,074 807,579 ( 330,929) 1,234 477,884 3,891 $ 481,775 $ 800,315 ( 327,753) 472,562 ( 24,590) 33,803 $ 481,775	$ 545,779 258,074 803,853 ( 327,486 ) 1,431 477,798 4,874 $ 482,672 $ 911,924 ( 379,257) 532,667 ( 50,670) 675 $ 482,672

39. Other disclosures

• (1) Major transactions:

• Acquisition of real estate properties amounting to more than NT$100 million or 20% of paid-up capital: None.

• Disposal of real estate properties amounting to more than NT$100 million or 20% of paid-up capital: None.

• Core business transactions conducted with related parties amount to more than NT$100 million or more than 20% of paid-up capital: None.

• Related party receivables amounting to more than NT$100 million or 20% of paid up capital: None.

• Trading of derivatives: None.

• Others: None.

• (2) Information on invested businesses: None.

• (3) Information relating to investments and business activities in the Mainland China: None.

• 95 -

• (4) Information of dominant shareholders:

Unit: shares

Information of dominant shareholders:		Unit: shares
Shareholding Name of dominant shareholder	Shares held	Shareholding percentage(%)
Chien Cheng Development Co., Ltd. OSTA TRADING CO., LTD. Sheng Ching Investment Co., Ltd.	18,806,192 15,823,085 15,159,289	6.24% 5.25% 5.03%

• Note 1: Information on major shareholders, as presented in this chart, was taken from records of the Taiwan Depository & Clearing Corporation as of the final business day of the reported quarter; and included parties holding book-entry common and preferred shares (including treasury stock) for aggregate ownership of 5% and above. Share capital reported in the Company's financial statements may differ from the number of shares delivered via book entry due to different basis of preparation/calculation.

• Note 2: Shareholders who placed shares under trust are disclosed based on sub-accounts under trustee's main trust account. Shareholders with more than 10% ownership interest are subject to insider equity reporting, according to the Securities and Exchange Act. Insider equity includes shares held in their own name and any shares placed under a trust that the insider has control over. Please access the Market Observation Post System for reports on insider equity.

40. Segment information

Non-life insurance was the Company's primary and only major business segment in 2020 and 2019, so segment-by-segment disclosure of financial information is not required.

• 96 -

§LIST OF MAJOR ACCOUNTS§

ITEM

NO./INDEX

Asset, liability and equity accounts

Cash and cash equivalent accounts Receivable accounts Other receivable accounts Financial asset at fair value through profit and loss accounts Financial asset at cost after amortization accounts Other financial asset accounts

Financial asset at fair value through other comprehensive income accounts

Investment property variation accounts Investment property accumulated depreciation variation accounts Claim recoverable from reinsurers accounts Reinsurance accounts receivable and payable Property, plant and equipment variation accounts Property, plant and equipment accumulated depreciation variation accounts

Right-of-use asset variation accounts Right-of-use asset accumulated depreciation variation accounts Intangible asset variation accounts Deferred income tax asset accounts Other asset details Statement of Notes Payable Statement of Insurance Claims Payable Other payable accounts Lease liability accounts Unearned premium reserve variation accounts Claim reserve variation accounts Special claim reserve variation accounts Special earnings reserve (for major incidents and change of risk) provision worksheet Special earnings reserve (for major incidents and change of risk) reversal worksheet Deficiency reserve variation accounts Other liability accounts Profit and loss accounts Retained earned premium accounts Interest income accounts Gain and loss accounts for financial assets/liabilities at fair value through profit and loss Realized gain and loss accounts for financial assets/liabilities at fair value through other comprehensive income Gain/loss on exchange accounts Investment property gain and loss accounts Expected credit impairment loss and reversal gain on investment accounts Retained claim and benefit payment accounts Commission expense accounts Operating expense accounts Summary of current employee welfare, depreciation and amortization by function

Account set 1 Account set 2 Account set 3 Account set 4 Account set 5 Note 11 Account set 6

Note 13 Note 13 Account set 7 Account set 8 Note 15 Note 15

Account set 9 Account set 10 Note 17 Note 26 Account set 11 Account set 12 Account set 13 Note 20 Account set 14 Account set 15 Account set 16 Account set 17 Account set 18

Account set 19

Note 38 Account set 20

Account set 21 Account set 22 Account set 23

Account set 24

Note 25(6) Account set 25 Account set 26

Account set 27 Account set 28 Account set 29 Account set 30

• 97 -

The First Insurance Co., Ltd. Cash and cash equivalent accounts December 31, 2020

	December 31, 2020	December 31, 2020
Account set 1 Item Cash Cheque deposit Demand deposit Foreign currency deposit	Unit: NTD thousands / foreign currency thousands Summary Amount $ 669 940,142 769,029 US$2,111, GBP$56, HK$314, JPY$21, EUR$55 and CNY$27 65,484 $ 1,775,324
		$ 669 940,142 769,029 65,484 $ 1,775,324

Note: Foreign currency deposits were valued at spot exchange rates as of the balance sheet date, which were: USD1 = NTD28.480, HKD1 = NTD3.673, GBP1 = NTD38.900, JPY1 = NTD0.276, EUR1 = NTD35.020, CNY1 = NTD4.377.

• 98 -

The First Insurance Co., Ltd. Receivable accounts December 31, 2020

Account set 2

Unit: NTD thousands

Customer name Notes receivable Arising from business activities Customer A Others Arising from non-business activities Less: loss provisions Premiums receivable Customer B Customer C Others Less: loss provisions	Summary		Amount
			$ 20,392 126,763 147,155 12 147,167 3,682) $ 143,485 $ 23,647 12,781 176,342 212,770 39,979) $ 172,791
		(
		(

Note: The above shows accounts that represented more than 5% of the outstanding balance.

• 99 -

The First Insurance Co., Ltd. Other receivable accounts December 31, 2020 Account set 3 Unit: Item Summary Other receivables Security dividends receivable Interest receivable Share settlements receivable Commission receivable from canceled coverage Rent receivable Less: loss provisions (	The First Insurance Co., Ltd. Other receivable accounts December 31, 2020 Account set 3 Unit: Item Summary Other receivables Security dividends receivable Interest receivable Share settlements receivable Commission receivable from canceled coverage Rent receivable Less: loss provisions (	NTD thousands Amount
		$ 20,754 10,069 30,708 3,661 2,063 67,255 2,559) $ 64,696
	(

Note: The above shows accounts that represented more than 5% of the outstanding balance.

• 100 -

The First Insurance Co., Ltd. Financial asset at fair value through profit and loss accounts December 31, 2020

Account set 4

Unit: NTD thousands, unless specified otherwise

Name of financial instrument TWSE/TPEx listed shares Hung Sheng Fund beneficiary certificates Union Advantage Global Fixed Income Portfolio Fund Union Emerging Asia Bond Fund A NTD Union Multi-Asset High Income Fund A NTD Union Money Market Fund FSITC US Top 100 Bond Fund— Accumulated FSITC Money Market Fund Yuanta De- Bao Money Market Fund Hua Nan Kirin Money Market Fund Fuh Hwa Money Market Fund Subtotal Securitized beneficiary certificates O-Bank R1 Plus: valuation adjustment	Summary Interest payment date Principal repayment date - - - - - - - - - - - - - - - - - - - -	Shares (thousand units) / lots 15,555 591 500 3,034 22,559 4,868 1,669 23,599 24,510 11,421 19,888	Face value ($) $10 10 10 10 10 10 10 10 10 10 10	Total value 155,550 5,910 5,000 30,340 225,590 48,680 16,690 235,990 245,100 114,210 198,880	Interest rate (%) - - - - - - - - - - -	Acquisition cost $ 611,965 10,000 5,825 30,000 299,172 50,000 299,115 285,164 294,721 165,802 1,439,799 187,590 2,239,354 ( 299,077) $ 1,940,277	Fair	value
	Interest payment date - - - - - - - - - - -						Unit price ($) 19.60 16.55 11.68 9.61 13.31 10.22 179.85 12.11 12.07 14.54 9.70	Total value
								$ 304,872 9,782 5,838 29,154 300,256 49,735 300,110 285,775 295,726 166,115 1,442,491 192,914 $ 1,940,277
						(

• 101 -

Account set 5 Name of bond	The First Insurance Co., Ltd. Financial asset at cost after amortization accounts December 31, 2020 Summary Lots Face value Total value Interest payment date Principal repayment date 2020/11 No maturity date 1 $ 30,000 $ 30,000 2020/7 Maturing 2025/7/17 1 100,000 100,000 2020/6 Maturing 2030/6/24 1 100,000 100,000 2020/8 Maturing 2030/8/14 1 100,000 100,000 330,000 2020/3 Maturing 2021.3.31 1 50,000 50,000 2020/12 Maturing 2021/12/3 1 20,000 20,000 2020/9 Maturing 2022/9/30 1 100,000 100,000 2020/11 Maturing 2022/11/10 1 120,000 120,000 2020/3 Maturing 2024/22/3 1 110,000 110,000 2020/11 Maturing 2024/11/15 2 150,000 300,000 2020/1 Maturing 2029/1/25 1 100,000 100,000 2020/9 Maturing 2023/9/27 1 150,000 150,000 2020/9 Maturing 2023/9/27 1 100,000 100,000 2020/9 Maturing 2023/9/27 1 50,000 50,000 2020/6 Maturing 2023/6/29 1 140,000 140,000 2020/6 Maturing 2026/6/26 1 150,000 150,000 2020/9 Maturing 2027/9/30 1 50,000 50,000 1,440,000 $ 1,770,000	Interest rate (%) 1.00 1.00 1.05 3.70 2.35 2.35 2.60 2.50 2.50 2.50 1.55 1.55 1.55 1.55 1.70 2.25 1.25	Unit: NTD thousands unless specified otherwise Loss provisions Unamortized premium (discount) Book value Collateral $ 151 $ - $ 29,849 None 151 - 99,849 None 151 - 99,849 None 45 - 99,955 None 498 - 329,502 76 - 49,924 None 30 - 19,970 None 562 - 99,438 None 181 - 119,819 None 2,141 - 107,859 None 5,839 - 294,161 None 151 - 99,849 None 852 1,510 150,658 None 568 1,007 100,439 None 284 503 50,219 None 795 1,450 140,655 None 2,920 - 147,080 None 973 - 49,027 None 15,372 4,470 1,429,098 $ 15,870 $ 4,470 $ 1,758,600	Unit: NTD thousands unless specified otherwise Loss provisions Unamortized premium (discount) Book value Collateral $ 151 $ - $ 29,849 None 151 - 99,849 None 151 - 99,849 None 45 - 99,955 None 498 - 329,502 76 - 49,924 None 30 - 19,970 None 562 - 99,438 None 181 - 119,819 None 2,141 - 107,859 None 5,839 - 294,161 None 151 - 99,849 None 852 1,510 150,658 None 568 1,007 100,439 None 284 503 50,219 None 795 1,450 140,655 None 2,920 - 147,080 None 973 - 49,027 None 15,372 4,470 1,429,098 $ 15,870 $ 4,470 $ 1,758,600
	Interest payment date 2020/11 2020/7 2020/6 2020/8 2020/3 2020/12 2020/9 2020/11 2020/3 2020/11 2020/1 2020/9 2020/9 2020/9 2020/6 2020/6 2020/9
Domestic corporate bonds Cumulative subordinated corporate bonds of Mercuries Life SERCOMM unsecured common corporate bond CTBC Holding unsecured subordinated common corporate bond Type B Taiwan Cogeneration unsecured common corporate bond Bank debenture Sunny Bank (2014) Subordinated Bond Issue 1 Bank of Kaohsiung (2014) Subordinated Bond Issue 3 Hwatai Bank (2015) Subordinated Bond Issue 1 Sunny Bank (2015) Subordinated Bond Issue 3 Bank of Panhsin (2017) Subordinated Bond Issue 1 Bank of Panhsin (2017) Subordinated Bond Issue 5 Bank Sinopac (2019) Subordinated Bond Issue 2 Tranche B Far Eastern International Bank (2016) Subordinated Bond Issue 1 Far Eastern International Bank (2016) Subordinated Bond Issue 1 Far Eastern International Bank (2016) Subordinated Bond Issue 1 O-Bank (2016) Subordinated Bond Issue 1 Tranche A Bank of Panhsin (2019) Subordinated Bond Issue 1 Hwatai Bank (2020) Subordinated Bond Issue 1				None None None None None None None None None None None None None None None None None

• 102 -

The First Insurance Co., Ltd. Financial asset at fair value through other comprehensive income accounts December 31, 2020

Account set 6 Name of financial instrument TWSE/TPEx listed shares Tahhsin Far Eastern New Century Huaku Union Bank of Taiwan Far Eastern International Bank Cathay Finanial Holdings Yuanta Financial Holdings SinoPac Holdings MiTAC Taiwan Cooperative Holdings Domestic unlisted shares Sunny Commercial Bank Subtotal of shares Government bonds 2001 A / Issue 2 2011 A / Issue 9 2012 A / Issue 5 2011 A / Issue 7 2012 A / Issue 9 2013 A / Issue 6 2014 A / Issue 6 2014 A / Issue 13 2012 A / Issue 8 2013 A / Issue 9 2013 A / Issue 9 2012 A / Issue 4 Less: amount placed as bond	Summary Interest payment date Principal repayment date - - - - - - - - - - - - - - - - - - - - - - 2020/2 Maturing 2021/2/13 2020/9 Maturing 2021/9/30 2020/3 Maturing 2022/3/7 2020/8 Maturing 2031/8/2 2020/9 Maturing 2022/9/24 2020/3 Maturing 2023/3/6 2020/3 Maturing 2024/3/3 2020/9 Maturing 2024/9/26 2020/8 Maturing 2042/8/24 2020/8 Maturing 2043/8/2 2020/8 Maturing 2043/8/2 2020/2 Maturing 2042/2/13	Shares (thousand units) / lots 63 16,914 1,483 10,886 22,076 4,054 2,588 22,989 445 4,300 98,953 - - - - - - - - - - - -	Face value($) $10 10 10 10 10 10 10 10 10 10 10 9,000 50,000 50,000 50,000 50,000 50,000 100,000 100,000 150,000 48,000 150,000 150,000	Total value $ 630 169,140 14,830 108,860 220,760 40,540 25,880 229,890 4,450 43,000 989,530 9,000 50,000 50,000 50,000 50,000 50,000 100,000 100,000 150,000 48,000 102,000 150,000	Lossprovisions $ - - - - - - - - - - - - - 2 13 13 13 13 13 26 26 42 33 15 46 255 - $ 255	Valuation allowance adjustment $ 135 ( 10,214 ) 10,197 3,258 ( 19,713 ) 7,433 2,839 6,594 213 2,058 2,800 198,792 201,592 29 377 580 6,691 1,030 1,300 4,123 5,052 25,995 9,786 20,797 14,720 90,480 ( 68,203) $ 223,869	Acquisition cost $ 4,413 499,875 120,011 113,761 259,238 163,849 50,345 256,630 12,914 85,447 1,566,483 689,806 2,256,289 9,017 50,023 50,064 51,311 49,819 49,760 100,021 100,257 161,667 59,832 127,141 175,850 984,762 ( 515,969) $2,725,082	Unit: NTD Fair v	th alu	ousands unless specified otherwise e Total value Collateral $ 4,549 None 489,660 None 130,207 None 117,019 None 239,526 None 171,282 None 53,183 None 263,224 None 13,128 None 87,505 None 1,569,283 888,598 None 2,457,881 9,046 None 50,400 None 50,644 None 58,002 Note 50,849 None 51,060 None 104,144 None 105,309 None 187,662 Note 69,618 None 147,938 Note 190,570 Note 1,075,242 584,172) $2,948,951	ousands unless specified otherwise e Total value Collateral $ 4,549 None 489,660 None 130,207 None 117,019 None 239,526 None 171,282 None 53,183 None 263,224 None 13,128 None 87,505 None 1,569,283 888,598 None 2,457,881 9,046 None 50,400 None 50,644 None 58,002 Note 50,849 None 51,060 None 104,144 None 105,309 None 187,662 Note 69,618 None 147,938 Note 190,570 Note 1,075,242 584,172) $2,948,951
	Interest payment date - - - - - - - - - - - 2020/2 2020/9 2020/3 2020/8 2020/9 2020/3 2020/3 2020/9 2020/8 2020/8 2020/8 2020/2							Unitprice($) 72.20 28.95 87.80 10.75 10.85 42.25 20.55 11.45 29.50 20.35 8.98 100.5125 100.7992 101.2880 116.0049 101.6984 102.1196 104.1436 105.3093 125.1080 134.0890 145.0373 127.0466
											None None None None None None None None None None None None None None Note None None None None Note None Note Note
						(	(		(

Note: Pledged as operating bond.

• 103 -

The First Insurance Co., Ltd. Claim recoverable from reinsurers accounts December 31, 2020

Unit: NTD thousands

Account set 7 Item Personal accident insurance General automobile hull insurance for private vehicle General automobile liabilities insurance for private vehicle Mandatory automobile liabilities insurance for private vehicle Others Less: loss provisions	Summary	Unit:	NTD thousands Amount
			$ 36,312 29,752 26,067 14,150 25,459 131,740 706) $ 131,034
		(

Note: The above shows insurance categories that represented more than 5% of outstanding balance.

• 104 -

The First Insurance Co., Ltd. Reinsurance accounts receivable and payable December 31, 2020

Account set 8

Unit: NTD thousands

Summary Reinsurance accounts receivable MAT CMP CRC Others Less: loss provisions		Debits $ 86,329 32,725 10,275 47,504 176,833 1,493) $ 175,340	Summary Reinsurance accounts payable CRC CMP TOH TRI COR Others	Credits
				$ 106,346 65,333 20,084 19,671 19,053 113,014 $ 343,501
	(

Note: The above shows accounts that represented more than 5% of the outstanding balance.

• 105 -

The First Insurance Co., Ltd. Right-of-use asset variation accounts December 31 to December 31, 2020

Account set 9 Item Buildings Transportation equipment	Opening balance $ 4,486 1,506 $ 5,992	Increase - current period $ - 3,168 $ 3,168	Decrease - current period $ 1,790 - $ 1,790	Unit: NTD thousands Closing balance Remarks $ 2,696 4,674 $ 7,370	Unit: NTD thousands Closing balance Remarks $ 2,696 4,674 $ 7,370

• 106 -

The First Insurance Co., Ltd. Right-of-use asset accumulated depreciation variation accounts January 1 to December 31, 2020

Account set 10 Item Buildings Transportation equipment	Opening balance $ 1,034 638 $ 1,672	Increases during the current period $ 1,769 1,025 $ 2,794	Decreases during the current period $ 1,496 - $ 1,496	Unit: NTD thousands Closing balance Remarks $ 1,307 1,663 $ 2,970	Unit: NTD thousands Closing balance Remarks $ 1,307 1,663 $ 2,970

• 107 -

The First Insurance Co., Ltd. Other asset details December 31, 2020

Account set 11

Unit: NTD thousands

Title Guarantee deposits paid Deferred Income Tax Assets Other assets – others	Summary Insurance operating bond (placed in government bond) Others Deferred income tax effect on deductible temporary differences Payment in suspense Prepaid insurance premiums Prepaid rent Supplies inventory count (publications) Prepaid equipment purchase Others	Amount
		$ 584,172 47,646 $ 631,818 $ 51,618 $ 14,002 1,560 525 5,460 5,033 849 $ 27,429

• 108 -

	The First Insurance Co.,	Ltd.
	Statement of Notes Payable
	December 31, 2020
Account set 12				Unit: NTD thousands
Customer name	Summary	Amount		Remarks
Customer A		$	1,000
Customer B			648
Customer C			404
Customer D			384
Others			3,386
		$	5,822

Note: The above shows accounts that represented more than 5% of the outstanding balance.

• 109 -

The First Insurance Co., Ltd. Statement of Insurance Claims Payable December 31, 2020

Unit: NTD thousands

	December 31, 2020
Account set 13 Item Automobile Insurance Personal accident insurance	Summary	Unit: NTD thousands Amount
		$ 2,045 941 $ 2,986

• Note: The above shows insurance categories that represented more than 5% of the outstanding balance.

• 110 -

Account set 14 Item Buildings Transportation equipment	Summary Business locations Company car	The First Insurance Co., Ltd. Lease liability accounts December 31, 2020 Lease tenor Discount rate 2019/06/11~2022/10/19 2.65% 2019/01/01~2023/10/23 2.55%~2.65%	Unit: NTD thousands Closing balance Remarks $ 1,415 3,030 $ 4,445

• 111 -

Account set 15 Item Total value: One-year residential fire insurance Long-term residential fire insurance One-year commercial fire insurance Long-term commercial fire insurance Inland marine insurance Freight insurance Marine hull insurance Shipping vessel insurance Aviation Insurance General automobile hull insurance for private vehicle General automobile hull insurance for commercial vehicle General liabilities insurance for private vehicle General liabilities insurance for commercial vehicle Mandatory automobile liabilities insurance for private vehicle Mandatory automobile liabilities insurance for commercial vehicle Mandatory liabilities insurance for motorcycle General liabilities insurance Professional liability insurance Engineering insurance Nuclear risks insurance Performance bond insurance Credit insurance Other property insurance Personal accident insurance Commercial earthquake insurance Personal omnibus insurance Commercial omnibus insurance Typhoon and flood insurance Government-sponsored residential earthquake insurance One-year health insurance Long-term health insurance Share of foreign coverage	The First Insurance Co., Ltd. Unearned premium reserve variation accounts January 1 to December 31, 2020 Opening balance Net change in currentperiod $ 66,292 $ 2,582 110,264 ( 27,845) 193,492 ( 5,583) 1,263 ( 655) 2,364 ( 689) 30,260 ( 4,724) 20,348 2,292 21,855 ( 1,046) 4,610 14,831 914,858 129,265 15,359 3,177 836,070 98,547 77,812 ( 178) 255,166 3,538 36,276 ( 438) 164,405 ( 3,990) 132,545 ( 6,287) 15,843 ( 1,396) 87,816 4,030 4,855 ( 647) 5,478 ( 347) - - 21,480 5,211 397,695 ( 98,547) 82,105 ( 3,467) 20,462 ( 6,169) - 760 58,389 ( 5,395) 134,522 5,455 9,928 ( 7,398) - - 4,847 ( 1,841) $ 3,726,659 $ 93,046	Other changes $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ -	Unit: NTD thousands Closing balance Remarks $ 68,874 82,419 187,909 608 1,675 25,536 22,640 20,809 19,441 1,044,123 18,536 934,617 77,634 258,704 35,838 160,415 126,258 14,447 91,846 4,208 5,131 - 26,691 299,148 78,638 14,293 760 52,994 139,977 2,530 - 3,006 $ 3,819,705	Unit: NTD thousands Closing balance Remarks $ 68,874 82,419 187,909 608 1,675 25,536 22,640 20,809 19,441 1,044,123 18,536 934,617 77,634 258,704 35,838 160,415 126,258 14,447 91,846 4,208 5,131 - 26,691 299,148 78,638 14,293 760 52,994 139,977 2,530 - 3,006 $ 3,819,705

Unit: NTD thousands

(Continued next page)

• 112 -

(Continued from previous page)

Item Ceded: One-year residential fire insurance Long-term residential fire insurance One-year commercial fire insurance Long-term commercial fire insurance Inland marine insurance Freight insurance Marine hull insurance Shipping vessel insurance Aviation Insurance General automobile hull insurance for private vehicle General automobile hull insurance for commercial vehicle General liabilities insurance for private vehicle General liabilities insurance for commercial vehicle Mandatory automobile liabilities insurance for private vehicle Mandatory automobile liabilities insurance for commercial vehicle Mandatory liabilities insurance for motorcycle General liabilities insurance Professional liability insurance Engineering insurance Nuclear risks insurance Performance bond insurance Credit insurance Other property insurance Personal accident insurance Commercial earthquake insurance Personal omnibus insurance Commercial omnibus insurance Typhoon and flood insurance Government-sponsored residential earthquake insurance One-year health insurance Long-term health insurance Share of foreign coverage	Opening balance $ - 95,124 63,102 1,060 447 1,873 18,321 17,234 4,211 91,162 1,219 73,010 5,817 107,376 13,498 64,564 43,225 4,945 62,656 - 1,944 - 6,061 223,139 25,273 6,394 - 18,338 117,973 8,268 - 1,218 $ 1,077,452	Net change in currentperiod $ - ( 24,230) ( 10,966) ( 569) ( 447) ( 1,322) 1,455 ( 1,161) 13,375 13,158 244 10,573 7 2,539 ( 76) ( 2,118) ( 5,433) ( 804) 1,359 - ( 800) - 1,712 ( 124,603) ( 6,152) ( 6,288) 330 ( 3,515) 5,010 ( 7,251) - ( 108) ($ 146,081)	Other changes $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ -	Closing balance $ - 70,894 52,136 491 - 551 19,776 16,073 17,586 104,320 1,463 83,583 5,824 109,915 13,422 62,446 37,792 4,141 64,015 - 1,144 - 7,773 98,536 19,121 106 330 14,823 122,983 1,017 - 1,110 $ 931,371	Remarks

• 113 -

The First Insurance Co., Ltd. Claim reserve variation accounts January 1 to December 31, 2020

Account set 16

Unit: NTD thousands

Item Total value: Reported but not paid One-year residential fire insurance Long-term residential fire insurance One-year commercial fire insurance Long-term commercial fire insurance Inland marine insurance Freight insurance Marine hull insurance Shipping vessel insurance Aviation Insurance General automobile hull insurance for private vehicle General automobile hull insurance for commercial vehicle General liabilities insurance for private vehicle General liabilities insurance for commercial vehicle Mandatory automobile liabilities insurance for private vehicle Mandatory automobile liabilities insurance for commercial vehicle Mandatory liabilities insurance for motorcycle General liabilities insurance Professional liability insurance Engineering insurance Nuclear risks insurance Performance bond insurance Credit insurance Other property insurance Personal accident insurance Commercial earthquake insurance Personal omnibus insurance Commercial omnibus insurance Typhoon and flood insurance Government-sponsored residential earthquake insurance One-year health insurance	Opening balance $ 14,891 2,280 301,807 - 9 32,345 7,771 - 9,489 213,575 4,497 351,174 40,304 78,779 7,261 38,709 169,175 12,045 79,700 155 25,215 - 10,774 13,577 23,994 503 250 4,623 97 3,013	Net change in currentperiod ($ 3,038) 345 174,560 - ( 1) ( 3,574) ( 576) - ( 2,956) 41,182 3,665 26,005 10,130 ( 11,907) ( 2,007) 2,423 29,201 ( 3,295) ( 37,673) ( 65) ( 3,873) - 1,184 18,235 ( 1,959) ( 264) - ( 796) ( 97) ( 2,762)	Other changes $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	Closing balance $ 11,853 2,625 476,367 - 8 28,771 7,195 - 6,533 254,757 8,162 377,179 50,434 66,872 5,254 41,132 198,376 8,750 42,027 90 21,342 - 11,958 31,812 22,035 239 250 3,827 - 251	Remarks

(Continued next page)

• 114 -

(Continued from previous page)

Item Long-term health insurance Share of foreign coverage Not reported One-year residential fire insurance Long-term residential fire insurance One-year commercial fire insurance Long-term commercial fire insurance Inland marine insurance Freight insurance Marine hull insurance Shipping vessel insurance Aviation Insurance General automobile hull insurance for private vehicle General automobile hull insurance for commercial vehicle General liabilities insurance for private vehicle General liabilities insurance for commercial vehicle Mandatory automobile liabilities insurance for private vehicle Mandatory automobile liabilities insurance for commercial vehicle Mandatory liabilities insurance for motorcycle General liabilities insurance Professional liability insurance Engineering insurance Nuclear risks insurance Performance bond insurance Credit insurance Other property insurance Personal accident insurance Commercial earthquake insurance Personal omnibus insurance Commercial omnibus insurance Typhoon and flood insurance Government-sponsored residential earthquake insurance One-year health insurance Long-term health insurance Share of foreign coverage	Opening balance $ - - 1,446,012 1,034 169 1,459 - 992 4,752 2,998 12,088 559 1,897 40 253,962 26,709 402,386 44,756 111,468 35,378 472 14,585 75 2,119 - 13,205 95,063 368 1,989 8 372 - 16,257 - 61 1,045,221 $ 2,491,233	Net change in currentperiod $ - 41,850 273,937 ( 921) ( 144) 1,842 - ( 760) ( 708) ( 2,213) ( 10,579) 130 534 38 1,735 ( 1,583) ( 47,053) ( 7,704) 890 16,371 ( 98) ( 1,189) ( 6) ( 416) - 15,854 1,839 ( 158) ( 1,208) ( 6) ( 318) - ( 15,458) - 9 ( 51,280) $ 222,657	Other changes $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ -	Closing balance $ - 41,850 1,719,949 113 25 3,301 - 232 4,044 785 1,509 689 2,431 78 255,697 25,126 355,333 37,052 112,358 51,749 374 13,396 69 1,703 - 29,059 96,902 210 781 2 54 - 799 - 70 993,941 $ 2,713,890	Remarks
		(

(Continued next page)

• 115 -

(Continued from previous page)

Item Ceded: Reported but not paid One-year residential fire insurance Long-term residential fire insurance One-year commercial fire insurance Long-term commercial fire insurance Inland marine insurance Freight insurance Marine hull insurance Shipping vessel insurance Aviation Insurance General automobile hull insurance for private vehicle General automobile hull insurance for commercial vehicle General liabilities insurance for private vehicle General liabilities insurance for commercial vehicle Mandatory automobile liabilities insurance for private vehicle Mandatory automobile liabilities insurance for commercial vehicle Mandatory liabilities insurance for motorcycle General liabilities insurance Professional liability insurance Engineering insurance Nuclear risks insurance Performance bond insurance Credit insurance Other property insurance Personal accident insurance Commercial earthquake insurance Personal omnibus insurance Commercial omnibus insurance Typhoon and flood insurance Government-sponsored residential earthquake insurance One-year health insurance Long-term health insurance Share of foreign coverage Not reported One-year residential fire insurance Long-term residential fire insurance One-year commercial fire insurance	Opening balance $ - 1,657 167,834 - - 164 7,445 - 4,134 23,593 360 31,712 3,161 41,340 3,679 6,010 71,308 163 53,069 - 6,466 - 5,552 5,106 2,615 60 95 399 - 2,794 - - 438,716 - 23 -	Net change in currentperiod $ - 498 148,735 - - 4,839 ( 602) - 730 4,855 293 2,814 797 ( 7,107) ( 1,615) 702 15,941 1,645 ( 28,504) - - - ( 893) 11,797 ( 408) ( 14) - 8 - ( 2,585) - - 151,926 - ( 23) -	Other changes $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	Closing balance $ - 2,155 316,569 - - 5,003 6,843 - 4,864 28,448 653 34,526 3,958 34,233 2,064 6,712 87,249 1,808 24,565 - 6,466 - 4,659 16,903 2,207 46 95 407 - 209 - - 590,642 - - -	Remarks

(Continued next page)

• 116 -

(Continued from previous page)

Item Long-term commercial fire insurance Inland marine insurance Freight insurance Marine hull insurance Shipping vessel insurance Aviation Insurance General automobile hull insurance for private vehicle General automobile hull insurance for commercial vehicle General liabilities insurance for private vehicle General liabilities insurance for commercial vehicle Mandatory automobile liabilities insurance for private vehicle Mandatory automobile liabilities insurance for commercial vehicle Mandatory liabilities insurance for motorcycle General liabilities insurance Professional liability insurance Engineering insurance Nuclear risks insurance Performance bond insurance Credit insurance Other property insurance Personal accident insurance Commercial earthquake insurance Personal omnibus insurance Commercial omnibus insurance Typhoon and flood insurance Government-sponsored residential earthquake insurance One-year health insurance Long-term health insurance Share of foreign coverage	Opening balance $ - 93 419 2,440 10,073 429 - - 22,604 1,995 184,456 16,543 44,809 12,667 111 5,717 - 441 - 5,539 40,425 - 844 3 - - 14,787 - - 364,418 $ 803,134	Net change in currentperiod $ - ( 81) ( 218) ( 1,842) ( 8,813) 128 - - ( 94) ( 98) ( 28,192) ( 4,604) 47 8,635 ( 46) ( 326) - 208 - 6,988 1,383 - ( 507) ( 3) - - ( 14,448) - - ( 41,906) $ 110,020	Other changes $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ -	Closing balance $ - 12 201 598 1,260 557 - - 22,510 1,897 156,264 11,939 44,856 21,302 65 5,391 - 649 - 12,527 41,808 - 337 - - - 339 - - 322,512 $ 913,154	Remarks
		(

• 117 -

The First Insurance Co., Ltd. Special claim reserve variation accounts January 1 to December 31, 2020

Unit: NTD thousands

Account set 17 Item Mandatory automobile liabilities insurance for private vehicle Mandatory commercial automobile liabilities insurance Mandatory motorcycle liabilities insurance Nuclear risks insurance Commercial earthquake insurance Typhoon and flood insurance Mandatory earthquake insurance	Opening and closingbalance $ 35,881 ( 102,354 ) 538,008 74,687 678,171 247,640 197,532 $ 1,669,565	Current period variations $ 49,278 7,521 ( 22,996) - ( 3,946) ( 2,763) - $ 27,094	Other changes $ - - - - - - - $ -	Closing balance $ 85,159 ( 94,833 ) 515,012 74,687 674,225 244,877 197,532 $ 1,696,659	Unit: NTD thousands Remarks

• 118 -

The First Insurance Co., Ltd.

Special earnings reserve (for major incidents and change of risk) provision worksheet January 1 to December 31, 2020

Account set 18

Unit: NTD thousands

Insurance category One-year residential fire insurance Long-term residential fire insurance One-year commercial fire insurance Long-term commercial fire insurance Inland marine insurance Freight insurance Marine hull insurance Shipping vessel insurance Aviation Insurance General automobile hull insurance for private vehicle General automobile hull insurance for commercial vehicle General liabilities insurance for private vehicle General liabilities insurance for commercial vehicle Mandatory automobile liabilities insurance for private vehicle Mandatory automobile liabilities insurance for commercial vehicle Mandatory liabilities insurance for motorcycle General liabilities insurance Professional liability insurance Engineering insurance Nuclear risks insurance Performance bond insurance Credit insurance Other property insurance Personal accident insurance Commercial earthquake insurance Personal omnibus insurance Commercial omnibus insurance Typhoon and flood insurance Government-regulated earthquake insurance One-year health insurance Long-term health insurance Share of foreign coverage	Earned retained premium $ 114,951 3,569 244,847 93 12,374 183,332 6,310 10,176 2,894 1,676,105 29,480 1,501,351 148,147 - - - 165,392 11,006 40,544 - 7,341 - 35,454 307,317 93,220 25,163 126 62,233 - 5,491 - 6,524 $ 4,693,440	Expected claims Expected loss rate Amount of expected claims 55.60% $ 63,913 55.50% 1,981 58.17% 142,427 54.50% 51 60.50% 7,486 60.50% 110,916 70.30% 4,436 70.30% 7,154 75.30% 2,179 65.57% 1,099,022 67.50% 19,899 65.69% 986,237 67.37% 99,807 - - - - - - 68.82% 113,823 67.85% 7,468 60.98% 24,724 - - 72.46% 5,319 - - 72.62% 25,747 - - 60.00% 55,932 68.30% 17,186 70.00% 88 60.00% 37,340 - - - - - - - 3,930 $ 2,837,065	Retained (actual)claims $ 10,165 ( 214 ) 102,334 - 5,539 100,163 ( 538 ) ( 446 ) ( 431 ) 968,119 15,874 1,023,220 98,207 - - - 82,293 ( 541 ) 18,584 ( 64 ) ( 2,670 ) ( 3,718 ) 45,576 123,807 595 29 ( 3 ) ( 897 ) - 3,489 - 45,625 $ 2,634,097		Currentperiodprovision for special	Currentperiodprovision for special	earnings reserve
				Provision rate% 3% 1% 5% 5% 3% 5% 5% 5% 7% 1% 1% 1% 1% - - - 1% 1% 5% - 3% 3% 3% 3% 7% 1% 3% 7% - 3% - -	Provision at fixed rate $ 3,448 36 12,242 5 371 9,167 315 509 203 16,762 295 15,014 1,481 - - - 1,654 110 2,027 - 220 - 1,064 6,934 6,525 252 4 4,356 - 216 - 370 $ 83,580	Provision for below-expectati on claims $ 8,062 329 6,014 8 292 1,613 746 1,140 392 19,635 604 - 240 - - - 4,730 1,201 921 3,455 1,201 558 - 21,865 41,503 2,574 14 28,678 32,337 299 - 778 $ 179,189	Income tax effect $ 2,302 73 3,651 2 133 2,156 212 330 119 7,279 180 3,003 344 - - - 1,277 262 590 692 284 112 213 5,760 9,606 565 3 6,608 6,467 103 - 230 $ 52,556	Totalprovisions
		Expected loss rate 55.60% 55.50% 58.17% 54.50% 60.50% 60.50% 70.30% 70.30% 75.30% 65.57% 67.50% 65.69% 67.37% - - - 68.82% 67.85% 60.98% - 72.46% - 72.62% - 60.00% 68.30% 70.00% 60.00% - - - -
								$ 9,208 292 14,605 11 530 8,624 849 1,319 476 29,118 719 12,011 1,377 - - - 5,107 1,049 2,358 2,763 1,137 446 851 23,039 38,422 2,261 15 26,426 25,870 412 - 918 $ 210,213

• 119 -

The First Insurance Co., Ltd. Special earnings reserve (for major incidents and change of risk) reversal worksheet January 1 to December 31, 2020

Account set 19

Unit: NTD thousands

Title One-year residential fire insurance Long-term residential fire insurance One-year commercial fire insurance Long-term commercial fire insurance Inland marine insurance Freight insurance Marine hull insurance Shipping vessel insurance Aviation Insurance General automobile hull insurance for private vehicle General automobile hull insurance for commercial vehicle General liabilities insurance for private vehicle General liabilities insurance for commercial vehicle Mandatory automobile liabilities insurance for private vehicle Mandatory automobile liabilities insurance for commercial vehicle Mandatory liabilities insurance for motorcycle General liabilities insurance Professional liability insurance Engineering insurance Nuclear risks insurance Performance bond insurance Credit insurance Other property insurance Personal accident insurance Commercial earthquake insurance Personal omnibus insurance Commercial omnibus insurance Typhoon and flood insurance Government-regulated earthquake insurance One-year health insurance Long-term health insurance Share of foreign coverage	Cumulative special earnings reserve from previous period $ 65,253 3,816 103,820 511 5,527 110,063 2,581 4,855 1,579 309,608 2,024 72,362 18,480 - - - 48,247 2,287 19,776 30,905 6,157 569 6,151 141,100 311,900 13,441 251 149,613 240,172 8,433 - 2,220 $ 1,681,701	Cumulative special earnings reserve from previous period plus currentprovisions $ 74,461 4,108 118,425 522 6,057 118,687 3,430 6,174 2,055 338,726 2,743 84,373 19,857 - - - 53,354 3,336 22,134 33,668 7,294 1,015 7,002 164,139 350,322 15,702 266 176,039 266,042 8,845 - 3,138 $ 1,891,914		Special	reservereversedincurre	ntyear	Total reversals $ 6,545 644 - 22 - - - - - - - - - - - - - - - - 1,107 446 1,546 18,261 - 1,814 - - - - - 1,600 $ 31,985	Cumulative special earnings reserve in currentperiod
			Reversal for above-expectation claims $ - - - - - - - - - - - - - - - - - - - - - - 1,932 - - - - - - - - 1,989 $ 3,921	Reversal for excess above earned retained premium $ 7,886 776 - 26 - - - - - - - - - - - - - - - - 1,333 558 - 22,001 - 2,185 - - - - - - $ 34,765	Offset between insurance categories $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ -	Incometaxeffect $ 1,341 132 - 4 - - - - - - - - - - - - - - - - 226 112 386 3,740 - 371 - - - - - 389 $ 6,701
								$ 67,916 3,464 118,425 500 6,057 118,687 3,430 6,174 2,055 338,726 2,743 84,373 19,857 - - - 53,354 3,336 22,134 33,668 6,187 569 5,456 145,878 350,322 13,888 266 176,039 266,042 8,845 - 1,538 $ 1,859,929

• 120 -

The First Insurance Co., Ltd. Other liability accounts December 31, 2020

Unit: NTD thousands

	The First Insurance Co., Ltd. Other liability accounts December 31, 2020
Account set 20 Item Provisions for employee benefits Deferred income tax liabilities Guarantee deposits received Other liabilities – others	Summary Investment property - provision for land increment value tax Property and equipment - provision for land increment value tax Rental deposit Amount collected on behalf	Unit: NTD thousands Amount
		$ 142,972 $ 53,145 39,789 $ 92,934 $ 14,530 $ 93,428

• 121 -

The First Insurance Co., Ltd. Retained earned premium accounts January 1 to December 31, 2020

Account set 21 Insurance category One-year residential fire insurance Long-term residential fire insurance One-year commercial fire insurance Long-term commercial fire insurance Inland marine insurance Freight insurance Marine hull insurance Shipping vessel insurance Aviation Insurance General automobile hull insurance for private vehicle General automobile hull insurance for commercial vehicle General liabilities insurance for private vehicle General liabilities insurance for commercial vehicle Mandatory automobile liabilities insurance for private vehicle Mandatory automobile liabilities insurance for commercial vehicle Mandatory liabilities insurance for motorcycle General liabilities insurance Professional liability insurance Engineering insurance Nuclear risks insurance Performance bond insurance Credit insurance Other property insurance Personal accident insurance Commercial earthquake insurance Personal omnibus insurance Commercial omnibus insurance Typhoon and flood insurance Government-sponsored earthquake insurance policy One-year health insurance Share of foreign reinsurance coverage	Premium revenues $ 117,532 ( 287) 395,976 7 12,131 190,803 56,731 43,735 45,599 1,993,445 35,261 1,750,488 160,870 554,531 49,717 187,842 235,338 12,892 85,755 - 8,596 - 56,607 511,619 161,875 25,725 991 111,228 247,544 10,333 - $ 7,062,884	Reinsurance Premium $ - ( 5) 18,982 - - 2,555 - 3,294 - - - - - 151,029 26,938 78,107 8,494 117 30,403 6,263 1,327 - 603 4,364 20,030 50 - 11,542 32,732 - 6,840 $ 403,665	Reinsurance expenses $ - ( 246) 164,728 - - 13,428 49,584 36,738 41,249 201,233 2,848 161,162 12,908 219,828 26,843 84,257 79,294 2,595 72,943 - 2,129 - 18,256 182,611 86,000 493 434 62,416 247,544 4,989 2,049 $ 1,776,313	Retainedpremium $ 117,532 ( 46) 250,230 7 12,131 179,930 7,147 10,291 4,350 1,792,212 32,413 1,589,326 147,962 485,732 49,812 181,692 164,538 10,414 43,215 6,263 7,794 - 38,954 333,372 95,905 25,282 557 60,354 32,732 5,344 4,791 $ 5,690,236	Unit: Method of provision Note 9 Note 1 Note 9 Note 1 Note 5 Note 5 Note 9 Note 9 Note 9 Note 9 Note 9 Note 9 Note 9 Note 3 Note 3 Note 3 Note 9 Note 9 Note 9 Note 4 Note 9 Note 6 Note 9 Notes 5, 7 and 9 Note 9 Note 9 Note 9 Note 9 Note 2 Note 9 Note 8	NTD thousands unless specified otherwise Net change in unearned premium reserve Retained earned premium $ 2,581 $ 114,951 ( 3,615) 3,569 5,383 244,847 ( 86) 93 ( 243) 12,374 ( 3,402) 183,332 837 6,310 115 10,176 1,456 2,894 116,107 1,676,105 2,933 29,480 87,975 1,501,351 ( 185) 148,147 999 484,733 ( 361) 50,173 ( 1,872) 183,564 ( 854) 165,392 ( 592) 11,006 2,671 40,544 ( 647) 6,910 453 7,341 - - 3,500 35,454 26,055 307,317 2,685 93,220 119 25,163 431 126 ( 1,879) 62,233 445 32,287 ( 147) 5,491 ( 1,733) 6,524 $ 239,129 $ 5,451,107	NTD thousands unless specified otherwise Net change in unearned premium reserve Retained earned premium $ 2,581 $ 114,951 ( 3,615) 3,569 5,383 244,847 ( 86) 93 ( 243) 12,374 ( 3,402) 183,332 837 6,310 115 10,176 1,456 2,894 116,107 1,676,105 2,933 29,480 87,975 1,501,351 ( 185) 148,147 999 484,733 ( 361) 50,173 ( 1,872) 183,564 ( 854) 165,392 ( 592) 11,006 2,671 40,544 ( 647) 6,910 453 7,341 - - 3,500 35,454 26,055 307,317 2,685 93,220 119 25,163 431 126 ( 1,879) 62,233 445 32,287 ( 147) 5,491 ( 1,733) 6,524 $ 239,129 $ 5,451,107
							$ 114,951 3,569 244,847 93 12,374 183,332 6,310 10,176 2,894 1,676,105 29,480 1,501,351 148,147 484,733 50,173 183,564 165,392 11,006 40,544 6,910 7,341 - 35,454 307,317 93,220 25,163 126 62,233 32,287 5,491 6,524 $ 5,451,107

• 122 -

• Note 1: Provisions for long-term fire insurance were made according to the latest coefficients amended and approved in Letter Tai-Cai-Bao-Zi No. 852363214.

• Note 2: For the policy-based earthquake insurance, the Company complies with "Enforcement Rules for the Risk Spreading Mechanism of Residential Earthquake Insurance" stipulated in Instruction Jin-Guan-Bao-Chan-Zi No. 10302529341 dated December 25, 2014 and makes monthly provisions according to the unearned premium reserve sheet that Taiwan Residential Earthquake Insurance Fund distributes to each of its reinsurance members.

• Note 3: For mandatory automobile/motorcycle liabilities insurance, provisions are made according to Instruction Jin-Guan-Bao-Chan-Zi No. 10202530301, whereas insurance coverage is provided in accordance with Instruction Jin-Guan-Bao-Chan-Zi No. 10302529351.

• Note 4: For nuclear risks insurance, provisions are made according to "Regulations for the Management of the Various Reserves for Nuclear Risks Insurance by Non-life Insurance Enterprises" stipulated in Instruction Jin-Guan-Bao-Cai-Zi No. 10102517091 dated December 28, 2012.

• Note 5: For omnibus travel coverage in freight insurance and accident insurance, provisions are made based on written premiums of active policies using average duration as the assumption, and by following the methods outlined in Letter No. Tai-Cai-Bao-0920704423 issued by Department of Insurance, Ministry of Finance.

• Note 6: For credit insurance, provisions are made according to the percentages that The Non-Life Insurance Association had stipulated for "consumer credit insurance" in September 2001 and for "financial institution small credit insurance" in August 2005.

• Note 7: For group coverage in accident insurance and health insurance products, provisions are made according to "Reserve Provisioning Methods for Insurance Companies" outlined in Instruction Jin-Guan-Bao-Cai-Zi No. 10102501561, and the basis of the premium mentioned in Letter Jin-Guan-Bao-Cai-Zi No. 10704504821 dated November 22, 2018.

• Note 8: For coverage assumed through reinsurance, premium reserves are provided according to Article 6 of "Reserve Provisioning Methods for Insurance Companies" stipulated in Jin-Guan-Bao-Cai-Zi No. 10102501561. The Company has adopted the 1/24th method, and details of implementation are determined by actuarial personnel based on the nature of each insurance category.

• Note 9: For other insurance, premium reserves are provided according to Article 6 of "Reserve Provisioning Methods for Insurance Companies" stipulated in Jin-Guan-Bao-Cai-Zi No. 10102501561. The Company has adopted the 1/24th method; details of implementation are determined by actuarial personnel based on the nature of each insurance category, which have been acknowledged by the Department of Insurance under Letter Tai-Cai-Bao No. 0920704423.

• 123 -

The First Insurance Co., Ltd. Interest income accounts January 1 to December 31, 2020

Account set 22 Item Interest from bond investments Interest from bank deposits Dividend from securitized real estate beneficiary certificates Interest from mandatory automobile liabilities insurance Others	Unit: NTD thousands Summary Amount $ 45,864 25,996 11,676 3,890 2 $ 87,428	Unit: NTD thousands Summary Amount $ 45,864 25,996 11,676 3,890 2 $ 87,428
		$ 45,864 25,996 11,676 3,890 2 $ 87,428

• 124 -

The First Insurance Co., Ltd. Gain and loss accounts for financial assets/liabilities at fair value through profit and loss January 1 to December 31, 2020

Unit: NTD thousands

Account set 23 Item Equity instruments Valuation gains/losses Trading gains/losses Dividend income Debt instruments Valuation gains/losses	Summary	Unit: NTD thousands Amount
		($ 165,444 ) 33,991 9,722 ( 121,731) ( 565) ( 565) ($ 122,296)
		( ( ( (

• 125 -

The First Insurance Co., Ltd. Realized gain and loss accounts for financial assets/liabilities at fair value through other comprehensive income January 1 to December 31, 2020

Unit: NTD thousands

Account set 24 Item Equity instrument Dividend income	Amount $ 100,807	Unit: NTD thousands Remarks

• 126 -

The First Insurance Co., Ltd. Investment property gain and loss accounts January 1 to December 31, 2020

Account set 25

Unit: NTD thousands

Item Gain on investment property Rental income Expenses and losses of investment property Expenses on investment property Depreciation on investment property	Summary	Amount
		$ 66,544 ( 6,906) ( 6,393) ( 13,299) $ 53,245

• 127 -

The First Insurance Co., Ltd. Expected credit impairment loss and reversal gain on investment accounts January 1 to December 31, 2020

Unit: NTD thousands

Account set 26 Item Government bonds Bank debenture	Amount of impairment losses $ - - $ -	Unit: NTD thousands Amount of reversal gains
		$ 3 951 $ 954

• 128 -

The First Insurance Co., Ltd. Retained claim and benefit payment accounts January 1 to December 31, 2020

Account set 27

Unit: NTD thousands

Insurance category One-year residential fire insurance Long-term residential fire insurance One-year commercial fire insurance Long-term commercial fire insurance Inland marine insurance Freight insurance Marine hull insurance Shipping vessel insurance Aviation Insurance General automobile hull insurance for private vehicle General automobile hull insurance for commercial vehicle General automobile liabilities insurance for private vehicle General liabilities insurance for commercial vehicle Mandatory automobile liabilities insurance for private vehicle Mandatory commercial automobile liabilities insurance Mandatory motorcycle liabilities insurance General liabilities insurance Professional liability insurance Engineering insurance Nuclear risks insurance Performance bond insurance Credit insurance Other property insurance Personal accident insurance Commercial earthquake insurance Personal omnibus insurance Commercial omnibus insurance Typhoon and flood insurance Government-regulated earthquake insurance One-year health insurance Share of foreign reinsurance coverage	Insurance claims (including claim-related expenses) $ 14,090 393 143,447 - 6,207 107,575 2,445 3,939 4,277 1,046,292 13,594 1,098,702 98,325 401,621 45,239 98,068 87,125 6,019 47,272 - 1,543 ( 3,715 ) 52,710 336,796 1,499 3,667 - 100 - 25,779 - $ 3,643,009	Claims paid for reinsurance $ - 12 3,497 - - 5,744 - 745 - - - - - 112,131 21,609 121,647 2,786 - 13,277 6 28 ( 35 ) 46 702 1,123 19 - 138 46 - 3,764 $ 287,285	Claims recovered from reinsurers $ - 342 71,357 - - 4,296 2,678 3,545 1,041 114,499 1,091 99,681 7,842 242,494 26,525 58,734 27,742 1,594 32,244 - ( 266 ) ( 31 ) 17,788 220,250 317 2,728 - 11 - 21,397 - $ 957,899	Retained claims
				$ 14,090 63 75,587 - 6,207 109,023 ( 233 ) 1,139 3,236 931,793 12,503 999,021 90,483 271,258 40,323 160,981 62,169 4,425 28,305 6 1,837 ( 3,719 ) 34,968 117,248 2,305 958 - 227 46 4,382 3,764 $ 2,972,395

• 129 -

The First Insurance Co., Ltd. Commission expense accounts January 1 to December 31, 2020

Account set 28

Unit: NTD thousands

Item Commission expense General automobile hull insurance for private vehicle General automobile liabilities insurance for private vehicle Personal accident insurance Others Reinsurance commission expense Engineering insurance One-year commercial fire insurance Commercial earthquake insurance General liabilities insurance Typhoon and flood insurance Others	Summary	Amount
		$ 345,717 294,761 108,441 214,819 963,738 8,929 2,908 1,975 1,671 1,151 1,745 18,379 $ 982,117

Note: The above shows insurance categories that represented more than 5% of outstanding balance.

• 130 -

The First Insurance Co., Ltd. Operating expense accounts January 1 to December 31, 2020

Account set 29

Unit: NTD thousands

Item Payroll expenses Taxes Advertising Postage Insurance premiums Pension Worker welfare Other expenses	Selling expenses $ 467,776 161,801 175,476 77,370 60,767 29,891 164,214 166,875 $ 1,304,170	Administrativ e expenses $ 86,920 - - - - - 4,992 1,130 $ 93,042	Staff training expenses $ - - - - - - 2,680 - $ 2,680	Total
				$ 554,696 161,801 175,476 77,370 60,767 29,891 171,886 168,005 $ 1,399,892

Note: The above shows accounts that represented more than 5% of the outstanding balance.

• 131 -

The First Insurance Co., Ltd.

Summary of current employee welfare, depreciation and amortization by function For periods from January 1 to December 31, 2020 and 2019

Unit: NTD thousands, except for Note 2 which is in dollars

Account set 30 Employee welfare expenses Salary Labor/health insurance premium Pension expense Remuneration to Director Other employee welfare expenses Depreciation Amortization expenses		2020	Unit: NTD t Total $ 879,481 58,167 29,891 9,068 16,074 $ 992,681 $ 26,108 $ 10,512	housands, except for Note 2 whi 2019	housands, except for Note 2 whi 2019	ch is in dollars
	Presented as operating cost $ 328,860 - - - - $ 328,860 $ 6,393 $ -	Presented as operating expense $ 550,621 58,167 29,891 9,068 16,074 $ 663,821 $ 19,715 $ 10,512		Presented as operating cost $ 326,470 - - - - $ 326,470 $ 6,938 $ -	Presented as operating expense $ 543,461 58,039 30,430 12,306 15,545 $ 659,781 $ 13,990 $ 6,771	Total
						$ 869,931 58,039 30,430 12,306 15,545 $ 986,251 $ 20,928 $ 6,771

Notes:

1. The Company employed a total of 866 employees in the current year and 864 employees in the previous year; the number of directors without concurrent roles as an employee was 12 in the current year and 12 in the previous year.

2. Mandatory disclosure for annual standalone financial statements:

3. (1) Employee welfare expenses averaged NT$1,151,771 per employee in the current year ("Total employee welfare expense for the year – total director remuneration" / "employee count – No. of directors without concurrent role as employee" for the current year).

   • Employee welfare expenses averaged NT$1,143,129 per employee in the previous year ("Total employee welfare expense for the previous year – total director remuneration" / "employee count – No. of directors without concurrent roles as an employee" for the previous year).

4. (2) Payroll expenses averaged NT$1,029,836 per employee in the current year (Total payroll expenses in the current year / "employee count – No. of directors without concurrent role as employee" for the current year). Payroll expenses averaged NT$1,021,046 per employee in the previous year (Total payroll expenses in the –

5. previous year / "employee count No. of directors without concurrent roles as an employee" for the previous year).

6. (3) Change in average payroll expenses was calculated at 0.86% ("Payroll expense per employee in the current year – payroll expense per employee in the previous year" / "payroll expense per employee in the previous year").

7. 132 -

8. (4) Please state the Company's remuneration policy (including that for directors, supervisors, managers and employees)

Remuneration policy:

Remuneration policy for managers and directors

1. Evaluation on performance shall be made, and compensation and remuneration shall be determined with reference to the normal compensation and remuneration levels in the industry. The rationality of the association with their individual performance, the Company's business performance, and future risks shall also be taken into account. Evaluation on performance shall be made, and compensation and remuneration shall be determined with reference to the normal compensation and remuneration levels in the industry. The rationality of the association with their individual performance, the Company's business performance, and future risks shall also be taken into account.

2. The Company shall not encourage acts outside of the Company's risk appetite for additional compensation. The compensation system and performance shall be reviewed regularly to ensure that decisions are made within the Company's risk appetite.

3. The proportion of dividends to be paid based on their short-term performance and change in timing for payment of compensation and remuneration shall be determined after the characteristics of the industry and the nature of the Company's businesses are considered.

Remuneration poicy for employees

The employee remuneration primarily consists of monthly salary (monthly salary including the base pay, supervisory allowance, duty allowance, profession allowance), performance bonus and year-end & festival bonus, etc. Meanwhile, according to Article 31 of the Company's Articles of Incorporation, annual profits concluded by the Company are subject to employee remuneration of at least 1%, which the Board of Directors may decide to distribute in cash or shares. Employees who meet certain criteria are entitled to receive remuneration.

• 133 -

The First Insurance Co., Ltd.

Other disclosures of the financial statements and

Auditors’ review report 2020

• 134 -

The First Insurance Co., Ltd. Other disclosures of the financial statements and auditors’ review report

To stakeholders of The First Insurance Co., Ltd.:

We have audited the 2020 financial statements of The First Insurance Co., Ltd. in accordance with Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards, and issued our unqualified opinion on March 26, 2021. The purpose of this audit was to express opinions on the overall financial statement preparation. Attached are other disclosures relating to the 2020 financial report of The First Insurance Co., Ltd. These disclosures have been prepared separately in accordance with Regulations Governing the Preparation of Financial Reports by Insurance Enterprises, which we have reviewed according to Notes on Review of Other Disclosures of Financial Report.

In our opinion, other disclosures relating to the 2020 financial report of The First Insurance Co., Ltd. have been made in accordance with Regulations Governing the Preparation of Financial Reports by Insurance Enterprises; the financial information presented was consistent with the financial statements, and no material amendment was required.

Deloitte Taiwan CPA Alice Huang CPA Wan-Yi Liao

March 26, 2021

• 135 -

The First Insurance Co., Ltd. Other disclosures of the financial report 2020

One. Business

1. Major business-related events:

2. (1) Any merger, acquisition, divestment, change of (equity) ownership by 10% or above, transfer of business activity, investment in affiliated companies, or restructuring in the last 5 years: None.

3. (2) Any acquisition or disposal of critical assets in the last 5 years:

   1. Acquisition of critical assets: None.

   2. Disposal of critical assets: None.

4. (3) Any major change in operations (including marketing system) or business activities: None.

5. 136 -

2. Background and compensation of directors (including independent directors), supervisors, President and Executive Vice Presidents: (1) Compensation to directors (including independent directors)

																					Unit:	NTD thousands
Title	Name				Remuneratio	n to Directo	r			The sum of D in prop inc	A, B, C, and ortion to net ome		Remun	eration for	performance of	works as	employees.			Sum of A, and G as a net i	B, C, D, E, F, percentage of ncome	Compensation from parent company or business investments other than subsidiaries
												Salaries special all ( (N	, bonuses, owances etc. E) ote 3)	Severance pen	payment and sion (F)	Em	ployee remuneration(G)
		Remune (N	ration (A) ote 1)	Severance pens	payment and ion (B)	Director r (	emuneration C)	Fees fo rende (N	r services red (D) ote 2)							The C	ompany	Companies included in the financial statements
		The Company	All companies included in the consolidated statements	The Company	All companies included in the consolidated statements	The Company	All companies included in the consolidated statements	The Company	All companies included in the consolidated statements	The Company	All companies included in the consolidated statements	The Company	All companies included in the consolidated statements	The Company	All companies included in the consolidated statements	Amount in cash	Amount in stock	Amount in cash	Amount in stock	The Company	All companies included in the consolidated statements
Chairman	Yi Chih Co., Ltd.	6,552	-	-	-	966	-	-	-	4.92%	-	1,995	-	-	-	7	-	-	-	6.23%	-	None
	Representative: C. H. Lee
Director	Chien Yi Industrial Co.,Ltd.
	Representative: Cheng-Tsung Lee
Director	Cheng-Tu Lee
Director	Edward Y. C. Lee
Director	Chien ChengDevelopment Co., Ltd.
	Representative: Tien-Ching Yang
Director	Shao-YingLee
Director	Chimax Development Company
	Representative: Chi-Chen Tu
Director	OSTA TRADING CO.,LTD.
	Representative: Chien-Yi Hsu
Director	Cheng-Chin Lee
Director	David Huang
Independent Director	Jui-Tung Lu	1,260	-	-	-	290	-	-	-	1.01%	-	-	-	-	-	-	-	-	-	1.01%	-	None
Independent Director	Jui-Chou Lin
Independent Director	Hsiu-Mei Lin

1. Please explain the policy, system, standards and structure by which independent director compensation is paid, and association between the amount paid and independent directors' responsibilities, risks and time committed:

Policy:

• The Company shall evaluate independent directors' performance and determine compensation packages in reference to peer level. The compensation shall take into account individual performance, corporate performance and association with future risks. It shall not encourage independent directors to act outside of the Company's risk appetite for additional compensation. The compensation system and performance shall be reviewed regularly to ensure that decisions are made within the Company's risk appetite.

System:

The link between independent directors' compensation and performance is evaluated to ensure the rationality and effectiveness of the performance assessment and compensation system, and thereby maintain competitiveness of the compensation and welfare package offered. Standards and structure:

Independent directors are compensated for the services rendered, and the package includes fixed compensations, travel allowances, remuneration and bonuses.

• Association between the amount paid and the responsibilities assumed, risks undertaken and time committed:

Linkage between performance of the Company's directors and compensation and remuneration: With respect to remuneration to directors of the Company, in accordance with Article 31 of the Articles of Incorporation, if the Company is profitable in a fiscal year, it may, by board resolution, set aside no more than 0.6% (inclusive) of its surplus profit as remuneration to directors (including independent directors), and a reasonable amount of remuneration shall be paid to a director after taking account of the results of the Company's operations and the director's contribution to the results. With respect to payment of remuneration, the Company uses results of the assessment made under the regulations governing performance evaluation of and compensation and remuneration to the Company's directors as references. In addition to the Company's overall operation performance, future operating risks in and development trends of the industry, the Company also makes reference to directors' performance achievement rates and their contribution to the Company when determining the reasonable compensation to be paid to the directors. The relevant performance evaluation and reasonableness of remuneration shall be subject to review by the Remuneration Committee and the Board of Directors. When appropriate, the Company reviews the remuneration systems in accordance with the relevant laws at any time in light of its actual operating conditions so as to strike a balance between the Company's sustainable operation and risk control. 2. Compensation received by director for providing service to any company included in the financial statements (e.g. consultancy service without the title of an employee) in the last year, except those disclosed in the above table: NT$180 thousand.

• 137 -

Payment scale of remuneration to the Directors of the Company	Name of Director	Name of Director	Name of Director	Name of Director
	The sum total of A + B +C+ D		The sum total of A + B +C+ D + E + F +G
	The Company	All companies included in consolidated statements(I)	The Company	All companies included in consolidated statements(J)
Below NT$ 1,000,000	David Huang, Chimax Development Company’s Representatives: Chi-Chen Tu, Cheng-Tu Lee, Shao-Ying Lee, Cheng-Chin Lee, Da Feng Construction Co., Ltd.’s Representative: Chien-Yi Hsu, Chien Cheng Development Co., Ltd.’s Representative: Tien-Ching Yang, Jui-Tung Lu, Edward Y.C. Lee,Jui-Chou Lin,Hsiu-Mei Lin	-	David Huang, Chimax Development Company’s Representatives: Chi-Chen Tu, Cheng-Tu Lee, Shao-Ying Lee, Cheng-Chin Lee, Da Feng Construction Co., Ltd.’s Representative: Chien-Yi Hsu, Chien Cheng Development Co., Ltd.’s Representative: Tien-Ching Yang, Jui-Tung Lu, Jui-Chou Lin,Hsiu-Mei Lin	-
NT$1,000,000 (inclusive) ~ NT$2,000,000 (exclusive)	Chien Yi Industrial Co., Ltd. Representative: Cheng-Tsung Lee	-	Chien Yi Industrial Co., Ltd. Representative: Cheng-Tsung Lee	-
NT$2,000,000(inclusive)~ NT$3,500,000(exclusive)	-	-	Edward Y. C. Lee	-
NT$3,500,000 (inclusive) ~ NT$5,000,000 (exclusive)	Yi Chi Co., Ltd.; Representative: C. H. Lee	-	Yi Chi Co., Ltd.; Representative: C. H. Lee	-
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	13	-	13	-

Note 1: Refers to director's compensation in the last year (including salaries, allowances, severance pay, various bonuses and incentives).

Note 2: Refers to compensation paid for services rendered (including travel, special allowances, subsidies, accommodation, corporate vehicle and in-kind benefits). If housing, company car and other means of transportation were provided or the spending is exclusive to particular person, disclosure the nature of the assets provided and the cost thereof, rent actually disbursed or at fair market value, fuel allowance and other subsidies. If a driver was assigned, specify the remuneration to such driver but not include as a part of the remuneration.

• 138 -

• Note 3: Refers to any salaries, allowances, severance pay, bonuses, incentives, travel allowances, special allowances, subsidies, accommodation, vehicles, in-kind benefits etc that the director received in the latest year for assuming the role of a company employee (such as President, Executive Vice President, manager or other employee). If housing, company car and other means of transportation were provided or the spending is exclusive to particular person, disclosure the nature of the assets provided and the cost thereof, rent actually disbursed or at fair market value, fuel allowance and other subsidies. If a driver was assigned, specify the remuneration to such driver but not include as a part of the remuneration.

• (2) Compensation to President and Executive Vice Presidents

Unit: NTD thousands

Title	Name	Salaries (A) (Note 1)	Salaries (A) (Note 1)	Severance payment and pension (B)	Severance payment and pension (B)	Bonuses and allowances (C)	Bonuses and allowances (C)	Employee remuneration (D)	Employee remuneration (D)	Employee remuneration (D)	Employee remuneration (D)	Sum of A, B, C, and D as a percentage of net income(%)	Sum of A, B, C, and D as a percentage of net income(%)	Compensation from parent company or business investments other than subsidiaries
		The Company	All companies included in the consolidated statements	The Company	All companies included in the consolidated statements	The Company	All companies included in the consolidated statements	The Company		All companies included in the consolidated statements		The Company	All companies included in the consolidated statements
								Amount in cash	Amount in stock	Amount in cash	Amount in stock
President	Chu-Minn Leu	16,551	-	16,735	-	-	-	53	-	-	-	21.81%	-	None
President	Jack Chen(Note 2)
Executive Vice President	C. S. Lin
Executive Vice President	Ching Chang Chen
Executive Vice President	Tom C. T. Chen
Executive Vice President	Jen-Huai Liu
Executive Vice President	H. C. Huang (Note 3)
Executive Vice President	Stephen S.C. Shen (Note 4)

• 139 -

Brackets along the scale for payments to the Presidents and individual Executive Vice Presidents.	Names of the President and ExecutiveVice Presidents	Names of the President and ExecutiveVice Presidents
	The Company	All companies included in consolidated statements(E)
Below NT$1,000,000	-	-
NT$1,000,000(inclusive)~ NT$2,000,000(exclusive)	-	-
NT$2,000,000 (inclusive) ~ NT$3,500,000 (exclusive)	Chu-Minn Leu, C. S. Lin, Stephen S. C. Shen, Jen-Huai Liu, Tom C. T. Chen,Ching-ChangChen	-
NT$3,500,000(inclusive)~ NT$5,000,000(exclusive)	-	-
NT$5,000,000(inclusive)~ NT$10,000,000(exclusive)	H. C. Huang	-
NT$10,000,000(inclusive)~ NT$15,000,000(exclusive)	Jack Chen	-
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	8	-

Note 1: Refers to salaries, allowances, and severance pay made to the President and Executive Vice Presidents in the last year. Note 2: Mr. Jack Chen, former President, retired on February 25, 2020 and was succeeded by Madam Chu-Minn Leu since February 26, 2020. Note 3: Vice President H.C. Huang was relieved from office on November 5, 2020. Note 4: Vice President Stephen S. C. Shen was relieved from office on May 12, 2020.

• 140 -

(3) Names of managers entitled to employee remuneration and amount entitled

Unit: NTD thousands

					Unit:	NTD thousands
						Total as a
Item	Title (Note 1)	Name (Note 1)	Amount in stock	Amount in cash	Total	percentage of net income (%)
Manager	President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Vice President Vice President Vice President Vice President Vice President Region Assistant Vice President Region Assistant Vice President Region Assistant Vice President Region Assistant Vice President Region Assistant Vice President Region Manager Manager Manager Manager Manager Manager Assistant Vice President, AccountingDept.	Chu-Minn Leu C. S. Lin Tom C. T. Chen Ching Chang Chen Jen-Huai Liu Yeong-Rong Hsiao Chang-Hong Chen Emerson Chien Edward Y. C. Lee Chen-Hsiung Lin Tony J.Y. Wang Hsu-Wei Chen Wen-Tung Yen S. Q. Chen Te-Chun Chiang Chien-Sheng Chen Chien Wen Chen Ping-Change Chou Tung-Sen Shih Tung-Ying Wu Chuan-Wei Hu Fei-Fen Hsiao	-	137	137	0.09%

Note 1: Names and titles have been disclosed separately, whereas earnings distribution has been disclosed in aggregate.

• 141 -

• (4) Chairman, President, or any managers involved in financial or accounting affairs being employed by the accounting firm or any of its affiliated enterprises in the last year: None.

• (5) Information about retired chairmen and presidents re-hired as consultants: None.

• 1. Change of President, chief internal auditor and certified actuary in the last 2 years:

	2020	2019
President	Chu-Minn Leu	Jack Chen
Chief internal auditor	ChingChangChen	ChingChangChen
Certified actuary	Chen-HsiungLin	Chen-HsiungLin

1. Changes in reserve provisioning method:

2. All reserves are provided according to "Reserve Provisioning Methods for

3. Insurance Companies" stipulated by the Financial Supervisory Commission, Executive Yuan, in Instruction Jin-Guan-Bao-Cai-Zi No. 10102501561. Certified actuaries are engaged to certify various reserves provided by the Company.

4. For non-life insurance companies that had shareholder-resolved increase or reduction of capital or board-resolved issuance of new shares in the last year, any application (or filing) that was not approved (or acknowledged) by the Securities and Futures Bureau, Financial Supervisory Commission, or any situation where change of capital was not approved by the Ministry of Economic Affairs: None.

5. Claims amounting to NT$20 million or above paid or recovered from reinsurance in the last 3 years, and analysis of financial impact:

Unit: NTD thousands

Insurance category	Claim case No.	Date of claim payment	Amount of claim	Amount recovered	Financial impact (Net losses)
Freight insurance	L200047	2020/09/14	29,205	-	( 29,205)
Fire	07A101	2020/07/08	33,127	30,417	( 2,710)
Fire	05A086	2020/06/15	70,593	70,593	-
Fire	07A065	2019/11/26	85,439	36,578	( 48,861)
Fire	07A101	2019/01/19	16,666	15,302	( 1,364)
Fire	07A111	2019/08/29	53,002	41,871	( 11,131)
Vessel hull insurance	H170011	2019/01/23	115,267	104,086	( 11,181)
Fishing Vessel Insurance	F180004	2019/07/22	27,144	23,072	( 4,072)
Freight insurance	LF11127/11	2019/09/23	27,111	14,378	( 12,733)
Others	BB01/0038	2018/03/07	31,355	17,071	( 14,284)
Fire	05A086	2018/12/17	63,591	63,591	-
Fire	06A159	2018/11/21	70,817	23,016	( 47,801)
Freight insurance	LC17051	2018/10/25	23,791	4,758	( 19,033)
Fishing Vessel Insurance	F170003	2018/10/18	44,748	42,006	( 2,742)

1. Name and credit rating of reinsurers where the amount of reinsurance premium expenses represented 1% or higher of total premium revenues in the last year:

Reinsurance companies	Credit Rating (S & P’s Rating)
C.R.C	A
Toa Re	A+
Swiss Re	AA-

• 142 -

8.	Date and outcome of external credit ratingand name of ratingagency,if applicable:	Date and outcome of external credit ratingand name of ratingagency,if applicable:	Date and outcome of external credit ratingand name of ratingagency,if applicable:
	Name of ratingagency	Date of rating	Ratingoutcome
	Taiwan Ratings	2020/12/28	tw AA

• Two. Market price, dividend and ownership diversity 1. Information relating to market price, net worth, earnings, and dividends per share for the last 2 years

the last 2years
	Year		2020	2019
Item
Market price per share (Note 1)	High		14.80	15.70
	Low		10.25	14.00
	Average		13.43	14.64
Net worth per share(Note 2)	Before dividend		22.45	22.62
	After dividend		Note 8	21.66
Earnings per share	Weighted average outstanding shares(in thousands)		301,164	301,164
	EPS(Note 3)		0.51	1.93
Dividends per share	Cash dividends		Note 8	0.96
	Stock dividends	From earnings	-	-
		From capital reserves	-	-
	Cumulative undistributed dividends(Note 4)		-	-
Analysis of investment returns	P/E ratio(Note 5)		26.33	7.59
	Price to dividends ratio (Note 6)		Note 8	15.25
	Cash dividendyield(Note 7)		Note 8	0.07

• Where stock dividends were paid from earnings or capital reserves, market price and cash dividends per share are adjusted retrospectively for the number of new shares issued.

• Note 1: The Table shows the highest and lowest market price of common shares in each year; average market price is calculated by weighing transaction prices against transaction volumes in the respective years.

• Note 2: Calculated based on the number of outstanding shares at year-end; amount of distribution resolved in next year's shareholder meeting is presented in the Table.

• 143 -

• Note 3: Where stock dividends were issued, EPS are disclosed in amounts before and after retrospective adjustments.

• Note 4: If equity securities are issued with terms that allow dividends to be accrued and accumulated until the year the Company makes profit, the amount of cumulative undistributed dividends up till the current year is disclosed separately.

• Note 5: P/E ratio = average closing price per share for the year / earnings per share.

• Note 6: Price to dividend ratio = average closing price per share for the year / cash dividends per share.

• Note 7: Cash dividend yield = cash dividend per share / average closing price per share for the current year.

• Note 8: Dividends per share are presented based on the results resolved in shareholder meeting of the following year. The 2020 proposal had yet to be resolved in a shareholders’ meeting.

• Ownership diversity

Common shares Face value - NT$10 per share December 31, 2020

			Unit: shares
Shareholding range	Number of shareholders	Shares held	Shareholding percentage (%)
1 to 999 1,000 to 5,000 5,001 to 10,000 10,001 to 15,000 15,001 to 20,000 20,001 to 30,000 30,001 to 40,000 40,001 to 50,000 50,001 to 100,000 100,001 to 200,000 200,001 to 400,000 400,001 to 600,000 600,001 to 800,000 800,001 to 1,000,000 1,000,001 and above	14,251 4,130 1,062 436 317 246 143 112 225 146 88 26 14 12 44	554,217 9,447,179 8,667,726 5,560,717 5,854,722 6,295,970 5,115,787 5,164,355 16,511,253 20,558,661 24,500,957 12,987,503 9,638,586 10,541,010 159,765,141	0.18% 3.14% 2.88% 1.85% 1.94% 2.09% 1.70% 1.71% 5.48% 6.83% 8.14% 4.31% 3.20% 3.50% 53.05%
Total	21,252	301,163,784

• 144 -

• Changes in shareholding of directors (including independent directors), managers and dominant shareholders (with 10% holding interest and above)

and above)
Title	Name	Openingshareholding position			Change of shareholding		Closingshareholding position
		Shares held	Shareholding percentage %	Shares pledged	Increase (decrease) in shares held	Increase (decrease) in sharespledged	Shares held	Shareholding percentage %	Shares pledged
Chairman	Yi Chi Co., Ltd.; Representative: C. H. Lee	4,928,750	1.64%	-	-	-	4,928,750	1.64%	-
Director	Chimax Development Company Representative: Chi-Chen Tu	1,357,389	0.45%	-	-	-	1,357,389	0.45%	-
Director	Chien Yi Industrial Co., Ltd. Representative: Cheng-TsungLee	7,335,189	2.44%	-	50,000	-	7,385,189	2.45%	-
Director	Cheng-Tu Lee	3,296,991	1.09%	-	-	-	3,296,991	1.09%	-
Director	Edward Y. C. Lee	2,807,896	0.93%	-	-	-	2,807,896	0.93%	-
Director	Shao-YingLee	195,104	0.06%	-	-	-	195,104	0.06%	-
Director	David Huang	828,518	0.28%	-	-	-	828,518	0.28%	-
Director	Cheng-Chin Lee	347,000	0.12%	-	-	-	347,000	0.12%	-
Director	Chien Cheng Development Co., Ltd. Representative: Tien-ChingYang	18,806,192	6.24%	-	-	-	18,806,192	6.24%	-
Director	Da Feng Construction Engineering Co., Ltd. Representative: Chien-Yi Hsu	15,823,085	5.25%	-	-	-	15,823,085	5.25%	-
Independent Director	Jui-Tung Lu	-	0.00%	-	-	-	-	0.00%	-
Independent Director	Jui-Chou Lin	-	0.00%	-	-	-	-	0.00%	-
Independent Director	Hsiu-Mei Lin	-	0.00%	-	-	-	-	0.00%	-
Manager	C. S. Lin	34,854	0.01%	-	-	-	34,854	0.01%	-
Manager	H. C. Huang (Note 1)	138,646	0.05%	-	-	-	138,646	0.05%	-
Manager	Tom C. T. Chen	168,888	0.06%	-	-	-	168,888	0.06%	-
Manager	Chu-Minn Leu	57,250	0.02%	-	-	-	57,250	0.02%	-

(Continued next page)

• 145 -

(Continued from previous page)

Title	Name	Openingshareholding position	Openingshareholding position	Openingshareholding position	Change of shareholding	Change of shareholding	Closingshareholding position	Closingshareholding position	Closingshareholding position
		Shares held	Shareholding percentage %	Shares pledged	Increase (decrease) in shares held	Increase (decrease) in sharespledged	Shares held	Shareholding percentage %	Shares pledged
Manager	S.Q. Chen	41,963	0.01%	-	-	-	41,963	0.01%	-
Manager	Jack Chen(Note 2)	55,161	0.02%	-	-	-	55,161	0.02%	-
Manager	Wen-TungYen	35,608	0.01%	-	15,000	-	50,608	0.02%	-
Manager	Jen-Huai Liu	488	0.00%	-	-	-	488	0.00%	-
Manager	Emerson Chien	-	0.00%	-	-	-	-	0.00%	-
Manager	TonyJ.Y. Wang	207,831	0.07%	-	-	-	207,831	0.07%	-
Manager	ChingChangChen	37,761	0.01%	-	-	-	37,761	0.01%	-
Manager	Jack Chu(Note 3)	80,000	0.03%	-	-	-	80,000	0.03%	-
Manager	Chen-HsiungLin	-	0.00%	-	2,000	-	2,000	0.00%	-
Manager	Hsu-Wei Chen	28,621	0.01%	-	-	-	28,621	0.01%	-
Manager	Yeong-RongHsiao	-	0.00%	-	-	-	-	0.00%	-
Manager	Stephen S.C. Shen (Note 4)	-	0.00%	-	-	-	-	0.00%	-
Manager	Edward Y. C. Lee	2,807,896	0.93%	-	-	-	2,807,896	0.93%	-
Manager	Beiru Lee(Note 5)	67,139	0.02%	-	-	-	67,139	0.02%	-
Manager	Fei-Fen Hsiao	-	0.00%	-	-	-	-	0.00%	-
Manager	Chang-HongChen	31,352	0.01%	-	-	-	31,352	0.01%	-
Manager	Chien Wen Chen	-	0.00%	-	-	-	-	0.00%	-
Manager	Ping-Change Chou	23,023	0.01%	-	-	-	23,023	0.01%	-
Manager	Te-Chun Chiang	850	0.00%	-	-	-	850	0.00%	-
Manager	Tung-Sen Shih	11,359	0.00%	-	-	-	11,359	0.00%	-
Manager	Chuan-Wei Hu	-	0.00%	-	-	-	-	0.00%	-
Manager	Tung-YingWu(Note 6)	15,000	0.00%	-	-	-	15,000	0.00%	-
Manager	Chien-Sheng Chen (Note 7)	426	0.00%	-	-	-	426	0.00%	-

Note 1: The former manager, H.C. Huang, was relieved from office on November 5, 2020.

Note 2: The former manager, Jack Chen, was relieved from office on February 26, 2020.

Note 3: The former manager, Jack Chu, was relieved from office on August 1, 2020.

Note 4: The former manager, Stephen S. C. Shen, was relieved from and implemented on May 12, 2020. Note 5: The former manager, Beiru Lee, was relieved from office on May 1, 2020. Note 6: The new manager, Tung-Ying Wu, took office on July 8, 2020. Note 7: The new manager, Chien-Sheng Chen, took office on September 1, 2020. Information relevant to the aggregate reporting policy: Not applicable.

• 146 -

Three. Key financial information

1. Summary balance sheet and statement of comprehensive income for the last 5 years (1) Balance sheet information:

Unit: NTD thousands

			Unit:	Unit:	Unit:	NTD thousands
Year Item			Financial information for the last 5years
		2020	2019	2018	2017	2016
Cash		1,775,324	1,860,014	1,626,898	1,157,174	1,231,822
Receivables		380,972	463,385	728,303	593,893	584,878
Financial assets and loans		10,297,861	9,966,570	9,238,209	9,525,773	9,181,743
Reinsurance Contracts Assets		2,150,899	2,269,819	2,907,356	2,473,583	2,758,745
Property,Plant and Equipment		661,560	620,038	624,243	626,390	622,106
Right-of-use asset		4,400	4,320	-	-	-
Intangible Assets		44,106	7,203	10,955	12,611	15,747
Other assets		710,865	665,465	591,508	600,145	581,617
Total assets		16,025,987	15,856,814	15,727,472	14,989,569	14,976,658
Payables		677,616	725,268	769,330	764,602	682,912
Lease liabilities		4,445	4,139	-	-	-
Liabilityreserves		8,379,938	8,081,929	8,764,982	8,317,402	8,711,701
Other liabilities		201,904	234,217	224,250	209,087	208,183
Total liabilities	Before dividend	9,263,903	9,045,553	9,758,562	9,291,091	9,602,796
	After dividend		9,334,670	9,906,132	9,471,789	9,798,552
Share capital		3,011,638	3,011,638	3,011,638	3,011,638	3,011,638
Retained Earnings	Before dividend	3,458,120	3,392,600	2,929,970	2,660,677	2,402,882
	After dividend		3,103,483	2,782,400	2,479,979	2,207,126
Other equityitems		292,326	407,023	27,302	26,163	( 40,658)
Total equity	Before dividend	6,762,084	6,811,261	5,968,910	5,698,478	5,373,862
	After dividend		6,522,144	5,821,340	5,517,780	5,178,106

Note 1: Financial information for the last 5 years, as presented above, has been prepared according to IFRSs, and audited by the CPA.

Note 2: Distribution of 2020 earnings has yet to be resolved in a shareholders’ meeting.

(2) Statement of comprehensive income:

Unit: NTD thousands, except EPS which is in dollars

Year Item		Financial information for the last 5years	Financial information for the last 5years	Financial information for the last 5years
	2020	2019	2018	2017	2016
Revenue	5,854,672	6,049,197	6,129,389	5,881,343	5,613,575
OperatingCost	4,246,729	4,045,100	4,251,229	4,122,629	3,844,794
OperatingExpense	1,399,892	1,339,907	1,314,345	1,242,794	1,203,086
Non-operating income and expenses	( 2,106)	( 565)	( 647)	( 386)	( 1,440)
Operating income before tax	205,945	663,625	563,168	515,534	564,255
Net Income After Tax	152,882	580,968	491,309	460,310	479,755
Other Comprehensive Income	87,058	408,953	( 33,636)	60,062	( 11,404)
Earningsper share	0.51	1.93	1.63	1.53	1.59

Note 1: Financial information for the last 5 years, as presented above, has been prepared according to IFRSs and audited by the CPA.

• 147 -

• Analysis of key financial ratios

Analysis	Year	Financial and operational indicators in the last 5years	Financial and operational indicators in the last 5years	Financial and operational indicators in the last 5years	Financial and operational indicators in the last 5years	Financial and operational indicators in the last 5years
		2020	2019	2018	2017	2016
Business performance indicators	Variation of written premiums revenue	2.73	( 1.99)	0.21	5.47	6.80
	Variation of lossespaid	( 10.34)	1.92	( 7.50)	13.76	13.03
	Variation of retained premium	6.28	( 0.70)	0.39	6.14	5.86
	Net worth ratio	42.19	42.95	37.95	38.02	35.88
Profit indicators	Return on Asset	0.96	3.68	3.20	3.07	3.30
	Return on Equity	2.25	9.09	8.42	8.31	9.33
	Net Investment Income Ratio	1.98	2.92	2.04	2.37	2.20
	Return on Investment	1.84	2.70	1.88	2.18	2.04
	Combined Ratio	96.10	95.47	97.80	96.23	100.06
	Retained Expense Ratio	39.51	40.18	39.03	37.23	38.42
	Retained Earned Loss Ratio	56.59	55.29	58.77	59.00	61.64
Operational indicators	Retained premium to equity ratio	84.15	78.61	90.33	94.25	94.17
	Gross premium to equity ratio	110.42	106.88	123.95	129.51	130.31
	Net reinsurance commission to equityratio	2.86	2.94	3.75	3.70	4.02
	Insurance liabilities to equityratio	121.81	116.16	143.86	142.34	158.11
	Percentage of equity variation	( 0.72)	14.11	4.75	6.04	9.55
	Expense ratio	33.96	33.51	32.49	31.01	31.84
Explanation to significant changes in the last two years: 1. Increase in the rate of changes in direct premium: Mainly due to the increase in direct premium of motor insurance and other insurance. 2. Decrease in the rate of changes in directly paid claims: Mainly due to the decrease in current claims under fire insurance and marine insurance. 3. Increase in retained rate of changes in premium: Mainly due to the decrease in current reinsurance premium of marine insurance and health insurance for injury. 4. Decrease in ROE, ROA and equity growth: Mainly due to the decrease in current net income. 5. Decrease in net investment income ratio and return on investment: Mainly due to the increase in current net investment income.

1. Decrease in ROE, ROA and equity growth: Mainly due to the decrease in current net income. 5. Decrease in net investment income ratio and return on investment: Mainly due to the increase in current net investment income.

Note 1: Financial statements for the last 5 years, as presented above, have been prepared according to IFRSs, and audited by the CPA. Note 2: Formulas for calculation of various analyses:

1. Business performance indicators

2. (1) Variation of written premiums revenue = (cumulative written premiums revenue in the current period - cumulative written premiums revenue for the previous period) / cumulative written premiums revenue for the previous period

["Written premiums revenue" refers to insurance premium revenues that an insurance company receives for underwriting insurance policy directly to the insured party.]

• 148 -

• (2) Variation of losses paid = (cumulative direct losses paid in the current period - cumulative direct losses paid in the previous period) / cumulative direct losses paid in the previous period ["Direct losses paid" refers to claims that an insurance company pays to insured parties of direct written policies for suffering an insured accident.]

• (3) Variation of retained premium = (cumulative retained premium in the current period - cumulative retained premium in the previous period) / cumulative retained premium in the previous period

  • [Retained premium = written premiums revenue + reinsurance premiums revenue - reinsurance premiums expense]

• (4) Net worth ratio = owners' equity / total assets excluding investment-linked insurance asset account

• Profit indicators

• (1) ROA= [net income after tax + interest expenses × (1- tax rate)] / average total assets. [Average total assets = (opening assets + closing assets) / 2]

• (2) Return on equity = profit before or after tax / average equity [Average equity = (current equity + equity for the previous period) / 2]

• (3) Net investment income ratio = (current net gain on investments + current gain on disposal of equity instruments measured at fair value through other comprehensive income) / [(opening available capital+ closing available capital - current net gain on investments - current gain on disposal of equity instruments measured at fair value through other comprehensive income) / 2]

• (4) Return on investment = (current net gain on investments + current gain on disposal of equity instruments measured at fair value through other comprehensive income) / [opening assets+ closing assets - current net gain on investments - current gain on disposal of equity instruments measured at fair value through other comprehensive income) / 2]

• (5) Combined ratio = retained expense ratio + retained earned loss ratio

• (6) Retained expense ratio = retained expenses / retained premium [Retained premium = written premiums revenue + reinsurance premiums revenue - reinsurance premiums expense]

  • [Retained expenses = commission and premium expenses + reinsurance commission expenses - reinsurance commission revenues + selling expenses + administrative expenses + depreciation and amortization of self-occupied real estate properties]

• (7) Retained earned loss ratio = retained claims / retained earned premiums

  • [Retained claims = insurance claims paid - claims recovered from reinsurers + net change in claim reserves]

  • [Retained earned premiums = written premiums revenue + reinsurance premiums revenue - reinsurance premiums expense - net change in unearned premium reserve]

• 149 -

• Operational indicators

  • (1) Retained premium to equity ratio = retained premium / equity

  • (2) Gross premium to equity ratio = (written premiums revenue + reinsurance premiums revenue) / equity

  • (3) Net reinsurance commission to equity ratio = (unearned premium reserve / retained premium) × reinsurance commission revenues / equity

  • (4) Insurance liabilities to equity ratio = Liabilities of various insurance category / equity

    • [Insurance liabilities = special claim reserves + claim reserves + unearned premium reserves + other reserves]

  • (5) Variation of equity = (current equity - equity for the previous period) / absolute value of equity for the previous period

  • (6) Expense ratio = expenses / (written premiums revenue + reinsurance premiums revenue)

    • [Expenses = commission and premium expenses + operating expenses + administrative expenses + depreciation and amortization of self-occupied real estate properties + reinsurance commission expenses]

• Other information material to understanding the company's financial position, financial performance, cash flow and changes: None.

• 150 -

Four. Analysis of financial position, performance and cash flow 1. Comparative analysis of financial position

Unit: NTD thousands

Year Item	2020	2019	Variation	Variation
			Amount	%
Cash	$ 1,775,324	$ 1,860,014	( $ 84,690)	( 4.55)
Receivables	380,972	463,385	( 82,413 )	( 17.78)
Financial assets and loans	10,297,861	9,966,570	331,291	3.32
Reinsurance Contracts Assets	2,150,899	2,269,819	( 118,920 )	( 5.24)
Property, Plant and Equipment	661,560	620,038	41,522	6.70
Right-of-useasset	4,400	4,320	80	1.85
Intangible Assets	44,106	7,203	36,903	512.33
Other assets	710,865	665,465	45,400	6.82
Total assets	16,025,987	15,856,814	169,173	1.07
Payables	677,616	725,268	( 47,652)	( 6.57)
Lease liabilities	4,445	4,139	306	7.39
Liabilityreserves	8,379,938	8,081,929	298,009	3.69
Other liabilities	201,904	234,217	( 32,313 )	( 13.80)
Total liabilities	9,263,903	9,045,553	218,350	2.41
Share capital	3,011,638	3,011,638	-	-
Retained Earnings	3,458,120	3,392,600	65,520	1.93
Equityand other items	292,326	407,023	( 114,697 )	( 28.18)
Total equity	6,762,084	6,811,261	( 49,177)	( 0.72)

Explanation to significant variations amounting to NT$10 million or 20% or above:

The increase in intangible assets in 2020 from 2019 was primarily a result of the increase in computer software cost in 2020.

The decrease in equity and other items in 2020 from 2019 was primarily a result of the decrease in valuation of equity instruments at fair value through other comprehensive income in 2020.

• 151 -

2. Analysis of financial performance

			Unit: NTD thousands	Unit: NTD thousands
Item	2020	2019	Variation	Variation %
Revenue	$5,854,672	$6,049,197	($ 194,525)	( 3.22)
OperatingCost	4,246,729	4,045,100	201,629	4.98
OperatingExpense	1,399,892	1,339,907	59,985	4.48
Operating profit	208,051	664,190	( 456,139)	( 68.68)
Non-operating income and expenses	( 2,106)	( 565)	( 1,541)	272.74
Pre-tax profit from continuingoperations	205,945	663,625	( 457,680)	( 68.97)
Income tax	53,063	82,657	( 29,594)	( 35.80)
Current net income from continuingoperations	152,882	580,968	( 428,086)	( 73.68)

Explanation to significant variations of 10% or above:

The decrease in operating profit and net income in 2020 from 2019 resulted from the increase in net changes in insurance liability provisions in 2020.

The increase in non-operating income and expenses in 2020 from 2019 resulted from the increase in property obsolescence loss in 2020.

The increase in income tax in 2020 from 2019 resulted from the decrease in pre-tax profit in 2020.

1. Cash flow variation analysis:

2. (1) Operating activities: Net cash inflow of NT$251,496 thousand was mainly attributed to disposal of financial assets at fair value through profit and loss and a decrease in reinsurance contract assets.

3. (2) Investing activities: Net cash outflow of NT$40,849 thousand was mainly due to acquisition of property, plant and equipment and intangible assets.

4. (3) Financing activities: Net cash outflow of NT$291,681 thousand was mainly due to payment of cash dividends.

5. 152 -

Five. Auditor's information:

1. Audit fee information

2. (1) Non-audit remuneration to financial statement auditors, accounting firms and related businesses that amount to one-quarter or higher of audit remuneration: None.

3. (2) Any replacement of accounting firm and reduction in audit remuneration paid compared with the previous year: None.

4. (3) Any reduction in audit remuneration by more than 15% compared to the previous year: None.

5. Change of CPA: None.

6. 153 -