FIRST INS - Annual Report 2019 | FinancialReports.eu

Stock ID: 2852

The First Insurance Co., Ltd.

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2019 Annual Report

Market Observation Post System (MOPS); website: https://mops.twse.com.tw Company website: https://www.firstins.com.tw

Published June 10, 2020

I. Spokesperson

Name: Chuan-Wei Hu Title: Manager TEL: (02)2391-3271 (main line) E-mail: [email protected]

II. Acting Spokesperson

Name: Fei-Fen Hsiao Title: Manager TEL: (02)2391-3271 (main line) E-mail: [email protected]

III. Address and contact number of the headquarter, branches and offices (Please refer to page 5)

IV. Name, address, and contact number of share administration agency:

Name: Share Administration Department, Hua Nan Securities Co., Ltd. Address: 4F, No. 54, Section 4, Minsheng East Road, Taipei City TEL: (02)2718-6425 (main line) Website: https://www.entrust.com.tw

V. Name of CPA and the name, address, and contact number of the accounting firm for the latest financial report:

CPA: Alice Huang, Wan-Yi Liao Name of accounting firm: Deloitte Taiwan Address: 20F, No. 100, Songren Road, Xinyi District, Taipei City TEL: (02)2725-9988 (main line) Website:

VI. Name of overseas exchange where securities are listed, and method of inquiry: None.

VII. Company website: https://www.firstins.com.tw

One. Letter to Shareholders ............................................................................................................03 Two. Company Overview I. Date of establishment..............................................................................................................06 II. Address and contact number of the headquarter, branches and offices.................................06 III. Company history..................................................................................................................08 Three. Corporate Governance Report I. Organization System...............................................................................................................13 II. Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches..............................................................................13 III. The pursuit of corporate governance....................................................................................37 IV. Information on auditing fees ................................................................................................81 V. Information on replacement of CPA......................................................................................83 VI. Disclosure of any Chairman, President, or managers involved in financial or accounting affairs being employed by CPA firm or any of its affiliated company within the most recent year; disclose their names, titles and duration of employment ...............................83 VII. Changes in shareholding by Directors, Managers and dominant shareholders in the most recent year to the day this report was printed............................................................83 VIII. Information on the relations among the top 10 shareholders of the Company by quantity of shareholding.....................................................................................................86 IX. Investments jointly held by the Company, the Company's Directors, managers, and enterprises directly or indirectly controlled by the Company; disclose shareholding in aggregate of the above parties............................................................................................87 Four. Funding Status I. Capital, shares, corporate bonds, preferred shares, global depositary receipt, employee stock options and M&A (including merger, acquisition and divestment)..........................88 II. Progress on planned use of capital ........................................................................................91 Five. Operational Overview I. Business activities...................................................................................................................96 II. Market and sales overview ....................................................................................................98 III. Employee information for the last 2 years .........................................................................101 IV. Contribution to environmental protection ..........................................................................102 V. Labor-management agreement.............................................................................................102 VI. Major contracts ..................................................................................................................102 Six. Financial Status I. Summary balance sheet and statement of comprehensive income for the last 5 years.........103 II. Financial analysis for the last 5 years..................................................................................104 III. Other information material to understanding the Company's financial position, financial performance, cash flow and changes ...............................................................................106 IV. Audit Committee's report on the review of the latest financial report................................107 V. Independent auditor's report and financial statements for the most recent year..................108 VI. Audited consolidated financial statements for the most recent year..................................196 VII. Any financial distress experienced by the Company or affiliated enterprise and impacts on the Company's financial position in the last year up till the publication date of annual report.........................................................................................................196 Seven. Review of financial position, business performance and risk issues I. Financial position..................................................................................................................196 II. Analysis of financial performance.......................................................................................197 III. Cash flow variation analysis ..............................................................................................197 IV. Material capital expenditures in the last year and impacts on business performance........198 V. Causes of profit or loss incurred on investments in the last year, and any improvements or investments planned for the next year..............................................................................198 VI. Risk disclosure...................................................................................................................198

VII. Other important disclosures..............................................................................................200 Eight. Special Remarks I. Affiliated companies .............................................................................................................200 II. Private placement of securities in the last year up till the publication date of this annual report ................................................................................................................................200 III. Holding or disposal of the company's shares by subsidiaries in the last year, up till the publication date of this annual report...............................................................................200 IV. Other supplementary information.......................................................................................200 Nine. Any occurrence of event defined under Subparagraph 2, Paragraph 3, Article 36 of the Securities and Exchange Act in the previous year up till the publication date of this annual report that significantly impacted shareholders’ equity or security prices ..........200

One. Letter to Shareholders

Ladies and gentlemen:

Welcome to the annual general meeting of The First Insurance Co., Ltd.

As the China-USA trade dispute intensified, the world saw a drastic reduction in manufacturing and trade activities in the first half of 2019 that hinted further slowdown of economic growth on a global scale. Taiwan was affected by this loss of momentum, and the effect was reflected in data such as foreign demand, export sale and industrial production. While overseas demand remained stagnant in the second half of the year, Taiwan was able to benefit from the China-USA trade stand-off for a number of reasons including supply chain shift, return of Taiwanese enterprises and increased investment in semiconductor equipment, and posted a full-year growth rate of 2.73% that was 0.13 percentage point higher than the 2.60% reported in 2018.

Below is a summary of the Company's 2019 operational performance and 2020 business plans: I. 2018 operational performance:

(I) Written premium revenues by insurance category:

. 2018 operational performance: I) Written premium revenues by insurance category:	. 2018 operational performance: I) Written premium revenues by insurance category:	. 2018 operational performance: I) Written premium revenues by insurance category:
(in NT$1,000)
Class	2019	2018
Fire	1,076,828	1,144,364
Marine	356,998	424,498
Motor	4,549,863	4,493,231
Others	891,365	952,640
Total	6,875,054	7,014,733

(II) Budget execution:

The Company did not publish an auditor-certified financial forecast for 2019, hence is not required to explain budget accomplishment.

(III) Income and expense:

The Company generated NT$6,049,197,000 of revenues in 2019 and incurred NT$4,045,100,000 of operating costs and NT$1,339,907,000 of operating expenses, which produced NT$664,190,000 of operating profit. After deducting income tax expense of NT$82,657,000, net income was concluded at NT$580,968,000.

(IV) Profitability analysis:

analysis:
Return on Asset	3.68%
Return on Equity	9.09%
Net Investment Income Ratio	2.92%
Return on Investment	2.70%
Combined Ratio	95.47%
Retained Expense Ratio	40.18%
Retained Earned Loss Ratio	55.29%
Earningsper share	NT$1.93

(V) Research and development:
The Company's product development efforts are focused on satisfying customers' needs. Given the rapid change in consumers' preference, the Company encourages employees to take initiative in innovative thinking and participate in new product and service development in ways that would expand the variety of insurance products offered to customers. The Company has also been inspiring creativity among employees to provide fresh ideas for new insurance products and new business opportunities, which will prove essential to future growth.

In 2019, the Company submitted applications for 106 insurance products of various categories including group casualty insurance, public liability insurance, motor insurance, personal liability insurance, commercial fire insurance and engineering insurance to the competent authority. These included new products as well as modifications of existing products.

II. Highlights of 2020 business plan:
(I) Operational guidelines:
Strict control of loss ratio and expense ratio.
Develop reinsurance channels and strengthen reinsurance capacity.
Install and improve IT & Cloud platform.
Strengthen educational training and raise staff’s professionalism.
Marketable products and differentiation and offer high quality insurance plans.
Continue to use information strategies in order to enhance management and operational efficiency.
Explore new insurance services, quality customers and bancassurance partners.
Enhance the professional capacity of the all-in-one underwriting, reinsurance, damage prevention and claims service team.
Raise underwriting, claims and risk management capacity for improved service quality.
Adopt a business-oriented approach that matches products to the appropriate customers. Raise productivity and enhance marketing of value-adding products.
(II) Business objectives:

Projected percentage of insurance sales for 2020:

Fire insurance 17.72%.
Marine insurance 5.67%.
Motor insurance 63.65%.
Other insurance 12.96%.
(III) Key production/sales policies:
Create a diversified marketing network and design suitable products for customers of different distribution channels.
Adopt a client-oriented approach and raise customers' satisfaction and loyalty by introducing high value-adding services.
Form alliances with participants of different industries for further expansion of service scope and customer reach.
Introduce customized products as a means to increase direct sales.

In November 2019, Taiwan Ratings Corp. published the Company's credit rating and financial strength rating, and considered the Company having demonstrated robust capital strength, consistent profitability and excellent liquidity structure. As a result, Taiwan Ratings Corp. issued a credit rating of "twAA" along with a "Stable" outlook.

Although China and USA have reached a provisional agreement in regards to the trade dispute, issues concerning intellectual property rights, technological competition and structural trade problems are more difficult to resolve over the short term and are expected to affect Taiwan's economic performance throughout 2020. Meanwhile, the U.S. cyclical slowdown, structural reform

and credit risk concerning China's economy and the ongoing COVID-19 pandemic all have the potential to undermine investors' and consumers' confidence and disrupt trade, tourism and supply chain on a global scale. According to the latest forecasts (April) published by key international institutions, tightened investments and consumption may cause global economic growth to turn negative to -3.0%. As for the domestic economy, ongoing expansion of production capacity, introduction of 5G and advanced semiconductor manufacturing, and the government's three main investment schemes to supporting 5+2 industries are all helpful to stimulating Taiwan's economic growth, but the ongoing pandemic has weakened demand for end products and caused commodity prices to fall by such a large extent that will inevitably limit Taiwan's export, production and consumption potentials. According to the latest forecasts (April) published by key institutions, Taiwan's economy shall exhibit moderate expansion at a rate between 1.03% and 1.92% this year. In response, the Company shall continue focusing on its core business activities while at the same time explore improvements with a focus on stability, pragmatism, and innovation. In terms of asset allocation, the Company will strive to raise capital efficiency and asset yields as a show of gratitude for the support of our shareholders.

Lastly,

we would like to give you our best regards for the future ahead.

Chairman C. H. Lee

Two. Company Overview

I. Date of establishment: September 4, 1962

II. Address and contact number of the headquarter, branches and offices:

Unit description	Address	TEL
Head Office Taipei Branch Office Taochu Branch Office Taichung Branch Office Tainan Branch Office Kaohsiung Branch Office Keelung Liaison Office Neihu Liaison Office Chunglun Liaison Office Sanchung Liaison Office Xinshu Liaison Office Banqiao Liaison Office Luzhou Liaison Office Xindian Liaison Office Taitung Liaison Office Hualien Liaison Office Lanyang Liaison Office Taoyuan Liaison Office Bade Liaison Office Hsinchu Liaison Office Toufen Liaison Office Miaoli Liaison Office Fengyuan Liaison Office Taichung Harbor Liaison Office	10F and 11F, No. 54, Section 1, Zhongxiao East Road, Zhongzheng District, Taipei City 16F, No. 37, Section 2, Sanmin Road, Banqiao District, New Taipei City 21F-2, No. 398, Huanbei Road, Zhongli District, Taoyuan City 9F, No. 726, Section 1, Taiwan Boulevard, West District, Taichung City 6F, No. 515, Chenggong Road, West Central District, Tainan City 4F and 5F, No. 263, Siwei 3rd Road, Lingya District, Kaohsiung City 4F, No. 11, Ai 9th Road, Renai District, Keelung City 4F-1, No. 160, Section 6, Min Chuan East Road, Neihu District, Taipei City 1F and 2F, No. 26, Section 4, Bade Road, Songshan District, Taipei City 1F and 2F, No. 46, Zhongzheng North Road, Sanchong District, New Taipei City 15F-1, No. 229, Xintai Road, Xinzhuang District, New Taipei City 19F-3, No. 37, Section 2, Sanmin Road, Banqiao District, New Taipei City 1F, No. 707, Changrong Road, Luzhou District, New Taipei City 11F, No. 103, Minquan Road, Xindian District, New Taipei City No. 503, Xinsheng Road, Taitung City, Taitung County No. 215, Zhongzheng Road, Hualien City, Hualien County 6F, No. 338-6, Gongzheng Road, Luodong Township, Yilan County 5F-2, No. 9, Jingguo Road, Taoyuan District, Taoyuan City 2F, No. 234 & 236, Section 1, Jieshou Road, Bade District, Taoyuan City 10F-5, No. 9, Section 3, Zhonghua Road, North District, Hsinchu City 2F, No. 485, Zhongyang Road, Toufen Town, Miaoli County No. 428-1, Zhigong Road, Miaoli City, Miaoli County No. 52, Fengdong Road, Fengyuan District, Taichung City No. 181, Section 8, Taiwan Boulevard, Wuqi District, Taichung City	(02)2391-3271 (02)2964-9588 (03)426-2666 (04)2201-3135 (06)258-5200 (07)335-5669 (02)2422-2279 (02)2792-7902 (02)2764-5190 (02)2981-3365 (02)2998-8600 (02)2964-3989 (02)2282-0978 (02)8667-1586 (08)932-2380 (03)832-3346 (03)955-0511 (03)358-8328 (03)367-2132 (03)523-9789 (037)681-012 (037)327-665 (04)2522-3928 (04)2662-5539

Chunglung
Liaison Office
No. 100, Longchang Road, Longjing District,
Taichung City
Changhua
Liaison Office
8F, No. 2, Section 2, Zhongshan Road,
Changhua City, Changhua County
Yuanlin Liaison
Office
No. 170, Nanping Street, Yuanlin Township,
Changhua County
Tsaotwen
Liaison Office
No. 7, Minquan West Road, Caotun Township,
Nantou County
Yunlin Liaison
Office
No. 78, Nanchang West Road, Dounan
Township, Yunlin County
Chiayi Liaison
Office
11F-1, No. 316, Chuiyang Road, East District,
Chiayi City
Hsinying
Liaison Office
No. 27-3, Datung Road, Xinying District,
Tainan City
Chiali Liaison
Office
No. 217, Jiadong Road, Jiali District, Tainan
City
Yongkang
Liaison Office
9F, No. 1-42, Zhonghua Road, Yongkang
District, Tainan City
Fengshan
Liaison Office
6F, No. 360, Section 1, Qingnian Road,
Fengshan District, Kaohsiung City
Luchu Liaison
Office
6F, No. 1187, Zhongshan Road, Luzhu
District, Kaohsiung City
Nantze Liaison
Office
14F-2, No. 800, Junxiao Road, Nanzi District,
Kaohsiung City
Xiaogang
Liaison Office
No. 1, Zhonggang Road, Xiaogang District,
Kaohsiung City
Pingtung
Liaison Office
No. 229-35, Zhongxiao Road, Pingtung City,
Pingtung County
Penghu Liaison
Office
1F, No. 43, Guangfu Road, Magong City,
Penghu County

(04)2630-6088
(04)711-7990
(04)835-1161
(049)231-5890
(05)597-6696
(05)222-2933
(06)632-7348
(06)721-1478
(06)311-0321
(07)710-7001
(07)607-2237
(07)365-8867
(07)802-4246
(08)766-6827
(06)927-6225

III. Company history (I) Date of establishment:

The Company was founded on September 4, 1962 with a goal to contribute to the "stability of the domestic economy, welfare of the society, and prosperity of the industrial and commercial sectors." Headquartered at No. 91, Section 1, Zhongxiao West Road, Taipei City, the Company began with a simplified organization with only two departments: Finance and Business. Owing to the management's conservative business approach and employees' contribution, the Company has been able to expand business with much success, and self-funded the construction of "First Insurance Tower" at No. 54, Section 1, Zhongxiao East Road, Taipei City, later on 1973.

(II) Milestones and developments:

January 1, 1975 marked the completion of the main office tower. Meanwhile, growing business activities led the Company to expand its internal organization and adopt a structure comprising five departments, namely: Finance Department, Administration Department, Fire Insurance Department, Casualty Insurance Department, and Marine Insurance.

To further support business growth, the Company began establishment of a comprehensive service network by creating branch offices in Taichung and Kaohsiung, followed by liaison offices in main counties and cities throughout Taiwan.

Since the re-organization in June 1984, the Company has been introducing new solutions to improve work efficiency, service quality and financial position, and making reviews and improvements to existing management practices. Over time, the Company has developed a robust structure comprising multiple departments such as: Fire Insurance Department, Marine Insurance Department, Motor Insurance Department, Casualty Insurance Department, Business Department, Marketing Department, Finance Department, Accounting Department, Auditing Department, Information Department and Planning Department. 1993

The Company's shares were approved for public offering by Securities and Futures Commission, Ministry of Finance. 1995

Under the approval granted by the Ministry of Finance in Letter No. Tai-Cai-Bao-841504666 dated May 6, 1995, the Company created three new liaison offices: Chiali, Toufen and Dounan on May 15, 1995. 1996

Under the approval granted by the Ministry of Finance in Letter No. Tai-Cai-Bao-851846380 dated July 23, 1996, the Company created its new Fengshan Liaison Office at 6F, No. 360, Section 1, Qingnian Road, Fengshan District, Kaohsiung County on August 1, 1996.
Under the approval granted by the Ministry of Finance in Letter No. Tai-Cai-Bao-851846344 dated November 26, 1996, the Company created its new Dali Liaison Office at No. 28, Daming Road, Dali City, Taichung County.

1997

Under the approval granted by the Ministry of Finance in Letter No. Tai-Cai-Bao-861768724 dated March 18, 1997, the Company created its new Gangshan Liaison Office at 3F, No. 138, Zhongshan North Road, Gangshan Township, Kaohsiung County.
Under the approval granted by the Ministry of Finance in Letter No. Tai-Cai-Bao-861782565 dated May 8, 1997, the Company created its new Taoyuan Liaison Office at 3F-5-2, No. 9, Jingguo Road, Taoyuan City.

2000

Under the approval granted by the Ministry of Finance in Letter No. Tai-Cai-Bao-0890707409 dated August 2, 2000, the Company created its Daya

Liaison Office at 1F and 2F, No. 127, Section 2, Yahuan Road, Daya Township, Taichung County.

Under the approval granted by the Ministry of Finance in Letter No. Tai-Cai-Bao-0890709387 dated September 27, 2000, the Company created its new Tainan Branch Office at 5F, No. 515, Chenggong Road, West Central District, Tainan City
Under the approval granted by the Ministry of Finance in Letter No. Tai-Cai-Bao-0890712554 dated December 26, 2000, the Company renamed its Gangshan Liaison Office to Luchu Liaison Office.
Under the approval granted by the Securities and Futures Bureau, Ministry of Finance, in Letter (89)Tai-Cai-Zheng-(I) No. 72667 dated August 24, 2000, the Company's shares were listed for trading on TWSE on November 28 (Tuesday), 2000.

2001

The Company created its Nantze Liaison Office at 14F, No. 800, Junxiao Road, Kaohsiung City on July 1, 2001, and registered with The Non-Life Insurance Association.
Under the approval granted by the Ministry of Finance in Letter No. Tai-Cai-Bao-0900709457 dated October 16, 2001, the Company created its Taipei County Branch Office at 16F, No. 37, Section 2, Sanmin Road, Banqiao City, Taipei County, and Taochu Branch Office at 21F-2, No. 398, Huanbei Road, Zhongli District, Taoyuan City.
2002
The Company created its Rende Liaison Office at No. 1147, Section 2, Zhongzheng Road, Rende Township, Tainan City on January 1, 2002, and registered with The Non-Life Insurance Association.
The Company created its Banqiao Liaison Office at 3F, No. 105, Section 1, Sichuan Road, Banqiao City, Taipei County on December 1, 2002, and registered with The Non-Life Insurance Association.
The Company created its Shuanghe Liaison Office at 1F, No. 8, Dehe Road, Yonghe City, Taipei County on December 1, 2002, and registered with The Non-Life Insurance Association.

2003

On September 1, 2003, the Company renamed its Dounan Liaison Office to Yunlin Liaison Office, and registered with The Non-Life Insurance Association.

2004

The Company created its Toufen Liaison Office on January 1, 2004, and registered with The Non-Life Insurance Association.
On June 8, 2004, the Company's "The First Golfer All Risks Insurance" won Best Product during RMIM's "Insurance Faith, Hope, and Love Award."
Customer Service Department was created on August 26, 2004.
Actuarial Department was created on August 26, 2004.
Direct Marketing Department was created on August 26, 2004.
Financial Insurance Marketing Department was created on August 26, 2004.
The Company created its Donggang Liaison Office on November 1, 2004, and registered with The Non-Life Insurance Association.
The Company created its Madou Liaison Office on November 1, 2004, and registered with The Non-Life Insurance Association.
The Company created its Chongde Liaison Office on November 1, 2004, and registered with The Non-Life Insurance Association.
The Company created its Baojian Liaison Office on November 1, 2004, and registered with The Non-Life Insurance Association.
The Company created its Puzi Liaison Office on November 1, 2004, and

registered with The Non-Life Insurance Association.

The Company created its Douliu Liaison Office on November 1, 2004, and registered with The Non-Life Insurance Association.
The Company created its Beidou Liaison Office on November 1, 2004, and registered with The Non-Life Insurance Association.
The Company created its Bade Liaison Office on November 1, 2004, and registered with The Non-Life Insurance Association.
On November 30, 2004, Taiwan Ratings Corp. awarded the Company a rating "twA+" for financial strength and issuer credit while S&P awarded a rating of "BBB"; both institutions concluded a "Stable" outlook.
The Company created its Xinzhuang Liaison Office on December 24, 2004, and registered with The Non-Life Insurance Association.

2005

The Company created its Xiaogang Liaison Office on April 22, 2005, and registered with The Non-Life Insurance Association.
The Company created its Zhubei Liaison Office on May 1, 2005, and registered with The Non-Life Insurance Association.
The Company created its Xinyi Liaison Office on December 1, 2005, and registered with The Non-Life Insurance Association.

2006

The Company created its Xinpu Liaison Office on January 1, 2006, and registered with The Non-Life Insurance Association.
On December 6, 2006, Taiwan Ratings Corp. awarded the Company a rating "twA+" for financial strength and issuer credit,

along with a "Stable" outlook.

2007

The Company created its Penghu Liaison Office on September 1, 2007, and registered with The Non-Life Insurance Association.
On November 20, 2007, Taiwan Ratings Corp. awarded the Company a rating "twA+" for financial strength and issuer credit,

along with a "Positive" outlook.

The Company closed down Xiaogang Liaison Office on December 20, 2007, and registered with The Non-Life Insurance Association.

2008

The Company closed down Madou Liaison Office on March 1, 2008, and registered with The Non-Life Insurance Association.
The Company closed down Xinzhuang Liaison Office on April 1, 2008, and registered with The Non-Life Insurance Association.
The Company closed down Daya Liaison Office on August 20, 2008, and registered with The Non-Life Insurance Association.
On September 18, 2008, Taiwan Ratings Corp. (Taiwan Ratings) awarded The First Insurance Co., Ltd. (First Insurance) a rating of "twA+" for issuer credit and financial strength, and adjusted outlook from "Positive" to "Stable." Meanwhile, S&P gave First Insurance an issuer credit and financial strength rating of "BBB," and adjusted outlook from "Positive" to "Stable."
The Company closed down Shuanghe Liaison Office on October 1, 2008, and registered with The Non-Life Insurance Association.
The Company closed down Chongde Liaison Office on October 31, 2008, and registered with The Non-Life Insurance Association.
The Company closed down Dali Liaison Office on November 1, 2008, and registered with The Non-Life Insurance Association.
On November 18, 2008, Taiwan Ratings awarded First Insurance a rating of "twA+" for issuer credit and financial strength, along with a "Stable" outlook.

Meanwhile, S&P gave First Insurance an issuer credit and financial strength rating of "BBB," along with a "Stable" outlook.

The Company closed down Douliu Liaison Office on December 1, 2008, and registered with The Non-Life Insurance Association.

2009

The Company closed down Beidou Liaison Office on January 31, 2009, and registered with The Non-Life Insurance Association.
The Company closed down Xindian Liaison Office on February 11, 2009, and registered with The Non-Life Insurance Association.
Taipei County Branch Office was renamed Taipei Branch Office with a change of the person-in-charge. The change had been approved by the Financial Supervisory Commission, Executive Yuan, under Letter No. Jin-Guan-Bao-3-09802053130 dated April 3, 2009.
The Company closed down Puzi Liaison Office on June 1, 2009, and registered with The Non-Life Insurance Association.
The Company closed down Donggang Liaison Office on June 30, 2009, and registered with The Non-Life Insurance Association.
The Company closed down Zhubei Liaison Office on July 17, 2009, and registered with The Non-Life Insurance Association.
On December 3, 2009, Taiwan Ratings awarded First Insurance a rating of "twA+" for issuer credit and financial strength, along with a "Stable" outlook. Meanwhile, S&P gave First Insurance an issuer credit and financial strength rating of "BBB," along with a "Stable" outlook.
2010
Risk Management Department was created on August 25, 2010.
On November 19, 2010, Taiwan Ratings awarded First Insurance a rating of "twA+" for issuer credit and financial strength, along with a "Stable" outlook. Meanwhile, S&P gave First Insurance an issuer credit and financial strength rating of "BBB," along with a "Stable" outlook.
2011
The Company created its Luzhou Liaison Office on July 1, 2011, and registered with The Non-Life Insurance Association.
The Company created its Xindian Liaison Office on July 1, 2011, and registered with The Non-Life Insurance Association.
On November 10, 2011, Taiwan Ratings awarded First Insurance a rating of "twA+" for issuer credit and financial strength, along with a "Stable" outlook. Meanwhile, S&P gave First Insurance an issuer credit and financial strength rating of "BBB," along with a "Stable" outlook.

2012

On November 20, 2012, Taiwan Ratings awarded First Insurance a rating of "twA+" for issuer credit and financial strength, along with a "Stable" outlook. Meanwhile, S&P gave First Insurance an issuer credit and financial strength rating of "BBB," along with a "Stable" outlook.

2013

Shulin Liaison Office was renamed Xinshu Liaison Office on January 1, 2013.
On July 3, 2013, Taiwan Ratings adjusted First Insurance's issuer credit and financial strength rating from "twA+" to “twAA-,” and gave a "Stable" outlook. Meanwhile, S&P adjusted First Insurance's issuer credit and financial strength rating from "BBB" to "BBB+” and gave a "Stable" outlook.
The Company closed down Xinpu Liaison Office on September 1, 2013, and registered with The Non-Life Insurance Association.
On November 14, 2013, Taiwan Ratings awarded First Insurance a rating of "twAA-" for issuer credit and financial strength, along with a "Stable" outlook.

Meanwhile, S&P gave First Insurance an issuer credit and financial strength rating of "BBB+," along with a "Stable" outlook.

The Company closed down Xinyi Liaison Office on December 31, 2013, and registered with The Non-Life Insurance Association.

2014

Rende Liaison Office was renamed Yongkang Liaison Office on May 19, 2014 2. Under the approval granted by the Financial Supervisory Commission in Letter No. Jin-Guan-Bao-Chan-10302109800 dated September 11, 2014, the Company reappointed David Huang as the new President, amended business registration, and made a placement issue of business license.
On November 27, 2014, Taiwan Ratings awarded First Insurance a rating of "twAA-" for issuer credit and financial strength, along with a "Stable" outlook. Meanwhile, S&P gave First Insurance an issuer credit and financial strength rating of "BBB+," along with a "Stable" outlook.

2015

Compliance Department was created on January 1, 2015.
Direct Marketing Department was removed on February 15, 2015.
E-Commerce Marketing Department was created on February 16, 2015.
On November 25, 2015, Taiwan Ratings awarded First Insurance a rating of "twAA-" for issuer credit and financial strength, along with a "Stable" outlook. Meanwhile, S&P gave First Insurance an issuer credit and financial strength rating of "BBB+," along with a "Stable" outlook.

2016

Corporate Governance Center was created on March 28, 2016.
On November 28, 2016, Taiwan Ratings awarded First Insurance a rating of "twAA-" for issuer credit and financial strength, along with a "Stable" outlook. Meanwhile, S&P gave First Insurance an issuer credit and financial strength rating of "BBB+," along with a "Stable" outlook.

2017

On November 17, 2017, Taiwan Ratings awarded First Insurance a rating of "twAA-" for issuer credit and financial strength, along with a "Stable" outlook. On November 27, 2018, S&P gave First Insurance an issuer credit and financial strength rating of "BBB+," along with a "Stable" outlook.
2018
Removed Personal Lines Insurance Group, Commercial Lines Insurance Group and Special Lines Insurance Group, and reorganized all subordinate departments under the Business Group.
Removed Management Support Resource Group and Enterprise Development Resource Group, and reorganized all subordinate departments under the Resource Management Group.
Renamed Personal Insurance Department to Accident and Health Insurance Department.
Established Xiaogang Liaison Office on May 1, 2018
On November 20, 2018, Taiwan Ratings adjusted First Insurance's rating to "twAA" for issuer credit and financial strength, and issued a "Stable" outlook. On November 20, 2018, S&P adjusted First Insurance's issuer credit and financial strength rating to "A-," and issued a "Stable" outlook.

2019

Established Chunglung Liaison Office on January 1, 2019
On November 25, 2019, Taiwan Ratings adjusted First Insurance's rating to "twAA" for issuer credit and financial strength, and issued a "Stable" outlook. On November 25, 2019, S&P confirmed First Insurance's issuer credit and financial strength rating at "A-," and issued a "Stable" outlook.
(III) Mergers, acquisitions, investments in affiliated companies, and restructuring that took

place in the last financial year, up till the publication date of annual report: None.

(IV) Major transfer of shareholding by directors, supervisors or shareholders with more than 10% ownership interest, change in management, business model or business activities or other events of significant impact on shareholders' equity: None.

Three. Corporate Governance Report

I. Organization System

(I) Organizational Structure

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01.01.2019
General Meeting
of Shareholders
Auditing
Board of Department
Management Corporate
Chairman Governance Center
Compliance
President
Department
Executive Vice
President
Resource
Business
Management
Group Group
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14
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(II) The job function of the departments are specified below:
Auditing Dept.: administer the examination and audits of all operations of the corporate HQ and the branches, evaluate the performance of the self-assessment of the departments and assigned duties.
Administration Dept.: the purchase, registration, and management of supplies, disposition of residual supplies by auction, the trading, leasing, management and registration of company tools, equipment and property, and the receiving, collection of premiums, management, review and keeping of statistical reports. Cashier service, registration and keeping of funds and marketable securities, and indentures, and special operations related to application of funds.
Accounting Dept.: administer the budgeting and account settlement of the Company, design of the accounting system, accounting and statistical compilation, request for commission payment, joint effort in the acceptance of printed matters, stationary, machines and equipment, and other duties as required by law.
Planning Dept.: administer the personnel management of the Company, which includes human resources, personnel administration, training and management, the design of long and short-term business plans, the surveys and design of different systems and organizations, and related revision and amendment. Perform secretarial duties; receive, distribute and proofread documents; sort out and keep seals and files; and deal with matters related to meetings of the Board of Director and shareholders' meetings in accordance with the law. Implement systematic and rational practices for handling complaints, and develop procedures for resolving consumer disputes and grievance.
Information Dept.: administer the design, installation, and keeping of the whole information system, design and implement data processing in all departments, the analysis, backup, development and maintenance of all operating systems and data use, the research and development, improvement, recommendation of the use of related information technologies, information security planning, monitoring, management operations, and other related matters.
Motor Insurance Dept.: administer the research and development and business design of motor insurance products, business development, policy underwriting, the review, establishment and keeping of the reinsurance contracts and counter-protection business, the generation, study and improvement of related statements and reports.
Fire Insurance Dept.: administer the design of products for fire insurance and allied perils, business development, underwriting of policy, domestic and overseas reinsurance contracts, agreements, clause, statement and the adjustment, indemnity of reinsurance and benefit claims of fire insurance, fire allied perils insurance and contractors’ insurance, liability insurance claims and related establishment, study, and improvement.
Casualty Insurance: administer the research and development and design of contractors’ insurance and liability insurance, business development, policy underwriting, domestic and overseas reinsurance contracts, agreements, clause, statements, engineering insurance, liability insurance claims, sharing of claims, indemnity of reinsurance, and the establishment, study, and improvement of related business.
Marine Insurance Dept.: administer the research and development and design of

marine cargo insurance, marine hull insurance, transport insurance and related products, business design, business service development, policy underwriting, domestic and overseas reinsurance contracts, agreements, clause, statement, and the adjustment of claims, indemnity of reinsurance, claims processing and the establishment, study, and improvement of related business.

The Business Production Depts: development of all insurance business and performing of assigned duties. Recruitment and management of marketing personnel, managers, agents, and sale personnel and related training. Market intelligence and adjustment of policy and analysis and review of business performance, and study on improvement.
Marketing Dept.: administer the design and assignment of business targets. Study, implementation, development and maintenance of joint marketing plans with automobile insurance agent, life insurance and banks. Development and establishment of newly emerged channels such as strategic alliance, Internet, telephone, mail and joint marketing. Recruitment, training, and employment of marketing personnel. Performance of duties assigned by superior officers. Response and recommendation of marketing related activities
Accident and Health Insurance Dept.: administer the research and development of the design of personal accident insurance and health insurance products, development of personal accident insurance and health insurance service and policy underwriting, preparation of statements and the review, establishment, and keeping of reinsurance and counter-protection contracts, adjustment of claims, indemnity of reinsurance, claims processing and the study, improvement and recommendation of related reinsurance.
Customer Service Dept.: administer the adjustment of claims, indemnity of reinsurance, and claims processing of automobile insurance, preparation of statements and rejection of claims with controversy, financing and proceedings in summary court, handling stolen cars, and the establishment, study, and improvement of related business.
Actuarial Dept.: administer the setting and review of insurance premium rate and liability reserve, decision-making in investment, assessment of the ability to repay debt, research and development of products and participation in the sale procedure, the research and development, improvement and recommendation of actuarial techniques.
Risk Management Dept.: administer risk management policies, structure, organizational functions, risk tolerance, and review the development, installation, and performance of the overall risk management mechanism, assistance and monitoring of the risk management taken by the departments, report on risk management at regular intervals and presentation of reports to the Board with timely feedback on the status of risk management in action, and give recommendation necessary for improvement.
Compliance Dept.: design, management and implementation of compliance system, legal proceedings, reconciliation, compulsory action, contracts and postal witness statements, study, review and counter-signature of insurance products before selling, gathering of information and study on insurance related laws and related amendment, supervision on anti-money laundering and personal information protection and

compliance with applicable laws, legal affairs and improvement.

Corporate Governance Center: coordinate and administer the Corporate Social Responsibility Committee, Outsourcing Committee, Equal Treatment of Customers Committee, Ethical Corporate Management Committee and other matters of corporate governance.

II. Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:

(I) Directors

1. Profiles of Directors

																	April 30, 2020	April 30, 2020	April 30, 2020	April 30, 2020
Title (Note 1)	Nationality of place of registration	Name	Sex	Date of (elected to) office:	Tenure	Initial date of elected to office (Note 2)	Quantity of shareholding at the time of elected to office		Current shareholding		Shareholding of spouse and dependents		Shareholding in the name of a third party		Major career (academic) achievements (Note 3)	Holding other positions of the Company and other companies at present	Other executive, Director or Supervisor who is a spouse or kindred within the 2nd tier under the Civil Code.			Remarks (Note 4)
							Number of shares	Proportion of shareholding	Number of shares	Proportion of shareholding	Number of shares	Proportion of shareholding	Number of shares	Proportion of shareholding			Title	Name	Relation
Chairman	Republic of China	Yi Chi Co., Ltd.	-	2019/06/27	3 years	1984/06/28	4,928,750	1.64%	4,928,750	1.64%	0	0%	0	0%	None	None	None	None	None	-
	Republic of China	Representa tive C. H. Lee	Male	2019/06/27	3 years	1990/03/09	1,699,367	0.56%	1,699,367	0.56%	3,719,751	1.24%	0	0%	Master, USIU, USA	Executive Director: Da Feng Construction Engineering Co., Ltd; Taiwan Fuji Die Co., Ltd., Chien Chi Co., Ltd.; Representative of Institutional Executive Director: Tsai Cheng Enterprise Co., Ltd., Chien Cheng Development Co., Ltd.; Director: Tu Ho Enterprise Co., Ltd., Chung Cheng Enterprise Co., Ltd., Chin Rai Chang Construction Co., Ltd., Yi Chi Co., Ltd. Lee Chien Cheng Memorial Education Foundation; Representative of Institutional Director: Hai Hwa Construction Co., Ltd., Hwa Wang Construction Co., Ltd., Taiwan Construction Management Co., Ltd.; Supervisor: Forbes Construction Co.,Ltd.	Director Director Director	Cheng-Ts ung Lee Cheng-Tu Lee Edward Y. C. Lee	Brothers Brothers Father and son	None
Director	Republic of China	Chien Yi Industrial Co.,Ltd.	-	2019/06/27	3 years	1984/06/28	7,335,189	2.44%	7,385,189	2.45%	0	0%	0	0%	None	None	None	None	None	-

	Republic of China	Representa tive: Cheng-Tsu ng Lee	Male	2019/06/27	3 years	1984/06/28	1,329,102	0.44%	1,329,102	0.44%	183,647	0.06%	0	0%	Department of Civil Engineering, Tamkang University	Chairman: Chien Cheng Development Co., Ltd., Taiwan Fjui Die Co., Ltd., Chien Yi Industrial Co., Ltd., Forbes Construction Co., Ltd., Chin Rai Chang Construction Co., Ltd., Yi Fang Co., Ltd., Lee Chien Cheng Memorial Education Foundation, Hwa Wang Construction Co., Ltd., Hai Hwa Construction Co., Ltd., Taiwan Apartment Management and Maintenance Co., Ltd., Taiwan Architecture Management Co., Ltd., Representative of Institutional Director: Chung Cheng Enterprise Co., Ltd., Chi Yi Construction Management Co., Ltd.; Director: Tu Ho Enterprise Co., Ltd., Rai San Co., Ltd., Executive Director: Tsai Cheng Enterprise Co., Ltd., Bao Shan Construction Co.,Ltd.	Chairman Director	C. H. Lee Cheng-Tu Lee	Brothers	-
Director	Republic of China	Cheng-Tu Lee	Male	2019/06/27	3 years	1990/06/23	3,296,991	1.09%	3,296,991	1.09%	381,355	0.13%	0	0%	Department of Accounting, Shih Chien University	Chairman: Tu Ho Enterprise Co., Ltd., Da Feng Construction Engineering Co., Ltd., Tsai Cheng Enterprise Co., Ltd., Chung Cheng Enterprise Co., Ltd.; Representative of Institutional Director: Hwa Wang Construction Co., Ltd., Hai Hwa Construction Co., Ltd., Taiwan Architecture Management Co., Ltd.; Executive Director: Chien Cheng Development Co., Ltd., Taiwan Fuji Die Co., Ltd., Yung Chi Enterprise Co., Ltd., Chin Shi Engineering Co., Ltd.; Director: Forbes Construction Co., Ltd., Lee Chien Cheng Memorial Education Foundation; Supervisor: Chin Rai Chang Construction Co., Ltd.; Representative of Institutional Supervisor: Chia Tai Construction Co., Ltd., Taiwan Apartment Management and Maintenance Co.,Ltd.	Director Chairman	Cheng- Tsung Lee C. H. Lee	Brothers	-
Director	Republic of China	Edward Y. C. Lee	Male	2019/06/27	3 years	2019/06/27	2,807,896	0.93%	2,807,896	0.93%	0	0%	0	0%	Master of Chemical Materials, Michigan State University	Director: Yi Chih Co., Ltd.; Representative of Institutional Director: Chien Cheng Development Co., Ltd., Tsai Cheng Enterprise Co., Ltd.	Chairman	C. H. Lee	Father and son	-

Director	Republic of China	Shao-Ying Lee	Male	2019/06/27	3 years	2010/06/25	195,104	0.06%	195,104	0.06%	208	0%	0%	Department of Civil Engineering, Tamkang University	Director: Tsai Cheng Enterprise Co., Ltd., Chien Cheng Development Co., Ltd., Bao Shan Construction Co., Ltd., Yung Chi Enterprise Co., Ltd., Chin Shi Engineering Co., Ltd.; Supervisor: Da Feng Construction Engineering Co., Ltd., Rai San Co.,Ltd.	None	None	None	-
Director	Republic of China	Chimax Developme nt Company	-	2019/06/27	3 years	1993/05/27	1,357,389	0.45%	1,357,389	0.45%	0	0%	0%	None	None	None	None	None	-
	Republic of China	Representa tive: Chi-Cheng Lai	Male	2019/06/27	3 years	2014/05/05	241,968	0.80%	241,968	0.80%	83,830	0.03%	0%	Department of Natural Resources, Chinese Culture University	Chairman: Chimax Development Company; Director: Yuan Hu Construction Co., Ltd.: Supervisor: Bao Shan Construction Co., Ltd.	None	None	None	-
Director	Republic of China	David Huang	Male	2019/06/27	3 years	June 24, 2016	828,518	0.28%	828,518	0.28%	5,114	0%	0%	Dept. of Business Administrati on, Soochow University	None	None	None	None	-
Director	Republic of China	Cheng-Chi n Lee	Male	2019/06/27	3 years	2001/05/25	347,000	0.12%	347,000	0.12%	190,000	0.06%	0%	Corporate Management , Dept. of Business Administrati on, Takushoku University, Japan	Chairman: Bao Shan Construction Co., Ltd.; Director: Si Yuan Co., Ltd., Teng Hong Co., Ltd.; Executive Director: Rai San Co., Ltd., Chien Cheng Development Co., Ltd.	None	None	None	-
Director	Republic of China	Da Feng Constructi on Engineerin gCo.,Ltd.	-	2019/06/27	3 years	2010/06/25	15,823,085	5.25%	15,823,085	5.25%	0	0%	0%	None	None	None	None	None	-
	Republic of China	Representa tive: Chien-Yi Hsu	Male	2019/06/27	3 years	2010/06/25	0	0%	0	0%	0	0%	0%	Department of Accounting, Soochow University	Chairman: Chia Tai Construction Co., Ltd.; Representative of Institutional Supervisor: Taiwan Real Estate Management Co., Ltd.; Supervisor: Chi Yi Architecture Management Co., Ltd.; Director: Lee Chien Cheng Memorial Education Foundation, Yi Kuang Enterprise Development Co.,Ltd.	None	None	None	-
Director	Republic of China	Chien Cheng Developme nt Co.,Ltd.	-	2019/06/27	3 years	2004/05/27	18,806,192	6.24%	18,806,192	6.24%	0	0%	0%	None	None	None	None	None	-
	Republic of China	Representa tive: Tien-Ching Yang	Male	2019/06/27	3 years	2004/05/27	0	0%	0	0%	0	0%	0%	Disciplined in commerce, Chang Hwa Senior Commercial High School	Representative of Institutional Supervisor: Taiwan Fuji Die Co., Ltd.; Director: Lee Chien Cheng Memorial Education Foundation; Supervisor: Chien Da Technology Co., Ltd.	None	None	None	-

Independent Director	Republic of China	Jui-Tung Lu	Male	2019/06/27	3 years	June 24, 2016	0	0%	0	0%	0	0%	0	0%	Dept. of Business Administrati on, Tamkang University	None	None	None	None	-
Independent Director	Republic of China	Jui-Chou Lin	Male	2019/06/27	3 years	2019/06/27	0	0%	0	0%	0	0%	0	0%	MBA, School of Tourism, Ming Chuan University	None	None	None	None	-
Independent Director	Republic of China	Hsiu-Mei Lin	Female	2019/06/27	3 years	2019/06/27	0	0%	0	0%	0	0%	0	0%	Master of Commerce, Postgraduate Institute of Accounting, Soochow University	None	None	None	None	-

Note 1: For institutional shareholders, the names and representatives are stated individually (for representatives, the names of the respective corporate shareholders they represent are stated separately), and additional disclosures are made in Table 1.
Note 2: Any disruption of duty as a director or supervisor after the date first elected is addressed in a separate remark.
Note 3: The work experiences of anyone above relating to their current roles, e.g. previous employment in the CPA's firm or employment in a related company, are disclosed with detailed job titles and responsibilities.
Note 4: In situations where the Company's President or manager of the highest equivalent grade is the same person as or a spouse or first-degree relative of the Chairman, please explain the reasons, rationality and necessity of such an arrangement and any response measures taken (such as introduction of independent directors). Furthermore, disclose whether more than half of directors are involved in concurrent duty as employees or managers.

Table 1: Dominant Shareholders of Institutional Shareholders

April 30, 2020

	April 30,2020
Name of institutional shareholder(Note 1)	Dominant shareholders of institutional shareholders (Note 2)
Yi Chih Co., Ltd.	C. H. Lee(47.97%), Hsiu-Chuan Lee-Yang(14.64%), Edward Y. C. Lee(7.93%), Ching-Ju Lee (6.67%), Wei-Ju Lee (6.67%), Teh-Sung Yang (3.33%),Teh-Hui Yang (2.5%),Hsiu-Mei Yang (1.25%)
Chien Yi Industrial Co., Ltd.	Cheng-Tsung Lee(56.57%), Yueh-Hwa Lee-Chang(6.24%), Po-Wei Lee(20.37%), Chan-Kuei Chang (2%), Chi-Chuan Chang (1.33%), Wan-LingLee(0.8%),Wan-Chi Lee(0.8%),Wan-Hsuan Lee(0.8%)
Chimax Development Company	Chi-Chen Tu(5.77%), Chi-Jen Tu (9.65%), Chao-Mei Lin (17.93%), Chi-Hsiu Tu (5.6%), Chi-Chung Tu (5.1%), Chi-Hsiang Tu (5%), Chi-Yuan Tu(9%),Li-JungTu(0.68%)
Chien Cheng Development Co., Ltd.	Chien Yi Industrial Co., Ltd.,(10.93%), Tu Ho Enterprise Co., Ltd. (9.34%), Yi Chi Co., Ltd. (6.44%), Po-Wen Yang (4.5%), Kai Heng Co., Ltd.(4.47%), Tsai Rai Enterprise Co., Ltd. (3.51%), Cheng-Tsung Lee(2.46%), Chu Kuan Enterprise Co., Ltd. (2.33%), Da Feng Construction Engineering Co., Ltd. (2.22%), Ching-Hsiang Chang (2.11%).
Da Feng Construction Engineering Co., Ltd.	Tsai Cheng Enterprise Co., Ltd. (13.09%), Kai Heng Co., Ltd. (6.78%), Tu Ho Enterprise Co., Ltd. (6.57%), Po-Wen Yang (4.57%), C. H. Lee (4.2%), Chien Yie Industrial Co., Ltd. (3.95%), Cheng-Tsung Lee (3.9%), Chia-Lang Chang(3.09%), Tsai Jui Enterprise Co.,Ltd.(3%),Chu Kuan Enterprise Co.,Ltd.(2.63%).

Note 1: Where Directors and Supervisors are representatives of institutional shareholders, the names of institutional shareholders are displayed. Note 2: The above Table shows the names and shareholding percentages of dominant shareholders (top 10 shareholders) in each of the Company’s institutional shareholders. If the dominant shareholders of the Institutional Shareholders are also institutional shareholders, fill in Table 2 below. Note 3: For institutional shareholders that are not corporate entities, the name of capital contributor or donor and percentage of capital contribution or donation are shown instead of shareholder name and shareholding percentage.

Name of institution (Note 1)	Dominant shareholders of the institution (Note 2)
Yi Chih Co., Ltd.	C. H. Lee (50.29%), Hsiu-Chuan Lee-Yang (16.96%), Edward Y. C. Lee (12.33%), Ching-Ju Lee (6.67%), Wei-Ju Lee (6.67%), Teh-Sung Yang (3.33%),Teh-Hui Yang (2.5%),Hsiu-Mei Yang (1.25%)
Tu Ho Enterprise Co., Ltd.	Cheng-Tu Lee(38.85%), C. H. Lee(1.43%), Chia-Chia Lee (11.55%), Ching-Fang Lee-Wu(31.19%), Cheng-Tsung Lee(1.43%), Wei-Wei Lee (2.86%), You-You Lee (2.86%), Hsiu-Chuan Lee-Yang (0.71%),Tien-ChingYang (0.71%)
Chien Yi Industrial Co., Ltd.	Cheng-Tsung Lee(56.57%), Yueh-Hwa Lee-Chang(6.24%), Po-Wei Lee(20.37%), Chan-Kuei Chang (2%), Chi-Chuan Chang (1.33%), Wan-LingLee(0.8%),Wan-Chi Lee(0.8%),Wan-Hsuan Lee(0.8%)
Tsai Rui Enterprise Co., Ltd.	Pei-Chuan Lee (98.33%), Chin-Yun Chang (1.67%)
Chu Kuan Enterprise Co., Ltd.	Pei-Ting Lee(42.28%), Cheng-Hsiu Tsai (5.58%), Ai-Ju Tsai (26.07%),Cheng-Han Tsai(26.07%).
Tsai Cheng Enterprise Co., Ltd.	Tu Ho Enterprise Co., Ltd. (18.18%), Chung Cheng Enterprise Co., Ltd. (8.33%), Chien Cheng Development Co., Ltd. (6.67%), Yi Chi Co., Ltd.(7.84%), Kai Heng Co., Ltd. (5.62%), Da Feng Construction Engineering Co., Ltd. (5%), Po-Wen Yang (4.5%), Chien Yi Industrial Co.,Ltd.(6.02%),Hui-Li Chang (4.02%),Chia-LangChang (2.71%).

Da Feng Construction Engineering Co., Ltd.	Tsai Cheng Enterprise Co., Ltd. (13.09%), Kai Heng Co., Ltd. (6.78%), Tu Ho Enterprise Co., Ltd. (6.57%), Po-Wen Yang (4.57%), C. H. Lee (4.2%), Chien Yie Industrial Co., Ltd. (3.95%), Cheng-Tsung Lee (3.9%), Chia-Lang Chang(3.09%), Tsai Jui Enterprise Co.,Ltd.(3%),Chu Kuan Enterprise Co.,Ltd.(2.63%).
Kai Heng Co., Ltd.	Yang-Ming Chen(2.40%), Pei-Fen Lee(2.40%), Kai-Lung Chen (15.13%), Kai-Chun Chen (14.80%), Ou-Shan Chang (0.13%),Cheng-Kuang Tseng (0.13%), Chin-Yun Chang (0.13%), You-Tsai Hsieh (0.13%), Jung-Tai Fang (0.13%), GOSUCCESS PROPERTIES LIMITED(62.93%)

Table 2: Table 1- Dominant shareholders of the Institutional Shareholders are institutional shareholders.

April 30, 2020

Note 1: Where dominant shareholders listed in Table 1 are institutions, the names of the institutions are displayed.

Note 2: The above Table shows the names and shareholding percentages of dominant shareholders (top 10 shareholders) in the respective institutions.

Note 3: For institutional shareholders that are not corporate entities, the name of capital contributor or donor and percentage of capital contribution or donation are shown instead of shareholder name and shareholding percentage.

2. Professional standing and independence of the Independent Directors

Criteria Name (Note1)	More than 5 years of work experience and the following professional qualification	More than 5 years of work experience and the following professional qualification	More than 5 years of work experience and the following professional qualification			Compliance of independence (Note 2)	Compliance of independence (Note 2)	Compliance of independence (Note 2)	Compliance of independence (Note 2)	Compliance of independence (Note 2)	Compliance of independence (Note 2)	Compliance of independence (Note 2)	Compliance of independence (Note 2)			Number of public companies that Independent Directors also hold positions
	As a lecturer or higher position at a public or private school of higher education in commerce, law, finance and banking, accounting, or the disciplines and subject required for company operation.	Professional or expert through national examinations with issuance of certificates such as court judge, public prosecutor, lawyer, accountants or other specialization required for company operation.	Work experience in commerce, law, finance and banking, accounting or necessary for company operation.	1	2	3	4	5	6	7	8	9	10	11	12
Yi Chih Co., Ltd. Representative: C. H. Lee			�	�	�				�	�	�	�		�		None
Chien Yi Industrial Co., Ltd. Representative: Cheng-TsungLee			�	�	�	�			�	�	�	�		�		None
Cheng-Tu Lee			�	�	�				�	�	�	�		�	�	None
Edward Y. C. Lee			�	�	�	�			�	�	�	�		�	�	None
Shao-Ying Lee			�	�	�	�	�		�	�	�	�	�	�	�	None
Chimax Development Company Representative: Chi-Chen Tu			�	�	�	�	�		�	�	�	�	�	�		None
David Huang			�	�	�	�	�	�	�	�	�	�	�	�	�	None
Cheng-Chin Lee			�	�	�	�	�		�	�	�	�	�	�	�	None
Da Feng Construction Engineering Co., Ltd. Representative: Chien-Yi Hsu			�	�	�	�	�		�	�	�	�	�	�		None

Chien Cheng Development Co., Ltd. Representative: Tien-Ching Yang		�	�	�	�	�		�	�	�	�	�	�		None
Jui-Tung Lu	�	�	�	�	�	�	�	�	�	�	�	�	�	�	None
Jui-Chou Lin		�	�	�	�	�	�	�	�	�	�	�	�	�	None
Hsiu-Mei Lin	�	�	�	�	�	�	�	�	�	�	�	�	�	�	None

Note 1: adjust the number of columns as needed.

s prior to the date elected.

(1) Not employed by the Company or by any of its affiliated companies.
(2) Not a director or supervisor of the Company or any of its affiliated companies (this restriction does not apply to concurrent independent director positions in the Company, its parent company, subsidiary, or another subsidiary of the parent that is compliant with the Act or local laws
).
(3) Does not hold more than 1% of the Company's outstanding shares in their own names or under the name of spouse, underage children, or proxy shareholder; nor is a top-10 natural-person shareholder of the Company.
(4) Not a manager listed in (1), or a spouse, 2nd-degree relative or closer or 3rd-degree direct relative or closer to any personnel listed in (2) or (3).
(5) Not a director, supervisor or employee of any corporate shareholder that: 1. holds 5% or more of the Company's outstanding shares; 2. is a top-5 shareholder; or 3. appoints director/supervisor representative in the Company according to Paragraph 1 or 2, Article 27 of The Company Act. (This excludes concurrent independent director positions held within the Company and its parent/subsidiary, or in other subsidiary of the parent company that are compliant with the Act or local laws).
(6) Not a director, supervisor or employee of any other company that controls directorship in the Company or where more than half of total voting rights are controlled by a single party (this excludes concurrent independent director positions held within the Company and its parent/subsidiary, or in other subsidiary of the parent company that are compliant with the Act or local laws).
(7) Does not assume concurrent duty and is not a spouse to the Company's Chairman, President or equivalent role, and is not a director, supervisor or employee of another company or institution. (This excludes concurrent independent director positions held within the Company and its parent/subsidiary, or in other subsidiary of the parent company that are compliant with the Act or local laws).
(8) Not a director, supervisor, manager, or shareholder with more than 5% ownership interest in any company or institution that has financial or business relationship with the Company (however, this excludes concurrent independent director positions held within companies or institutions that hold more than 20% but less than 50% outstanding shares of the Company, or in the Company's parent or subsidiary, or in another subsidiary of the parent that is compliant with the Act or local laws).
(9) Not a professional who provides audit service, or commercial, legal, financial, accounting or related services for an accumulated sum of less than NT$500,000 in the last 2 years, to the Company or its affiliate, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides the above service to the Company or its affiliated companies. This excludes roles as Remuneration Committee, Public Acquisition Review Committee or M&A Special Committee member appointed in accordance with the Securities and Exchange Act or Business Mergers And Acquisitions Act.
(10) Not a spouse or relative of second degree or closer to any other directors.
(11) Does not meet any of the conditions stated in Article 30 of The Company Act.
(12) Not elected as a government or corporate representative according to Article 27 of The Company Act.

(II) Profiles of the President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches

April 30, 2020

Title (Note 1)	Nationality	Name	Sex	Date of (elected to) office:	Shareholding	Shareholding	Shareholding by spouse or dependents	Shareholding by spouse or dependents	Shareholding in the name of a third party	Shareholding in the name of a third party	Major career (academic) achievements (Note 2)	Holding positions in other companies at present	A spouse or kindred within the 2nd tier under the Civil Code to a manager	A spouse or kindred within the 2nd tier under the Civil Code to a manager	A spouse or kindred within the 2nd tier under the Civil Code to a manager	Remarks (Note 3)
					Number of shares	Proportion of shareholding	Number of shares	Proportion of shareholding	Number of shares	Proportion of shareholding			Title	Name	Relation
President	Republic of China	Chu-Minn Leu	Female	2020/02/26	57,250	0.02%	0	0%	0	0%	Master of Applied Mathematics, National Tsing Hua University	None	None	None	None	None
Chief Internal Auditor	Republic of China	Ching Chang Chen	Male	2018/01/25	37,761	0.01%	0	0%	0	0%	Dept. of Business Administration, Feng Chia University	None	None	None	None	-
Chief Compliance Office at corporate HQ	Republic of China	Jen-Huai Liu	Male	2017/01/01	488	0%	0	0%	0	0%	Dept. of Law, Fu Jen Catholic University	None	None	None	None	-
Executive Vice President	Republic of China	C. S. Lin	Male	2006/04/27	34,854	0.01%	61,008	0.02%	0	0%	EMBA, Aletheia University	Director: Lee Chien Cheng Memorial Education Foundation	None	None	None	-
Executive Vice President	Republic of China	Stephen S.C. Shen	Male	2015/02/01	0	0%	0	0%	0	0%	Master of Risk Management and Insurance, National Cheng Chi University	Director: The Insurance Operations Society of the Republic of China; Supervisor: Chinese Insurance Service Association.	None	None	None	-
Executive Vice President	Republic of China	Tom C. T. Chen	Male	2018.03.28	168,888	0.06%	0	0%	0	0%	Dept. of Foreign Languages, National Taiwan University	None	None	None	None	-
Vice President, Business Group	Republic of China	Edward Y. C. Lee	Male	2019/01/01	2,807,896	0.93%	0	0%	0	0%	Master of Chemical Materials, Michigan State University	Director: Yi Chih Co., Ltd.; Representative of Institutional Director: Chien Cheng Development Co., Ltd., Tsai Cheng Enterprise Co.,Ltd.	None	None	None	-
Vice President, Business Group	Republic of China	Jack Chu	Male	2017/01/01	80,000	0.03%	3,000	0%	0	0%	Dept. of Banking and Insurance, Feng Chia University	None	None	None	None	-
Vice President, Business Department	Republic of China	Emerson Chien	Male	2014/09/05	0	0%	0	0%	0	0%	EMBA, National Cheng Chi University	None	None	None	None	-
Asst VP Accident Insurance Department	Republic of China	Yeong-Rong Hsiao	Male	2018/12/21	0	0%	0	0%	0	0%	Dept. of Insurance, Tamkang University	None	None	None	None	-
Vice President, Actuarial Department	Republic of China	Chen-Hsiung Lin	Male	2018/12/21	4,000	0%	0	0%	0	0%	Dept. of Applied Mathematics, National Chiao Tung University	None	None	None	None	-
Manager, Planning Dept.	Republic of China	Chuan-Wei Hu	Male	2019/06/01	0	0%	0	0%	0	0%	Department of Public Administration and Management and Department of Law, Chinese Culture University	None	None	None	None	-
Manager, Accounting Dept.	Republic of China	Fei-Fen Hsiao	Female	2018.03.01	0	0%	0	0%	0	0%	Dept. of Banking and Insurance, Hsiung Wu University	None	None	None	None	-
Vice President, Information Department	Republic of China	Beiru Lee	Female	2020/02/27	67,138	0.02%	1,000	0%	0	0%	Dept. of Applied Mathematics, National Cheng Kung University	None	None	None	None	-
Manager, Administration Dept.	Republic of China	Tung-Sen Shih	Male	2019/01/01	11,359	0%	0	0%	0	0%	Dept. of Financial Engineering and Actuarial Mathematics, Soochow University	None	None	None	None	-
Manager, Accident and Health Insurance Dept.	Republic of China	Ping-Change Chou	Male	2018/04/01	23,023	0.01%	18,127	0.01%	0	0%	Dept. of Horticulture, National Pingtung University of Science and Technology	None	None	None	None	-
Manager, Motor Insurance Dept.	Republic of China	Chang-Hong Chen	Male	2018/04/01	31,352	0.01%	19,684	0.01%	0	0%	Dept. of Banking and Insurance, Feng Chia	None	None	None	None	-

										University
Manager, Customer Service Dept.	Republic of China	Chien Wen Chen	Male	2018/04/01	0	0%	0	0%	0%	News Editing and Coverage, Shih Hsin University	None	None	None	None	-
Vice President, Taipei Region	Republic of China	Teh-Chun Chiang	Male	2019/01/01	850	0%	0	0%	0%	Dept. of Business Administration, Shih Chien University	None	None	None	None	-
Taipei Branch Office	Republic of China	S. Q. Chen	Male	2014/09/05	41,963	0.01%	0	0%	0%	Dept. of Chinese Literature, National Taiwan University	None	None	None	None	-
Taochu Branch Office	Republic of China	Tony J.Y. Wang	Male	2017/02/19	207,831	0.07%	0	0%	0%	Dept. of Accounting and Statistics, Chihlee University of Technology	None	None	None	None	-
Taichung Branch Office	Republic of China	Hsu-Wei Chen	Male	2014/01/01	28,621	0.01%	5,545	0%	0%	Asia University Dept. of International Business Administration	None	None	None	None	-
Tainan Branch Office	Republic of China	Wen-Tung Yen	Male	2008/05/30	50,608	0.01%	0	0%	0%	Dept. of Land Administration and Development, Chang Jung Christian University	None	None	None	None	-
Kaohsiung Branch Office	Republic of China	H. C. Huang	Male	2018/01/01	200,646	0.06%	0	0%	0%	MBA, National Chiayi University	None	None	None	None	-

Note 1: include background information on the President, Executive Vice Presidents, Vice Presidents, heads of various departments and branches, and anyone of equivalent authority to the above,
regardless of their job titles.
Note 2: Work experience relevant with the current position, such as the experience in a CPA firm or its affiliate within the aforementioned period of time, and specify the occupational title and the
professed duties.
Note 3: In situations where the Company's President or manager of the highest equivalent grade is the same person as or a spouse or first-degree relative of the Chairman, please explain the reasons, rationality and necessity of such an arrangement and any response measures taken, such as introduction of independent directors. Furthermore, disclose whether more than half of directors are involved in concurrent duty as employees or managers.
(III) Compensation paid to non-independent directors, independent directors, supervisors, the President and executive vice presidents in the last year
- I. If any of the following is applicable, disclose the names and remunerations to the Directors or Supervisors individually. The others could be disclosed in aggregate along the scale of payment, or the names and remunerations individually (for individual disclosure, specify the occupational title, name, and amount, and skip the bracket along the payment scale):
- (I) If there was a loss after taxation as presented in the separate financial statements, disclose the name and compensation to individual “Directors and Supervisors.” If there is earnings after taxation as stated in the separate financial statements of the most recent year sufficient to cover the loss carried forward, this requirement could be waived [Note 1].
- (II) If the shareholding of particular Director fell below the minimum requirements for more than 3 consecutive months in the most recent year, disclose the remuneration to such Director. If the shareholding of particular Supervisor fell below the minimum requirements for more than 3 consecutive months in the most recent year, disclose the remuneration to such Supervisor.
- (III) If particular Director or Supervisor pledged more than 50% of the shares in their holding in average under lien in any period of 3 months in the most recent year, disclose the remunerations to such Director or Supervisor in respective months in which the pledge of shares under lien exceeded 50% of their holding [Note 3].
- (IV) If all the Directors and Supervisors received more than 2% of the earnings after taxation of all companies included in the financial statements, and the remuneration to individual Directors or Supervisors is more than NT$15 million, disclose the remunerations to individual Directors or Supervisors. (Note: The abovementioned threshold shall be calculated based on "director compensation" and "supervisor compensation" sections shown in the Table, excluding compensations received for concurrent role as employee.)
- (V) Ranking in the worst tier of the most recent TWSE/TPEx corporate governance evaluation, or if the Company was denied evaluation by the Corporate Governance Evaluation Committee for reasons such as change of trading method, trade suspension or delisting at any time in the most recent year up till the publication of annual report.

(VI) Whether annual salary of full-time, non-managerial staff averaged less than NT$500,000 in the most recent year.

II. TWSE/TPEx listed companies that exhibit any of the conditions mentioned in (I) or (V) of the preceding Paragraph are required to disclose compensations received by the

top-5 paid managers (e.g. President, Executive Vice Presidents, CEO or head of finance).

[Note 1] For example: The General Meeting of Shareholders in 2020 compiled the annual report of 2019. If there was a loss after taxation as presented in the separate financial statements in any year between 2017 and 2019, disclosure shall be made separately. If there was a loss after taxation as presented in the separate financial statements of 2017 and/or 2018, but earnings after taxation shown in the separate financial statements of 2019 is sufficient to cover the loss carried forward, separate disclosure is not necessary.
[Note 2] For example: The General Meeting of Shareholders in 2010 compiled the annual report of 2009, and the shareholding of particular Director or Supervisor fell below the minimum requirement for more than 3 consecutive months in the period of January 1 to December 31 of 2009, disclosure shall be made individually. If shareholding of particular Director or Supervisor fell below the minimum requirement for more than 3 consecutive months in the period of January of 2009 (which was, November and December of 2008 and January of 2009), disclosure shall also be made individually.
(Note 3) For example: The General Meeting of Shareholders in 2010 compiled the annual report of 2009, and assuming all the Directors pledged their shares in holding under lien exceeding 50% in average in any 3 months of February, May and August of 2009, remunerations to the Directors whose pledge of shares under lien exceeding 50% of their holding in the respective months of February, May, and August shall be disclosed separately. If the Supervisors pledged their shares in holding under lien exceeding 50% in average in any 3 months, remunerations to the Supervisors whose pledge of shares under lien exceeding 50% of their holding in the respective months shall be disclosed separately.
Pledge of shares under lien in monthly average by all Directors: Quantity of shares pledged by all Directors/quantity of shareholding by all Directors (including the quantity of shares under trust retained for balloting). Pledge of shares under lien in monthly average by all Supervisors: Quantity of shares pledged by all Supervisors/quantity of shareholding by all Supervisors (including the quantity of shares under trust retained for balloting).

1. Compensation to non-independent and independent directors (aggregate disclosure of directors' names and range of remuneration)

(in NT$ 1,000)

Title	Name			Remuneratio	Remuneratio	n to Director	n to Director	n to Director	n to Director	The sum of A, B, C and D as a percentage of net income (Note 10)	The sum of A, B, C and D as a percentage of net income (Note 10)	Remuneration for performance of	Remuneration for performance of	Remuneration for performance of	Remuneration for performance of	works as employees.	works as employees.	works as employees.	works as employees.	The sum of F, and G in net incom	A, B, C, D, E, proportion to e (Note 10)	Compensation from parent company or business investments other than subsidiaries (Note 11)
		Remuneration (A) (Note 2)		Severance payment and pension (B)		Remuneration to Directors (C) (Note 3)		Fees for performance of work (D) (Note 4)				Salaries, bonus, and special subsidy (E) (Note 5)		Severance payment and pension (F)		Remuneration to		employees (G) (Note 6)
		The Company	Companies included in the financial statements (Note 7)	The Company	Companies included in the financial statements (Note 7)	The Company	Companies included in the financial statements (Note 7)	The Company	Companies included in the financial statements (Note 7)	The Company	Companies included in the financial statements (Note 7)	The Company	Companies included in the financial statements (Note 7)	The Company	Companies included in the financial statements (Note 7)	The Company		Companies included in the financial statements (Note 7)		The Company	Companies included in the financial statements (Note 7)
																Amount in cash	Amount in stock	Amount in cash	Amount in stock
Chairman	Yi Chi Co., Ltd.	7,000	-	-	-	2,782	-	-	-	1.68%	-	1,951	-	-	-	22	-	-	-	2.02%	-	None
	Representative: C. H. Lee
Director	Chien Yi Industrial Co., Ltd.
	Representative: Cheng-Tsung Lee
Director	Cheng-Tu Lee
Director	Yi-Lung Lai (Note 1)

Director	Shao-Ying Lee
Director	Edward Y. C. Lee (Note 2)
Director	Chimax Development Company
	Representative: Chi-Cheng Lai
Director	David Huang
Director	Cheng-Chin Lee
Director	Chien Cheng Development Co., Ltd.
	Representative: Tien-Ching Yang
Director	Da Feng Construction Engineering Co., Ltd.
	Representative: Chien-Yi Hsu
Independent Director	Jui-Tung Lu	1,260	-	-	-	1,264	-	-	-	0.44%	-	-	-	-	-	-	-	-	-	0.44%	-	None
Independent Director	Ming-Chieh Chen(Note 1)
Independent Director	Jui-Ping Lee (Note 1)
Independent Director	Jui-Chou Lin (Note 2)
Independent Director	Hsiu-Mei Lin (Note 2)

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, and 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$360,000. * Information of directors (i.e. non-independent directors) and independent directors shall be disclosed separately. Note 1: Independent Directors Jui-Ping Lee and Ming-Chieh Chen and Director Yi-Lung Lai were relieved of duty following the re-election held during the shareholder meeting dated June 27, 2019. Note 2: Independent Directors Jui-Chou Lin and Hsiu-Mei Lin and Director Edward Y. C. Lee were newly elected to the board following the re-election held during the shareholder meeting dated June 27, 2019.

Payment scale

	Payment scale	Payment scale	Payment scale	Payment scale
Payment scale of remuneration to the Directors of the Company	Name of Director
	Sum of first 4 compensations(A+B+C+D)		Sum of first 7 remunerations(A+B+C+D+E+F+G)
	The Company (Note 8)	Companies included in the financial statements (Note 9)H	The Company (Note 8)	All companies included in the financial statements (Note 9) I
Below NT$ 1,000,000	Yi-Lung Lai, David Huang, Ming-Chieh Chen, Chimax Development Company, Representatives: Chi-Chen Tu, Cheng-Tu Lee, Jui-Ping Lee, Shao-Ying Lee, Cheng-Chin Lee, Da Feng Construction Co., Ltd. Representative: Chien-Yi Hsu, Chien Cheng Development Co., Ltd. Representative: Tien-Ching Yang, Jui-Tung Lu, Jui-Chou Lin, Hsiu-Mei Lin	-	Yi-Lung Lai, David Huang, Ming-Chieh Chen, Chimax Development Company, Representatives: Chi-Chen Tu, Cheng-Tu Lee, Jui-Ping Lee, Shao-Ying Lee, Cheng-Chin Lee, Da Feng Construction Co., Ltd. Representative: Chien-Yi Hsu, Chien Cheng Development Co., Ltd. Representative: Tien-Ching Yang, Jui-Tung Lu, Jui-Chou Lin,	-

			Hsiu-Mei Lin
NT$ 1,000,000 (inclusive) ~ NT$ 2,000,000 (non-inclusive)	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 (non-inclusive)	Edward Y. C. Lee	-	Edward Y. C. Lee	-
NT$ 3,500,000 (inclusive) ~ NT$ 5,000,000 (non-inclusive)	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 (non-inclusive)	-	-	-	-
NT$ 10,000,000 (inclusive) ~ NT$ 15,000,000 (non-inclusive)	-	-	-	-
NT$ 15,000,000 (inclusive) ~ NT$ 30,000,000 (non-inclusive)	-	-	-	-
NT$ 30,000,000 (inclusive) ~ NT$ 50,000,000 (non-inclusive)	-	-	-	-
NT$ 50,000,000 (inclusive) ~ NT$ 100,000,000 (non-inclusive)	-	-	-	-
More than NT$100,000,000	-	-	-	-
Total	16	-	16	-

Note 1: Directors' names are presented separately (for corporate shareholders, the name of the corporate shareholder and its representative are presented separately) and distinguished between independent and non-independent directors, while the amounts are presented in aggregate sums. Any directors who co-headed the President or Executive Vice President positions are disclosed in this Table and in Table (3-1), or Tables (3-2-1) and (3-2-2).
Note 2: Refers to director's compensation in the last year (including salary, allowance, severance pay, various bonuses and incentives etc.).
Note 3: Represents the amount of director remuneration that the board has proposed as part of the latest earnings appropriation.
Note 4: Refers to compensation paid for services rendered (including travel, special allowances, subsidies, accommodation, corporate vehicle and in-kind benefits). Where housing, cars, vehicles, or personal allowances were granted, the nature and cost of assets, the rental rates (calculated based on actual or fair value), cost of petrol and other subsidies are also disclosed.

If a driver was assigned, specify the remuneration to such driver but not include as a part of the remuneration.

Note 5: 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. Part of the salary expense was recognized according to IFRS2 - "Share-based Payment." Amounts including employee stock options, restricted employee shares and subscription to cash issues are also treated as compensation.

Note 6: Refers to any compensation that the director received (in cash or in shares) in the last year for assuming the role of an employee (such as President, Executive Vice President, manager or other employees). The amount of employee compensation proposed by the board of directors in the last year has been disclosed (where the amount could not be estimated, the actual amount paid in the last year was presented instead). Table 1-3 has also been completed for reference.
Note 7: The disclosure includes all companies covered by the consolidated financial statements (including the Company), and represents total amount of compensation paid by all companies above to the Company's directors.
Note 8: The amount of compensation paid by the Company to each director has been disclosed in ranges.
Note 9: The details represent the range of compensation paid by the consolidated entity (including the Company) to each director.
Note 10: Net income refers to the amount of profit shown in the latest financial reports of the consolidated/standalone entity.
Note 11: a.This field represents all forms of compensation that the director received from the Company's parent company or business investments other than subsidiaries (or "None" if absent).
b. For directors who received compensation from parent company or business investments other than subsidiaries, amounts received from these business investments or parent company have been added to column I of the compensation brackets Table. In which case, column I will be renamed "...parent company and all business investments..."
c. Compensation refers to any return, remuneration (including remuneration received as an employee, director and supervisor) and professional service fee that the Company's director received for serving as director, supervisor or manager in the parent company or business investments other than subsidiaries.
The content of remuneration for disclosure in this table is different from the concept of the Income Tax Act. This table is for disclosure purpose only and not for taxation purpose.

2. Compensation to supervisors (aggregate disclosure of Supervisors' names and compensation range)

Unit: NTD thousands

Title	Name	Remuneration to Supervisor	Remuneration to Supervisor	Remuneration to Supervisor	The sum of A, B, and C in proportion to net income. (Note 8)	Compensation from parent company or business
		Remuneration (A) (Note 2)	Salaries (B) (Note 3)	Fees for performance of works (C) (Note 4)

		The Company	Companies included in the financial statements (Note 5)	The Company	Companies included in the financial statements (Note 5)	The Company	Companies included in the financial statements (Note 5)	The Company	Companies included in the financial statements (Note 5)	investments other than subsidiaries (Note 9)
-	-	-	-	-	-	-	-	-	-	-

Payment scale

Remuneration to Supervisors in relevant brackets along the payment scale	Name of Supervisor	Name of Supervisor
	Sum of first 3 compensations(A+B+C)
	The Company (Note 6)	Companies included in the financial statements(Note 7)D
Below NT$1,000,000	-	-
NT$ 1,000,000 (inclusive) ~ NT$ 2,000,000 (non-inclusive)	-	-
NT$ 2,000,000 (inclusive) ~ NT$ 3,500,000 (non-inclusive)	-	-
NT$ 3,500,000 (inclusive) ~ NT$ 5,000,000 (non-inclusive)	-	-
NT$ 5,000,000 (inclusive) ~ NT$ 10,000,000 (non-inclusive)	-	-
NT$ 10,000,000 (inclusive) ~ NT$ 15,000,000 (non-inclusive)	-	-
NT$ 15,000,000 (inclusive) ~ NT$ 30,000,000 (non-inclusive)	-	-
NT$ 30,000,000 (inclusive) ~ NT$ 50,000,000 (non-inclusive)	-	-
NT$ 50,000,000 (inclusive) ~ NT$ 100,000,000 (non-inclusive)	-	-
Morethan NT$100,000,000	-	-
Total	-	-

Note 1: Supervisors' names are presented separately (for institutional shareholders, the name of the institutional shareholder and its representative are stated separately), whereas the amount of benefits and allowances are presented in aggregate sums.

Note 2: Refers to supervisors' compensation in the last year (including salaries, allowances, severance pay, various bonuses and incentives etc.).
Note 3: This is the supervisor remuneration that the Board of Directors has proposed as part of last year's earnings appropriation and is pending shareholders' resolution.
Note 4: Refers to compensation paid to supervisors for services rendered in the last year (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.
Note 5: The disclosure includes all companies included in the consolidated financial statements (including the Company), and represents total amount of compensation paid by all companies above to the Company's supervisors.
Note 6: The amount of compensation paid by the Company to each supervisor has been disclosed in ranges.
Note 7: The details represent the range of compensation paid by the consolidated entity (including the Company) to each supervisor.
Note 8: Net income refers to that in the most recent year. If IFRSs have been adopted, net income shall refer to the amount of after-tax profit shown in the latest financial reports of the consolidated/standalone entity.
Note 9: a. This field represents all forms of compensation that the supervisor received from the Company's parent company or business investments other than subsidiaries (or "None" if absent).
b. For supervisors who received compensation from parent company or business investments other than subsidiaries, amounts received from these business investments or parent company have been added to column D of the compensation brackets Table. In which case, column D will be renamed "...parent company and all business investments..."
c. Compensation refers to any returns, remuneration (including remuneration received as an employee, director and supervisor) and professional service fees that the Company's supervisors received for serving as directors, supervisors or managers in business investments other than subsidiaries.
The Company phased out the positions of Supervisors in the election of 2016 and beyond.

3. Compensation to the President and Executive Vice Presidents (aggregate disclosure of name and compensation)

Unit: NTD thousands

Title	Name	Salaries (A) (Note 2)	Salaries (A) (Note 2)	Severance payment and pension (B)	Severance payment and pension (B)	Bonuses and allowances (C) (Note 3)	Bonuses and allowances (C) (Note 3)	Remuneration to employees (D) (Note 4)	Remuneration to employees (D) (Note 4)	Remuneration to employees (D) (Note 4)	Remuneration to employees (D) (Note 4)	Sum of A, B, C and D as a percentage of net income (%) (Note 8)	Sum of A, B, C and D as a percentage of net income (%) (Note 8)	Compensation from parent company or business investments other than subsidiaries (Note 9)
		The Company	Companies included in the financial statements (Note 5)	The Company	Companies included in the financial statements (Note 5)	The Compa ny	Companies included in the financial statements (Note 5)	The Company		Companies included in the financial statements (Note 5)		The Company	Companies included in the financial statements (Note 5)
								Amount in cash	Amount in stock	Amount in cash	Amount in stock
President	Jack Chen(Note A)	19,972	-	-	-	-	-	219	-	-	-	3.48%	-	None
President	Chu-Minn Leu(Note A)
Executive Vice President	C. S. Lin
Executive Vice President	Ching Chang Chen
Executive Vice President	Tom C. T. Chen
Executive Vice President	H. C. Huang
Executive Vice President	Stephen S.C. Shen
Executive Vice President	Jen-Huai Liu

*Disclosure is mandatory for persons who hold positions equivalent to a President or Executive Vice President (e.g. group president, CEO, general manager etc.). Note A: Mr. Jack Chen, former President, retired on February 25, 2020 and was succeeded by Madam Chu-Minn Leu since February 26, 2020.

Payment scale

	Payment scale	Payment scale
Brackets along the scale for payments to the Presidents and individual Executive Vice Presidents.	Names of the President and Executive Vice Presidents
	The Company (Note 6)	Companies included in the financial statements (Note 7)E
Below NT$ 1,000,000	-	-
NT$ 1,000,000 (inclusive) ~ NT$ 2,000,000 (non-inclusive)	-	-
NT$ 2,000,000 (inclusive) ~ NT$ 3,500,000 (non-inclusive)	C. S. Lin, Stephen S.C. Shen, Chu-Minn Leu, H. C. Huang, Jen-Huai Liu, Tom C. T. Chen, Ching-ChangChen	-

NT$ 3,500,000 (inclusive) ~ NT$ 5,000,000 (non-inclusive)	Jack Chen	-
NT$ 5,000,000 (inclusive) ~ NT$ 10,000,000 (non-inclusive)	-	-
NT$ 10,000,000 (inclusive) ~ NT$ 15,000,000 (non-inclusive)	-	-
NT$ 15,000,000 (inclusive) ~ NT$ 30,000,000 (non-inclusive)	-	-
NT$ 30,000,000 (inclusive) ~ NT$ 50,000,000 (non-inclusive)	-	-
NT$ 50,000,000 (inclusive) ~ NT$ 100,000,000 (non-inclusive)	-	-
More than NT$100,000,000	-	-
Total	8	-

Note 1: The names of President and Executive Vice Presidents are presented separately, whereas the amount of benefits and allowances is presented in aggregate sums. Any directors who co-headed the President or Executive Vice President positions are disclosed in this Table and in Table (1-1), or Tables (1-2-1) and (1-2-2).
Note 2: Refers to salaries, allowances, and severance pay made to the President and Executive Vice Presidents in the last year.
Note 3: Refers to other compensations such as bonus, incentive, travel allowance, special allowance, subsidy, accommodation, corporate vehicle or other in-kind benefits made to the President and Executive Vice Presidents. 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. Part of the salary expense was recognized according to IFRS2 - "Share-based Payment." Amounts including employee stock options, restricted employee shares and subscription to cash issues are also treated as compensation.
Note 4: Represents the amount of employee remuneration allocated to the President and Executive Vice Presidents (in cash or in shares), which the board of directors has proposed as part of the most recent earnings appropriation (where the amount could not be estimated, a calculation was made based on last year's payout ratio). Table 1-3 has been prepared in addition to the above details. Net income refers to that in the most recent year. If IFRSs have been adopted, net income shall refer to the amount of after-tax profit shown in the latest financial reports of the consolidated/standalone entity.
Note 5: Compensation is presented in aggregate of all amounts paid by all companies covered by the consolidated financial statements (including the Company) to the Company's President and Executive Vice Presidents.
Note 6: The amount of compensation paid by the Company to its President and Executive Vice Presidents are disclosed separately in ranges.
Note 7: The disclosure includes the sum of amounts paid by the consolidated entity (including the Company) to the Company's President and Executive Vice Presidents. The names of President and Executive Vice Presidents have been disclosed separately in ranges.

Note 8: Net income refers to that in the most recent year. If IFRSs have been adopted, net income shall refer to the amount of after-tax profit shown in the latest financial reports of the consolidated/standalone entity.
Note 9: a. This field represents all forms of compensation that the President and Executive Vice Presidents received from the Company's parent company or business investments other than subsidiaries (or "None" if absent).
- b. For President/Executive Vice Presidents who receive compensation from parent company or business investments other than subsidiaries, the amount of compensation from parent company or business investments have been added to column E of the compensation brackets Table. In which case, column E will be renamed "...parent company and all business investments..."
- c. Compensation refers to any returns, remuneration (including remuneration received as an employee, director and supervisor) and professional service fees that the Company's President/Executive Vice Presidents received for serving as directors, supervisors or managers in the parent company or business investments other than subsidiaries.
The content of remuneration for disclosure in this table is different from the concept of the Income Tax Act. This table is for disclosure purpose only and not for
taxation purpose.

Compensation for top-5 paid managers of the TWSE/TPEx listed company (individual disclosure by name and amount)(Note 1)

1)
Title	Name	Salaries (A) (Note 2)		Severance payment and pension (B)		Bonuses and allowances (C) (Note 3)		Remuneration to employees (D) (Note 4)				The sum of A, B, C and D as a percentage of net income (Note 6)		Compensation from parent company or business investments other than subsidiaries (Note 7)
		The Company	Companies included in the financial statements (Note 5)	The Company	Companies included in the financial statements (Note 5)	The Company	Companies included in the financial statements (Note 5)	The Company		Companies included in the financial statements(Note 5)		The Company	Companies included in the financial statements (Note 5)
								Amount in cash	Amount in stock	Amount in cash	Amount in stock
-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
-	-
-	-
-	-
-	-

Note 1: The term "top-5 paid managers" refers to "managers" that meet the definitions specified in Letter Tai-Cai-Zheng-III-Zi No. 0920001301 issued by (former) Securities and Exchange Commission, Ministry of Finance, on March 27, 2003. The notion of "top-5 paid" is ranked and determined based on the sum of salary, pension, bonus, special allowance and employee remuneration received by managers from all companies included in the consolidated financial statements (i.e. sum of A+B+C+D). Any directors who concurrently served as abovementioned managers are disclosed in this Table and in Table (1-1).

Note 2: Refers to salaries, allowances, and severance pay made to top-5 paid managers in the last year.

Note 3: Refers to other compensations such as bonus, incentive, travel allowance, special allowance, subsidy, accommodation, corporate vehicle or other in-kind benefits made to top-5

paid managers in the last year. 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. Part of the salary expense was recognized according to IFRS2 - "Share-based Payment." Amounts including employee stock options, restricted employee shares and subscription to cash issues are also treated as compensation.

Note 4: Represents the amount of employee remuneration allocated to top-5 paid managers (in cash or in shares), which the board of directors has proposed as part of the most recent earnings appropriation (where the amount could not be estimated, a calculation was made based on last year's payout ratio). Table 1-3 has been prepared in addition to the above details.

Note 5: The disclosure includes all companies covered by the consolidated financial statements (including the Company), and represents total amount of compensation paid by all companies above to top-5 paid managers.

Note 6: Net income refers to the amount of profit shown in the latest financial reports of the consolidated/standalone entity.
Note 7: a. This field represents all forms of compensation that the top-5 paid managers received from the Company's parent company or business investments other than subsidiaries (or "None" if absent).
- b. Compensation refers to any return, remuneration (including remuneration received as an employee, director and supervisor) and professional service fee that the top-5 paid managers received for serving as director, supervisor or manager in the parent company or business investments other than subsidiaries.
The content of remuneration for disclosure in this table is different from the concept of the Income Tax Act. This table is for disclosure purpose only and not for taxation purpose.

Names of managers who received employee remuneration and the final allocation - December 31, 2019

Unit: NTD thousands

	Title (Note 1)	Name (Note 1)	Amount in cash	Total	Total as a percentage of net income(%)
Manager	President	Jack Chen(Note 6)	538	538	0.09%
	President	Chu-Minn Leu(Note 7)
	Senior Executive Vice President	C. S. Lin
	Executive Vice President	H. C. Huang
	Executive Vice President	Stephen S.C. Shen
	Executive Vice President	Tom C. T. Chen
	Executive Vice President	ChingChangChen
	Executive Vice President	Jen-Huai Liu
	Vice President, Business Group	Edward Y. C. Lee
	Vice President	TonyJ.Y. Wang
	Vice President	Wen-TungYen
	Vice President	S.Q. Chen
	Vice President	Emerson Chien
	Vice President	Jack Chu
	Vice President	Hsu-Wei Chen
	Vice President	Chien Wen Chen
	Vice President	Beiru Lee
	Vice President	Ping-Change Chou
	Vice President	Yeong-RongHsiao
	Vice President	Chang-HongChen
	Vice President	Teh-Chun Chiang
	Vice President	Chen-HsiungLin
	Manager, Accounting Dept.	Fei-Fen Hsiao
	Manager	Tung-Sen Shih
	Manager	Chuan-Wei Hu(Note 8)

Note 1: Names and titles have been disclosed separately, whereas the amount of remuneration has been disclosed in aggregate. Note 2: Refers to the amount of employee remuneration provided for managers (in cash or in shares), which the board of directors has proposed as part of the most recent earnings appropriation (where the amount could not be estimated, a calculation was made based on last year's payout ratio). Net income refers to that in the most recent year. If IFRSs have been adopted, net income shall refer to the amount of after-tax profit shown in the latest financial reports of the consolidated/standalone entity. Note 3: Pursuant to FSC Letter Tai-Cai-Zheng-III-Zi No. 0920001301 dated March 27, 2003, the role of manager covers the following positions: (1) President and equivalent rank.

(2) Executive Vice President and equivalent rank.

(3) Vice President and equivalent rank.

(4) Head of financial segment.

(5) Head of accounting segment.

(6) Personnel who perform management duties and are authorized to affix signature on behalf of the Company. Note 4: For directors, President and Executive Vice Presidents who receive employee remuneration (in cash or in shares), details have been disclosed in this Table in addition to Table 1-2.

Note 5: Based on employment information as of December 31, 2019 Note 6: Service ended February 25, 2020. Note 7: Service commenced February 26, 2020. Note 8: Service commenced June 1, 2019.

5. Analysis of the remunerations to the Directors, Supervisors, President and Executive Vice Presidents in proportion to the net income over the last 2 years, and explain the policy, standard, components and the procedure of decision-making of remunerations and the association with operation performance:

(1) Compensation to the Directors, President and Executive Vice Presidents and in proportion to net income in 2019 were NT$14,279,000 (2.46 %) and NT$ 20,191,000 (3.48 %), which indicated an increase in the proportion to net income from the same period of 2018 at NT$ 11,453,000 (2.33%) and NT$ 34,897,000 (7.10%), whereas net income in 2019 amounted to NT$580,968,000 with an increase of NT$89,659,000 from NT$491,309,000 in the same period of 2018. Directors' compensation as a percentage of net income was higher in 2019 compared to 2018, whereas President's and Executive Vice Presidents' compensation as a percentage of net income was lower compared to 2018.
(2) The principles of remunerations to the Directors, Supervisors, President and Executive Vice Presidents are shown in “Four. Fund Raising: VI. Dividend Policy and implementation, and VIII. Percentage and scope of employee remuneration and remuneration to Directors and Supervisors”. The salaries for the President and Executive Vice Presidents were determined with reference to industry standard. Bonus will be paid in commensuration with the profit status and operation performance of the Company.
(3) Linkage between performance of the Company's directors and compensation: With respect to remuneration to directors of the Company, in accordance with Article 31 of the Articles of Association, 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, 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.

(4) Association between managers' performance and compensation: Pursuant to Article 4 of the Company's Manager Performance Assessment and Compensation Policy, the Company shall develop annual performance evaluation standards by taking into consideration a variety of factors including growth rate, target attainment rate, market share, combined ratio, production value, collection performance, findings and defects highlighted during self-audit or inspections conducted by the authority, CPA and internal audit unit and rectification to areas requiring improvement highlighted in the Statement of Declaration of Internal Control. Annual targets and weights shall be assigned properly to various indicators to facilitate effective assessment of managers' contribution, and thereby maximize support long-term profitability and maximize shareholders' value.

III. The pursuit of corporate governance

(I) Functionality of Board of Directors

A total of 7 board meetings (A) were held in 2019; below are the attendance records:

cupational Title	Name (Note 1)	Name (Note 1)	tendance in person (B)	tendance by proxy	rcentage of in-person attendance (%)B/A	rcentage of in-person attendance (%)B/A	rcentage of in-person attendance (%)B/A	mark	mark
airman	Yi Chih Co., Ltd. Representative: C. H. Lee		7	0	100%			Re-elected on 2019/06/27 election of a new Board
rector	Chien Yi Industrial Co., Ltd. Representative: Cheng-TsungLee		7	0	100%			Re-elected on 2019/06/27
rector	Cheng-Tu Lee		7	0	100%			Re-elected on 2019/06/27
rector	Edward Y. C. Lee		4	0	100%			Newly elected on 2019/06/27
rector	Shao-Ying Lee		6	0	86%			Re-elected on 2019/06/27
rector	Chimax Development Company Representative: Chi-Chen Tu		7	0	100%			Re-elected on 2019/06/27
rector	David Huang		7	0	100%			Re-elected on 2019/06/27
rector	Cheng-Chin Lee		5	2	71%			Re-elected on 2019/06/27
rector	Feng Construction Engineering Co., Ltd. Representative: Chien-Yi Hsu		7	0	100%			Re-elected on 2019/06/27
rector	ien Cheng Development Co., Ltd. Representative: Tien-ChingYang		6	1	86%			Re-elected on 2019/06/27
dependent Director	Jui-Tung Lu		7	0	100%			Re-elected on 2019/06/27
dependent Director	Jui-Chou Lin		4	0	100%			Newly elected on 2019/06/27
dependent Director	Hsiu-Mei Lin		4	0	100%			Newly elected on 2019/06/27
proxy;* : No attendance				◎: Attendance in person;☆: Attendance by 2019/07/11 2019/08/23 2019/11/12 2019/12/27 - - - - - - - -
2019	2019/02/27	2019/03/26	2019/04/30	2019/07/11		2019/08/23	2019/11/12		2019/12/27
Jui-Tung Lu
Ming-Chieh Chen				-		-	-		-
Jui-Ping Lee				-		-	-		-

Board	Content of the motions and subsequent actions taken	Particulars inscribed in Article 14-3 of the Securities and Exchange Act	Adverse opinions or qualified opinions of the Independent Directors
19th session of the 19th Board 2019/02/27	1. Amendment to the internal control and internal audit system of the Company.	Yes	None
		Yes	None
	Independent directors' opinions: None.
	Company's response to independent directors' opinions: None.
	Resolution:passed unanimouslybyall attendingdirectors.
20th session of the 19th Board 2019/03/26	1.The Company's 2018 financial statements.	Yes	None
	2. The audit fee for Deloitte Taiwan in 2019	Yes	None
	3. Amendment to the internal control and internal audit system of the Company.	Yes	None
	Independent directors' opinions: None.
	Company's response to independent directors' opinions: None.
	Resolution:passed unanimouslybyall attendingdirectors.
1st session of the 20th Board 2019/7/11	1. Amendment to the internal control and internal audit system of the Company.	Yes	None
	Independent directors' opinions: None.
	Company's response to independent directors' opinions: None.
	Resolution:passed unanimouslybyall attendingdirectors.
2nd session of the 20th Board 2019/8/23	1. Financial Statements of the Company covering the first half of 2019.	Yes	None
	3. Amendment to the internal control and internal audit system of the Company.	Yes	None

I. For board of directors meetings that meet any of the following descriptions, state the date, session, the discussed motion, independent directors' opinions and how the Company has responded to such opinions:
(II) Any other documented objections or qualified opinions raised by independent director against board resolution in relation to matters other than those described above.

	Independent directors' opinions: None.	Independent directors' opinions: None.	Independent directors' opinions: None.
	Company's response to independent directors' opinions: None.
	Resolution:passed unanimouslybyall attendingdirectors.
4th session of the 20th Board 2019/12/27	1. Amendment to the internal control and internal audit system of the Company.	Yes	None
	Independent directors' opinions: None.
	Company's response to independent directors' opinions: None.
	Resolution:passed unanimouslybyall attendingdirectors.

(1) Board performance assessment: board's participation in the Company's operations, the quality of board's decisions, the board's composition, election and ongoing education of board members, and enforcement of internal control.
(2) Director individual performance assessment: director's awareness toward the Company's goals and missions, awareness to duties, level of participation in the Company's operations, maintenance of internal relations and communication, professionalism and ongoing education, and enforcement of internal control.
(3) Performance assessment for functional committees: participation in the Company's operations, awareness to duties, quality of committee's decisions, composition and member selection, and enforcement of internal control.

The Company provided information on a better understanding of the performance of the Board to the competent authority annually, and conducted the assessment in accordance with Article 40-1 of the “Corporate Governance Best Practice Principles for the Insurance Industry” specified as follows:

(I) Self-assessment (Only the Directors assumed office for more than 6 months in 2019 and were continued in office are entitled to conduct the assessment)

Actual number of Directors (1)	In office for more than 6 months and still in office(2)	Number of Directors participating in the assessment(3)	Ratio of the Directors participating in the assessment (3)/(2)	Total average scoring in the assessment (the summation of all the points scored by each Director conducting the assessment, and divided by the number of Directors under assessment).
13	13	13	100%	95.21

Notes to the effect of the assessment (to be filled in by the companies participating in the assessment): Directors understand the rights and obligations through the items of self-assessment for the establishment of a viable system of corporate governance.

(II) Assessment by peers (overall assessment) (Only the Directors that assumed office for more than 6 months in 2019 and were continued in office are entitled to conduct the

assessment)
Actual number of Directors (1)	In office for more than 6 months and still in office(2)	Number of Directors participating in the assessment(3)	Ratio of the Directors participating in the assessment (3)/(2)	Total average scoring in the assessment (the summation of all the points scored by each Director conducting the assessment, and divided by the number of Directors under assessment).
13	13	13	100%	96.33

Note 1: Where directors and supervisors are institutions, the names of corporate shareholders and their representatives are stated.

Note 2:

(1) The date of resignation is specified for Directors or Supervisors who had resigned prior to the close of the financial year. The percentage of in-person attendance (%) is calculated based on the number of board of directors meetings held and the number of in-person attendance during active duty.
(2) If a re-election of directors or supervisors had taken place prior to the close of the financial year, directors/supervisors of both the previous and the current term are listed; in which case, the remarks column would specify the re-election date and whether the director/supervisor was elected in the previous term, the new term, or both. The attendance (or attend as observer) rate to Board session (%) shall be calculated on the basis of the number of sessions held in such period and the actual number of presence in the sessions.
(II) The operation of the Audit Committee or the participation of the Supervisors in the operation of the Board

Annual focus of the Audit Committee:
(1) Fair presentation of the Company's financial statements.
(2) Appointment and dismissal of financial statement auditors, and evaluation of their independence and performance.
(3) Implementation of the Company's internal control system.
(4) The Company's compliance with relevant regulations and rules.
(5) Control over the Company's existing or potential risks.
(6) Committee duties, as mentioned below: Establishment or amendment of the Company's internal control system according to Article 14-1 of the Securities and Exchange Act.
- Evaluation over the effectiveness of internal control system.
- Establishment or amendment of asset acquisition and disposal procedures, derivative trading procedures, third party lending procedures, third party endorsement and guarantee procedures, and other procedures of major financial consequences according to Article 36-1 of the Securities and Exchange Act, or establishment or amendment of procedures for derivative trading, subscription to public offering of unlisted securities, subscription to private security placement, loan to stakeholders or other concerned transactions according to Paragraph 8, Article 146, Article 146-1, Article 146-3 and Article 146-7 of the Insurance Act.
- Matters concerning directors' personal interests.
- Major asset or derivative transactions.
- Major lending, endorsement or guarantee to an external party.
- Offering, issuance or private placement of securities with equity characteristics.
- Appointment, dismissal, or compensation of financial statement auditors and
- certified actuaries.
- Appointment and dismissal of finance, accounting or internal audit managers. Annual and semi-annual financial reports.
⑪ Annual audit plan.
⑫ Other issues deemed material by the Company or the authority.
Functionality of the Audit Committee:
A total of 5 Audit Committee meetings (A) were held in 2019; independent directors' attendance records are summarized below:

Title	Name	Attendance in person (B)	Percentage of in-person attendance (%)(B/A)(Note)	Remarks
Independent Director	Jui-Tung Lu	5	100%	Re-elected on 2019/07/11
Independent Director	Ming-Chieh Chen	3	100%	Service until 2019/06/27
Independent Director	Jui-Ping Lee	3	100%	Service until 2019/06/27
Independent Director	Jui-Chou Lin	2	100%	Newly elected on 2019/07/11
Independent Director	Hsiu-Mei Lin	2	100%	Newly elected on 2019/07/11

Board	Content of the motions and subsequent actions taken	Particulars inscribed in Article 14-5 of the Securities and Exchange Act	Motions not passed by the Audit Committee but at the consent of more than 2/3 of the Directors.
19th session of the 19th Board 2019/02/27	1. Amendment to the internal control and internal audit system of the Company.	Yes	None
	Resolution of the Audit Committee (2019/02/15): All members of the Audit Committee acted in favor of the motion.
	Company's response to Audit Committees' opinions: Motion was passed asproposed byall attendingdirectors.
20th session of the 19th Board 2019/03/26	1. The Company's 2018 financial statements.	Yes	None
	2. The audit fee for Deloitte Taiwan in 2019.	Yes	None
	3. Amendment to the internal control and internal audit system of the Company.	Yes	None
	Resolution of the Audit Committee (2019/3/15): All members of the Audit Committee acted in favor of the motion.
	Company's response to Audit Committees' opinions: Motion was passed asproposed byall attendingdirectors.
1st session of the 20th Board 2019/7/11	1. Amendment to the internal control and internal audit system of the Company.	Yes	None
	Resolution of the Audit Committee (2019/6/18): All members of the Audit Committee acted in favor of the motion.
	Company's response to Audit Committees' opinions: Motion was passed asproposed byall attendingdirectors.
2nd session of the 20th Board 2019/12/27	1. Financial Statements of the Company covering the first half of 2019.	Yes	None
	2. Amendment to the internal control and internal audit system of the Company.	Yes	None
	Resolution of the Audit Committee (2019/8/14): All members of the Audit Committee acted in favor of the motion.
	Company's response to Audit Committees' opinions: Motion was passed asproposed byall attendingdirectors.
	2. Amendment to the internal control and internal audit	Yes	None

system of the Company. Resolution of the Audit Committee (2019/12/17): All members of the Audit Committee acted in favor of the motion.

Company's response to Audit Committees' opinions: Motion was passed as proposed by all attending directors.

II. Avoidance of involvements in interest-conflicting discussions by independent directors; state the names of concerned independent directors, the discussions, the nature of conflicting interests, and the voting process: None.

III. Communications among the Independent Directors, Chief Internal Auditor, and the CPAs (in the aspects of corporate finance, business condition, and key matters for communications, the means of communications and the results).

(I) Policy of the Communications among the Independent Directors, Chief Internal Auditor, and the CPAs.

The Independent Directors of the Company and the CPAs were engaged in at least 1 routine meeting since 2016. The CPAs disclosed the audit procedure report on “key audit matters” pursuant to the Statement of Auditing Standard No. 57 – Forming an Opinion and Reporting on Financial Statements. Special meeting will be called in case of significant abnormal events.
The Audit Committee has appointed professional CPAs to audit the financial statements of the Company with the issuance of Auditor’s Report as reference for the Audit Committee.
The Chief Internal Auditor reports to the Independent Directors from time to time on the pursuit of internal audit and internal control of the Company.
(II) Disclosures and result:

	Summaryof the communications between the Independent Directors and the CPAs:	Summaryof the communications between the Independent Directors and the CPAs:
	Date	Gravityof communication
	2019/03/15	1. The CPAs disclosed the audit procedure report on “key audit
		matters” pursuant to the Statement of Auditing Standard No.
		57 – “Forming an Opinion and Reporting on Financial
		Statements”, and Statement of Auditing Standard No. 62 –
		“Communication with Those Charged with Governance”.
	Date	Gravityof communication
	2019/08/14	1. Conclusions of the audit of the semi-annual report for the first
		half of 2019
		2. Auditplan for 2019

Note:

The date of resignation is specified for independent directors who had resigned prior to the close of the financial year. The percentage of in-person attendance (%) is calculated based on the number of board of directors meetings held and the number of in-person attendance during

active duty.

If a re-election of independent directors had taken place prior to the close of the financial year, independent directors of both the previous and the current board will be listed; in which case, the remarks column will address the re-election date and specify whether the independent director was elected in the previous board, the new board, or both. The attendance as observers to Board session (%) shall be calculated on the basis of the number of sessions held in such period and the actual number of presence in the sessions.
The participation of Supervisors in the operation of the Board: Not applicable. The Company adopted the Audit Committee to substitute the function of the Supervisors.

(III) Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies:

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	variation with the Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies
	Yes	No	Summary
I. Has the Company instituted and disclosed the corporate governance best practice principles in accordance with the “Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies”?		No	The Company has established its corporate governance best practice principles in accordance with the Corporate Governance Best Practice Principles for the Insurance Industry, and has reviewed clause “corresponding” to the principle in Februaryand August every year.	No variation found. Complying with the corporate governance best practice principles.
II. Equity structure and shareholders’ equity of the Company (I) Has the Company implemented a set of internal procedures to handle shareholders' suggestions, queries, disputes and litigations? (II) Is the Company constantly informed of the identities of its major shareholders and the ultimate controller? (III) Has the Company established and implemented risk management practices and firewalls for companies it is affiliated with? (IV) Has the Company established internal policies that prevent insiders from trading securities against non-public information?	Yes Yes	No No	(I) The Company has established the Planning Department, and this department will respond to the suggestions, queries, disputes, and legal proceedings from the shareholders at once to the satisfaction of the shareholders. (II) The Company has kept the dominant shareholders exercising de facto control over the Company and the list of ultimate parties in control of these dominant shareholders. (III) The Company does not have any affiliates, and did not install any risk control mechanism and firewall for such purpose. (IV) The Company has established the operation procedure for handling essential information as an integral part of its internal control system. It is explicitly stated in the procedure that Directors, managers, and employees who access to material information of the Company due to theirpositions,duties or functions	(I) Conforming to the Corporate Governance Best Practice Principles. (II) Conforming to the Corporate Governance Best Practice Principles. (III) The Company does not have affiliates. (IV) Conforming to the Corporate Governance Best Practice Principles.

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	variation with the Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies
	Yes	No	Summary
			performed or control shall duly observe this procedure.
III. The composition and function of the Board (I) Has the board devised and implemented policies to ensure diversity of its members? (II) Apart from the Remuneration Committee and Audit Committee, has the Company assembled other functional committees at its own discretion? (III)Has the Company established a set of policies and assessment tools for evaluating board performance, and conducted performance evaluation on a yearly basis? Are performance evaluation results reported to the board of directors and used as reference for compensation, remuneration and nomination decisions? (IV) Are external auditors' independence assessed on a regular basis?	Yes Yes Yes	No	(I) The Company has designed the job functions for the Directors on the basis of their respective professional knowledge and skills and implemented accordingly. (For more details, refer to section (VIII) Other information enabling better understanding of the Company’s corporate governance) (II) The Company has already established the Risk Management Committee within its organizational structure. (III) The Company has not yet established the regulations governing the performance of the Board. However, the Company has requested the Directors to conduct self-assessment and assessment by peers of their performance by the end of March of each year. (IV) The Company assesses the independence of the CPAs every year and the assessment report has been passed by the Board after discussion on March 26, 2019. The standard of assessment is specified below(Note 2)	(I) Conforming to the Corporate Governance Best Practice Principles. (II) Conforming to the Corporate Governance Best Practice Principles. (III) Conforming to the Corporate Governance Best Practice Principles. (IV) Conforming to the Corporate Governance Best Practice Principles.

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	variation with the Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies
	Yes	No	Summary
IV.Has the Company allocated adequate number of competent corporate governance staff and appointed a corporate governance officer to oversee corporate governance affairs (including but not limited to providing directors/supervisors with the information needed to perform their duties, assisting directors/supervisors with compliance issues, convention of board meetings and shareholder meetings, and preparation of board/shareholder meeting minutes)?	Yes		The Company has established the Corporate Governance Center on March 28 2016, which will be responsible for matters of corporate governance. In addition, the Company has also appointed designated personnel to the center for the pursuit of corporate governance. The function of the Corporate Governance Center is shown below (Note 3). (I) The operation and assignments of the committees of the Company. (II) Handling matters of corporate governance. (III) Study, Improvement, and recommendation of the legal rules on corporate governance. (IV) Report to the Board annually on the result of corporate governance. In addition, the Company has appointed corporate governance officer since June 1, 2019. See Note (VIII) - Other information enabling better understanding of the Company’s corporate governance for details:	Complying with the corporate governance best practice principles
V. Has the Company established channels for communications with the stakeholders (including but not limiting to shareholders, employees, customers, and suppliers), and set up a section for stakeholders at the official website of the Company with proper response to the concerns of the stakeholders on issues related to corporate social responsibility?	Yes		The Company has established channels for communication with the stakeholders, and has set up a stakeholder section at its official website for proper response to the concerns of the stakeholders on issues related to corporate social responsibility.	Complying with the corporate governance best practice principles
VI. Has the Companycommissioned a	Yes		The Companyhas commissioned the Share Registrar	Complyingwith the

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	variation with the Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies
	Yes	No	Summary
professional share registration and investor service institution for providing services to shareholders?			Service of Hua Nan Securities to handle share registration and transaction services.	corporate governance best practice principles
VII. Disclosure of information (I) Has the Company established a website that discloses financial, business, and corporate governance-related information? (II) Has the Company adopted other means to disclose information (e.g. English website, assignment of dedicated personnel to collect and disclose corporate information, implementation of a spokesperson system, broadcasting of investor conferences via the Company website)? (III) Does the Company publish and make official filing of annual financial report within two months after the end of an accounting period, and publish file Q1, Q2 and Q3 financial reports along with monthly business performance before the required due dates?	Yes Yes	No	(I) The Company has established its official website for disclosure of information on financial performance and corporate governance. (II) The Company has installed an English website, appointed Planning Department to collect and disclose related information on the Company, properly performed the spokesperson system, and uploaded the procedure of investors conference to the website as required by law on December 30, 2019. (III) The Company has published and filed annual report, Q1, Q2 and Q3 financial reports along with monthly business performance within the required timeframe.	(I) Conforming to the Corporate Governance Best Practice Principles. (II) Conforming to the Corporate Governance Best Practice Principles. (III) Conforming to the Corporate Governance Best Practice Principles.
VIII. Does the Company have other information that enables a better understanding of the Company's corporate governance practices (including but not limited to employee rights, employee care, investor relations, supplier relations, stakeholders' interests, continuing education of directors/supervisors,implementation of risk	Yes		Essential information of the Company on corporate governance in action: (I) Employee right, employee care: in addition to the protection with the labor insurance and national health insurance, all employees are further protected by a group insurance policy in their daily lives. The Company has also established the “Employee Welfare	(I) Conforming to the Corporate Governance Best Practice Principles.

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	variation with the Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies
	Yes	No	Summary
management policies and risk measurements, implementation of customer policy, and insuring against liabilities of company directors and supervisors)?	Yes Yes Yes Yes Yes		Committee” for administering subsidies for the employees in matrimony, bereavement, celebration and other events, emergency relief aid and tourist travelling and group activities. (II) Investor relation and stakeholder rights: The Company expects to pursue stable investment policy for the proper allocation of assets for better return, and maintain profit at designated level. (III) Supplier relation: the Company is a property insurance firm and is engaged in the sale of various forms of insurances and related business. The only relation with suppliers is just the printing of blank forms. (IV) Continuing education of the Directors and Supervisors: The Chairman, some of the Directors and Independent Directors of the Company have pursued continuing education every year as required. (V) Risk management policy and the implementation of the risk assessment standard: The Company has made its risk management policy as an integral part of its internal control and internal audit system. Respective departments have conducted quarterly review and assessment. (VI) The pursuit of customer policy: The Company is conceived with the notion of service in treating its customers, and has maintained positive interactions with the customers and	(II) Conforming to the Corporate Governance Best Practice Principles. (III) Conforming to the Corporate Governance Best Practice Principles. (IV) Conforming to the Corporate Governance Best Practice Principles. (V) Conforming to the Corporate Governance Best Practice Principles. (VI) Conforming to the Corporate Governance Best Practice Principles.

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	variation with the Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies
	Yes	No	Summary
	Yes		makes the rights of the customers the top priority of concern. (VII) Professional liability insurance taken out by the Company for the benefit of directors and supervisors:The Company has taken out directors and supervisors professional liability insurance for its directors (including independent directors). Details of which have been reported to the board of directors.	(VII) Conforming to the Corporate Governance Best Practice Principles.
IX. Response to the corporate governance evaluation result released by the Corporate Governance Center of Taiwan Stock Exchange Corporation in the most recent year, and further effort shall be made on matters for improvement but still unaccomplished. The responses of the Company to the improvement suggested in the corporate governance evaluation: The nomination system and electronic voting system were adopted in the election of Directors. The Audit Committee was also established, corporate social responsibility was defined and the establishment of a designated body for performing corporate social responsibility. The board of directors now contains a female member. Areas prioritized for improvement:directors' ongoing education, annual report disclosure of director performance assessment and association with compensation,board diversity goals and implementation,and annual task focus of the Audit Committee.

Note 1: Always provide explanations in the summary description column, regardless of whether there are any deviations from the best practice principles. Note 2: Standard for the assessment of the independence of CPAs

e2: Standardfor theassessmentof theindependence ofCPAs
Items for assessment	Assessment result	Meeting the standard of independence or not
1. Are the CPAs and the Company in direct or indirect relation in financial interest.	No	Yes
2. Are the CPAs Directors of the Company or in position that have significant influence on the audit work at present or in the last 2 years?	No	Yes
3. Have the CPAs tolerated or felt the intimidation from the Company?	No	Yes
4. Have the CPAsprovided non-auditingservice to the Company	No	Yes

that mayaffect the status of impartiality?
5. Any other violation of the Statement of Auditing Standard that mayaffect the status of impartiality?	No	Yes

Note 3: The structure of the Corporate Governance Center:

The Company has established the Corporate Governance Center directly under the Board. This Center shall administer the following: I. Corporate Social Responsibility Committee

II. Outsourcing Committee

III. Equal Treatment to Customers Committee IV. Ethical Corporate Management Committee

(I) Members:
1 Director-General, 1 Deputy Director-General, 1 Chief Secretary and several committee members.

(II) Authority:

Outline the CSR mission or vision; establish CSR policy, system or management guidelines.
Compilation, edition and circulation of the Corporate Social Responsibility Report of the Company.
Proper implementation of the “Corporate Social Responsibility Best Practice Principles for TWSE or TPEx Listed Companies” and related rules and regulations.

(III) Empowerment:

The Board agrees to fully empower the committee to handle everything pertinent to corporate social responsibility unless otherwise specified by law that particular issues of corporate social responsibility shall be subject to the resolution of the Board.

(IV) Disclose the composition, responsibilities, and functioning of remuneration committee, if available:

1. Information of Remuneration Committee members

Identity (Note 1)	Condition Name	More than 5 years of work experience and the following professional qualification	More than 5 years of work experience and the following professional qualification	More than 5 years of work experience and the following professional qualification		Compliance	Compliance	Compliance	of independence (Note 2)	of independence (Note 2)	of independence (Note 2)	of independence (Note 2)	of independence (Note 2)		Number of other companies where the member is also a member of their remuneration committees	Remarks
		As a lecturer or higher position at a public or private school of higher education in commerce, law, finance and banking, accounting, or the disciplines and subject required for company operation.	Professional or expert through national examinations with issuance of certificates such as court judge, public prosecutor, lawyer, accountants or other specialization required for company operation.	Work experience in commerce, law, finance and banking, accounting or necessary for company operation.	1	2	3	4	5	6	7	8	9	10
Independent Director	Jui-Tung Lu			�	�	�	�	�	�	�	�	�	�	�	None

Independent Director	Hsiu-Mei Lin			�	�	�	�	�	�	�	�	�	�	�	None
Others	Chung-Mei Chen			�	�	�	�	�	�	�	�	�	�	�	None

Note 1: Please specify director, independent director or others.

Note 2: Members who meet the following conditions at any time during active duty and two years prior to the date of appointment will have a “ � ” placed in the corresponding boxes.

(1) Not employed by the Company or by any of its affiliated companies.
(2) Not a director or supervisor of the Company or any of its affiliated companies (this restriction does not apply to concurrent independent director positions in the Company, its parent company, subsidiary, or another subsidiary of the parent that is compliant with the Act or local laws).
(3) Does not hold more than 1% of the Company's outstanding shares in their own names or under the name of spouse, underage children, or proxy shareholder; nor is a top-10 natural-person shareholder of the Company.
(4) Not a manager listed in (1), or a spouse, 2nd-degree relative or closer or 3rd-degree direct relative or closer to any personnel listed in (2) or (3).
(5) Not a director, supervisor or employee of any corporate shareholder that: 1. holds 5% or more of the Company's outstanding shares; 2. is a top-5 shareholder; or 3. appoints director/supervisor representative in the Company according to Paragraph 1 or 2, Article 27 of The Company Act. (This excludes concurrent independent director positions held within the Company and its parent/subsidiary, or in other subsidiary of the parent company that are compliant with the Act or local laws).
(6) Not a director, supervisor or employee of any other company that controls directorship in the Company or where more than half of total voting rights are controlled by a single party (this excludes concurrent independent director positions held within the Company and its parent/subsidiary, or in other subsidiary of the parent company that are compliant with the Act or local laws).
(7) Does not assume concurrent duty and is not a spouse to the Company's Chairman, President or equivalent role, and is not a director, supervisor or employee of another company or institution. (This excludes concurrent independent director positions held within the Company and its parent/subsidiary, or in other subsidiary of the parent company that are compliant with the Act or local laws).
(8) Not a director, supervisor, manager, or shareholder with more than 5% ownership interest in any company or institution that has financial or business relationship with the Company (however, this excludes concurrent independent director positions held within companies or institutions that hold more than 20% but less than 50% outstanding shares of the Company, or in the Company's parent or subsidiary, or in another subsidiary of the parent that is compliant with the Act or local laws).
(9) Not a professional who provides audit service, or commercial, legal, financial, accounting or related services for an accumulated sum of less than NT$500,000 in the last 2 years, to the Company or its affiliate, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides the above service to the Company or its affiliated companies. This excludes roles as Remuneration Committee, Public Acquisition Review Committee or M&A Special Committee member appointed in accordance with the Securities and Exchange Act or Business Mergers And Acquisitions Act.
(10) Does not meet any of the conditions stated in Article 30 of The Company Act.
Functionality of the Remuneration Committee:
(1) The Company's Remuneration Committee consists of 3 members.
(2) Term of office: From July 11, 2019 to June 26, 2022. The Committee held 3 meetings (A) in 2019. The qualifications of and attendance of

the meetings by the committee members are as follows:

Title	Name	Attendance in person (B)	Attendance by proxy	Actual attendance (%) (B/A)(Note)	Remarks
Convener	Hsiu-Mei Lin	1	0	100%	Newlyappointed members
Member	Jui-Tung Lu	1	0	100%	Newly appointed on 2019/07/11
Member	Chung-Mei Chen	3	0	100%	Re-appointed on 2019/07/11
Convener	Ming-Chieh Chen	2	0	100%	Service until 2019/06/26
Member	Jui-PingLee	2	0	100%	Service until 2019/06/26
Other mandatory disclosures: I. If the Board rejected or revised the recommendation presented by the Remuneration Committee, specify the date, the series of the session, the content of the motions, the resolutions of the Board and the response of the Company to the opinions of the Remuneration Committee (like the remuneration package passed by the Board is at a higher level than the recommendation presented by the Remuneration Committee, specify the difference and the reason). No rejection or revision of the recommendation presented by the Remuneration Committee by the Board has ever occurred. II. Should any member object or express qualified opinions to the resolution made by the Remuneration Committee (see Note 4), whether on-record or in writing, please describe the date and session of the meeting, details of the motion, the entire members' opinions, and how their opinions were addressed. No adverse opinion or qualified opinion from the members of the Remuneration Committee has ever occurred against the resolutions of the Remuneration Committee.

Note:

(1) If particular member of the Remuneration Committee resigned from office prior to the end of the fiscal year, specify the date of resignation in the field provided. The attendance (or attend as observer) rate to the session of the committee (%) shall be calculated on the basis of the number of sessions held in such period and the actual number of presence in the sessions.
(2) If there was an election of new members for the Remuneration Committee before the end of the fiscal year, fill in the information on the former and the new members, and specify if the members are newly elected to office or reelected for a second term of office, and the date of the election. The attendance rate to committee session (%) shall be calculated on the basis of the number of sessions held in such period and the actual number of presence in the sessions.
(3) In accordance with Article 2 of the Organizational Rules of the Company's Remuneration Committee, powers of the Company's Remuneration Committee are as follows:
Develop and regularly review the policies, systems, and standards for performance evaluation of and compensation and remuneration to directors and managers as well as for the structures of the compensation and remuneration.

Regularly review and determine compensation and remuneration to directors and managers.

The committee shall perform the abovementioned duties in accordance with the following principles:

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

Directors and managers shall not be induced to engage in activities involving risks beyond the risk tolerance of the Company in order to pursue compensation and remuneration.

The proportion of dividends to be paid to directors and senior managers based on their short-term performance and partial 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.

(4) Contents of the motions at the meetings of the Remuneration Committee held in 2019 and subsequent actions taken

Remuneration Committee	Motion	Resolution	Company's response to Remuneration Committee's opinions
9th meeting of the 3rd Remuneration Committee (2019/02/15)	I. Review of 2018 director and employee (including managers) remuneration. II. Assessment of the changes in the performance bonus of the Chairman, resident directors and manager of the Company	The motions were approved by all members of the committee and submitted to the latest board meeting for resolution	The motions were submitted to the 19th session of the 19th board meeting dated February 27, 2019 and approved by all directors present at the meeting
10th meeting of the 3rd Remuneration Committee (2019/04/17)	I. Review of appointment and compensation of corporate governance officer of the Company	The motions were approved by all members of the committee and submitted to the latest board meeting for resolution	The motions were submitted to the 21st session of the 19th board meeting dated April 30, 2019 and approved by all directorspresent at the meeting
1st meeting of the 4th Remuneration Committee (2019/10/31)	I. Amend the regulations governing performance evaluation of and compensation and remuneration to the Company's managers II. Approval of the pension for the managers of the Company III. Salaries for the newly appointed President of the Company	The motions were approved by all members of the committee and submitted to the latest board meeting for resolution	The motions were submitted to the 3rd session of the 20th board meeting dated November 12, 2019 and approved by all directors present at the meeting

(V) Fulfillment of social responsibilities:

Fulfillment of social responsibilities and deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies.

Practice	Principles for TWSE/TPEx Listed Companies.	Principles for TWSE/TPEx Listed Companies.	Principles for TWSE/TPEx Listed Companies.
Items for assessment	State of operation(Note 1)			Variation with the Corporate Social Responsibility Best Practice Principles for TWSE or TPEx Listed Companies, and the reasons.
	Yes	No	Summary (Note 2)
I. Has the Company conducted risk assessment on environmental, social and corporate governance issues that are relevant to its operations, and implemented risk management policies or strategies based on principles of materiality? (Note 3)	Yes		I. The Company's risk management policy and procedures have taken into consideration industry characteristics and the materiality principle. They address market risk, credit risk, liquidity risk, operational risk, insurance risk, asset and liability matching risk and other risks relating to operations.	I. Conforming to Corporate Social Responsibility Best Practice Principles for Companies Listed on TWSE /TPEx.
II. Does the Company have a unit that specializes (or is involved) in CSR practices? Is the CSR unit run by senior management and does the unit report its progress to the board of directors?	Yes		II. The Company has established a Corporate Social Responsibility Committee consisting of 5 functional groups that address various issues of concern of stakeholders and follow up on the execution of relevant issues on a regular basis. CSR practices are executed by the senior management under the authority of the board of directors, and progress is reported to the board on a yearly basis (see page 15 of the Company's corporate social responsibility report)(Note 3).	II. Conforming to Corporate Social Responsibility Best Practice Principles for Companies Listed on TWSE /TPEx.

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	Variation with the Corporate Social Responsibility Best Practice Principles for TWSE or TPEx Listed Companies, and the reasons.
	Yes	No	Summary (Note 2)
III. Environmental issues (I) Has the Company developed an appropriate environmental management system, given its distinctive characteristics ? (II) Is the Company committed to achieving efficient use of resources, and using renewable materials that produce less impact on the environment? (III) Does the Company assess potential risks and opportunities associated with climate change, and undertake measures in response to climate issues? (IV) Does the Company maintain statistics on greenhouse gas emission, water usage and total waste volume in the last two years, and implement policies aimed at saving energy, reducing carbon, greenhouse gas, water and controlling waste?	Yes Yes Yes Yes		III. Environmental issues (I) The Company has educated its employees to classify dumps and recycling of materials, and has enhanced the efficient use of resources (refer to p.34~38 of the CSR Report of the Company). (II) The general affairs staff of the corporate HQ has requested other employees to classify resources by nature of the functional departments. The Company is not a manufacturer, therefore ISO 14001 is not appropriate. (III) The Company has notified all that male employees are not required to wear suits and tie for work, and adjusted the temperature of the air-conditioning upward to reduce the emission of greenhouse gas. (IV) Incentive policies were implemented in 2019 to enforce energy conservation among employees. Carbon emission (kgCO2e) in 2019 was 27,376 (kgCO2e) less than 2018, averaging 2,281 (kgCO2e) lower per month. Furthermore, equipment with water efficiency labels have been gradually adopted since 2017, and tap flow has been adjusted to conserve water resource. Implementation of water-saving equipment will be expanded to other branches and liaison offices in the future.	(I) Conforming to Corporate Social Responsibility Best Practice Principles for Companies Listed on TWSE /TPEx. (II) Conforming to Corporate Social Responsibility Best Practice Principles for Companies Listed on TWSE /TPEx. (III) Conforming to Corporate Social Responsibility Best Practice Principles for Companies Listed on TWSE /TPEx. (IV) Conforming to Corporate Social Responsibility Best Practice Principles for Companies Listed on TWSE /TPEx.

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	Variation with the Corporate Social Responsibility Best Practice Principles for TWSE or TPEx Listed Companies, and the reasons.
	Yes	No	Summary (Note 2)
IV. Social issues (I) Has the Company developed its policies and procedures in accordance with laws and International Bill of Human Rights? (II) Has the Company developed and implemented reasonable employee welfare measures (including compensation, leave of absence and other benefits), and appropriately reflected business performance or outcome in employees' compensations? (III) Does the Company provide employees with a safe and healthy work environment? Are employees trained regularly on safety and health issues?	Yes Yes Yes		IV.Social issues (I) The Company has established relevant policies and procedures in management in accordance with applicable legal rules and the International Convention of Human Right to protect employees’ rights (refer to p.50of the CSR Report of the Company). (II) The Company provides employees with welfare measures in addition to Labor Insurance and National Health Insurance coverage. An "Employee Welfare Committee" has been assembled to enforce welfare measures, and the performance evaluation systemappropriately reflects corporate performance and results in employees' compensations (see pages 52~56 of the Company's CSR report). (III) The Company provided a safe and healthy work environment for the employees and has provided education on health and safety at regular intervals thereby fire safety exercise drill was held once semi-annually at the corporate HQ. In addition, the office of the corporate HQ, the branches and the Yang Ping South Road location have been equipped with the AED for first-aid (refer to p.49~50 of the CSR Report of the Company).	(I) Conforming to Corporate Social Responsibility Best Practice Principles for Companies Listed on TWSE /TPEx. (II) Conforming to Corporate Social Responsibility Best Practice Principles for Companies Listed on TWSE /TPEx. (III) Conforming to Corporate Social Responsibility Best Practice Principles for Companies Listed on TWSE /TPEx.

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	Variation with the Corporate Social Responsibility Best Practice Principles for TWSE or TPEx Listed Companies, and the reasons.
	Yes	No	Summary (Note 2)
(IV) Has the Company implemented an effective training program that helps employees develop skills over their career? (V) Has the Company complied with laws and international standards with respect to customers' health, safety and privacy, marketing and labeling in all products and services offered, and implemented consumer protection policies and complaint procedures? (VI) Has the Company implemented a supplier management policy that regulates suppliers' conducts with respect to environmental protection, occupational safety and health or work rights/human rights issues, and tracked suppliers' performance on a regular basis?	Yes Yes	No	(IV) The Company's training programs have been designed according to operating strategies and human resource plans. The Company has internal and external training courses available to help all employees gain professional knowledge, improve work efficiency/quality and develop the professional character needed to compete in the market. The Company also encourages employees to acquire insurance-related certificates, and offers incentives to train professional insurance talents. (V) The insurance products sold by the Company were approved by the competent authority. There is a special hotline for consumer complaint as stated in the insurance policy and company website (refer to p.13~14 of the CSR Report of the Company). (VI) Before the engagement in business transactions with the suppliers, the Company has evaluated if the suppliers have a record on impact on the environment and the society in the past. The contracts binding the Company and key suppliers are not in defiance of the policy of corporate social responsibility of the Company and if there is any significant impact on the environment and the society,the Company	(IV) Conforming to Corporate Social Responsibility Best Practice Principles for Companies Listed on TWSE /TPEx. (V) Conforming to Corporate Social Responsibility Best Practice Principles for Companies Listed on TWSE /TPEx. (VI) Conforming to Corporate Social Responsibility Best Practice Principles for Companies Listed in TWSE /TPEx.

		State of operation(Note 1)	Variation with the Corporate
			Social Responsibility Best
Items for assessment	Yes	No Summary (Note 2)	Practice Principles for TWSE or TPEx Listed Companies, and the
			reasons.
		could terminate or rescind the clause of
		these contracts at anytime.
V. Does the Company prepare corporate social	Yes	The Company prepares its CSR report based on	V. Conforming to Corporate
responsibility report or any report of non-financial		GRI (Global Reporting Initiative) Standards, and	Social Responsibility Best
information based on international reporting		has opted for Core disclosure. Stakeholder	Practice Principles for
standards or guidelines? Are the abovementioned		inclusiveness, sustainability context, materiality and	Companies Listed on TWSE
reports supported by assurance or opinion of a		completeness are the four defining principles	/TPEx.
third-party certifier?		adopted in the preparation of CSR report.
VI. If the Company has established CSR principles in accordance with "Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed
Companies," please describe its current practices and any deviations from the Best Practice Principles:
The Company has compiled the CSR Report in conformity to the requirements of the competent authority and announced publicly as required by
law. Theyare congruent with the Corporate Social ResponsibilityBest Practice Principles for TWSE or TPEx Listed Companies.

VII. Any other essential information that may help to understand the performance of corporate social responsibility better: (The Company has disclosed any relevant and reliable information on corporate social responsibility at its official website and MOPS).

First, the Company is established with the idea of “take from society and give back to society”. For long time, the Company never hesitated to participate in social charity and the primary engagement at present is donation. Donation has been made in kind and cash. The summary of the social charity is specified below:
(I) For the effective use of Company resources, the Information Department repaired and recovered the malfunctioned computers from all departments and donated the recovered computers to AGAPE HOUSE for the drug addicts in rehabilitation to learn a skill so that they could be better prepared to go back to the workplace in the society.
(II) For the expression of social concern under corporate social responsibility, the Company decided to donate AED to charity organizations since 2016. The recipients in 2016 were schools in Taipei City (Xi Yuan Primary School, Nan Men Primary School, Jingxing Junior High School, Daan Vocational High School, and Yongchun Senior High School). From 2017 onward, the recipients of donations shall be governed by the regulations of the Company with adjustment of the quantity of the items for donation as needed. As of 2018, the First Insurance had donated AED to in 11 administrative areas of Taiwan. In 2019, the AED will be donated in different administrative areas.
Note 1: If State of operation is specified "Yes," please explain the key policies, strategies and measures taken and the current progress; if State of operation is specified "No," please provide reasons and explain any policy, strategy and measure planned for the future.

Note 2: If the Company has prepared a CSR report, State of operation may be completed by providing page references to the CSR report instead.

Note 3: Materiality principle refers to environmental, social and corporate governance issues that are of material impact to the Company's investors and stakeholders.

Director-General /Executive Vice President

Deputy Director-General / Manager

Chief Secretary/Deputy Head

Members and function of the committee:

Committee	functionalgroups	Members	Primaryfunction	Operation in 2019
Corporate Social Responsibility Committee	Corporate Governance Group, Customer Concern Group, Employee Care Group, Environmental Protection Group, and Social Charity Group.	Director-General: Head of the Resource Management Group Deputy Director-General: Head of the Planning Dept. Chief Secretary:Deputy Head of the Planning Dept. Members: members of the business production departments	Responsible for the design and execution of the plans for corporate social responsibility policy or related action plans, and report to the Board annually.	2 meetings were convened, on 2019/04/22 and 2019/04/27.

(VI) Integrity policies and practices:

Enforcement of business integrity, deviation and causes of deviation from Ethical Corporate Management - Best Practice Principles for TWSE/TPEx Listed Companies

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	Variation with the Ethical Corporate Management Best Practice Principles for TWSE or TPEx Listed Companyand the reasons.
	Yes	No	Summary
I. Establishment of the policies and action plans on business ethics (I)Has the Company established a set of board-approved business integrity policy, and stated in its Memorandum or external correspondence about the policies and practices it implements to maintain business integrity? Are the board of directors and the senior management committed to fulfilling this commitment? (II)Has the Company developed systematic practices for assessing integrity risks? Does the Company perform regular analyses and assessments on business activities that are prone to higher risk of dishonesty, and implement preventions against dishonest conducts that include at least the measures mentioned in Paragraph 2, Article 7 of "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies"? (III) Has the Company defined and enforced operating procedures, behavioral guidelines, penalties and grievance systems as part of its preventive measures against dishonest conducts? Are the above measures reviewed and revised on a regular basis?	Yes Yes Yes		(I) The Company has made its ethical corporate management policy in March 2016, and has pronounced the policies and action plans in ethical corporate management over its website. The management reports to the Board on the implementation of the policy annually. Amendments to the Company's Business Integrity Code of Conduct were last made on July 11, 2019. (II) The Company has established measures for the prevention of unethical practices in March 2016 with proper operation procedures, ethic code of conduct, penalty on violation and the system for filing complaints for subsequent actions. The Company has adopted measures to prevent acceptance and offering of bribes and offering of illegal political donations within the scope of operation that entails higher risk for unethical business practice. (III) The Companyhas specified relevant details in various preventions adopted against dishonest conduct,and made corresponding amendments on July11,2019.	(I) Consistent with Integrity Best-Practice Principles for TWSE/TPEx Listed Companies. (II) Consistent with Integrity Best-Practice Principles for TWSE/TPEx Listed Companies. (III) Conforming to Integrity Best-Practice Principles for

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	Variation with the Ethical Corporate Management Best Practice Principles for TWSE or TPEx Listed Companyand the reasons.
	Yes	No	Summary
				TWSE/TPEx Listed Companies, and actions for the prevention of accepting and offering bribes, the offering of illegal political donations within the scope of operation that entails higher risk for unethical business practice have also been taken.
II. Proper ethnical corporate management (I) Does the Company evaluate the integrity of all counterparties it has business relationships with? Are there any integrity clauses in the agreements it signs with business partners? (II) Does the Company have a unit that specializes (or is involved) in the enforcement of business integrity directly under the board of directors? Does this unit report its progress(regarding implementation of business integrity policy and prevention against dishonest conducts) to the board of directors on a regular basis (at least once a year)?	Yes Yes		(I) The Company has avoided the engagement in business transactions with those who have a record of unethical business practices but has not yet specified the clause of business integrity in relevant business contracts. (II) The Company has established a designated body for the advocacy of ethical corporate management in 2016. This body reports to the Board on the state of operation to the Board annually. 1. The Company has established a Corporate Governance Center under the Board of Directors. The Corporate Governance Center	(I) Consistent with Integrity Best-Practice Principles for TWSE/TPEx Listed Companies. (II) Consistent with Integrity Best-Practice Principles for TWSE/TPEx Listed Companies.

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	Variation with the Ethical Corporate Management Best Practice Principles for TWSE or TPEx Listed Companyand the reasons.
	Yes	No	Summary
(III) Does the Company have any policy that prevents conflict of interest, and channels that facilitate the report of conflicting interests? (IV)Has the Company implemented effective accounting policyand internal control system to maintain	Yes Yes		is responsible for comprehensively managing the affairs of the Ethical Corporate Management Committee and assisting the Board of Directors and management to develop and supervise the implementation of ethical management policies. 2. Actions taken in 2019: (1) Assist in integrating integrity and ethical values into the Company's business strategy; (2) Promote and coordinate with the publicity of and training in integrity policies (in 2019, the Company organized 136 training courses on publicity of and training in integrity policies); and (3) Plan the reporting systems to ensure the effectiveness of the implementation thereof. 3. The implementation of the reporting systems was reported to the 6th session of the 20th board meeting on March 26, 2020. (III) The Company has made the policy of ethical corporate management in March 2016 covering the prevention of the conflict of interest and the availability of appropriate channels for reporting for the proper avoidance of the conflict of interest. (IV) The Company has established viable accountingsystem,internal control system	(III) Consistent with Integrity Best-Practice Principles for TWSE/TPEx Listed Companies. (IV) Consistent with Integrity

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	Variation with the Ethical Corporate Management Best Practice Principles for TWSE or TPEx Listed Companyand the reasons.
	Yes	No	Summary
business integrity? Has an internal audit unit been assigned to devise audit plans based on the outcome of integrity risk assessment, and to audit employees' compliance with various preventions against dishonest conduct? (V) Does the Company organize internal or external training on a regular basis to maintain business integrity?	Yes		and the audit conducted by internal auditors for the proper pursuit of ethical corporate management. (V) The Company has been providing internal and external training on ethical corporate management for the employees since 2016.	Best-Practice Principles for TWSE/TPEx Listed Companies. (V) Consistent with Integrity Best-Practice Principles for TWSE/TPEx Listed Companies.
III. The functioning of the informant system (I) Does the Company provide incentives and means for employees to report misconducts? Does the Company assign dedicated personnel to investigate the reported misconducts? (II) Has the Company implemented any standard procedures for handling reported misconducts, and subsequent actions and confidentiality measures to be undertaken upon completion of an investigation? (III) Has the Company provided proper whistleblower protection?	Yes Yes Yes		(I) The Companyhas established reporting systems, procedures for processing of reports,and grievance channels, and designated appropriate employees who process reports against those who are reported? (II) The Company has established standard operation procedure for the investigation on unethical practices being reported with proper measures for confidentiality. (III) The Company has taken appropriate measures for the protection of the informants from undue treatment after reporting.	(I) Consistent with Integrity Best-Practice Principles for TWSE/TPEx Listed Companies. (II) Consistent with Integrity Best-Practice Principles for TWSE/TPEx Listed Companies. (III) Consistent with Integrity Best-Practice Principles for

Items for assessment	State of operation(Note 1)	State of operation(Note 1)	State of operation(Note 1)	Variation with the Ethical Corporate Management Best Practice Principles for TWSE or TPEx Listed Companyand the reasons.
	Yes	No	Summary
				TWSE/TPEx Listed Companies.
IV. Intensification of disclosure (I) Has the Company disclosed its integrity principles and progress onto its website and MOPS?	Yes		The Company has established the ethical corporate management best practice principles in 2016, and has disclosed the content at its official website and MOPS with routine disclosure of the content and the result of implementation.	Consistent with Integrity Best-Practice Principles for TWSE/TPEx Listed Companies.
V. If the Company has established business integrity policies in accordance with "Ethical Corporate Management Best Practice Principles for TWSE/TPEx-Listed Companies," please describe its current practices and any deviations from the Best Practice Principles: The Company has established the ethical corporate management best practice principles in 2016 and has disclosed the content at its official website and MOPS. Theseprinciples are congruent with the Corporate Social ResponsibilityBest Practice Principles for Companies Listed on TWSE /TPEx.
VI. Other information relevant to understanding the Company's business integrity (e.g. review of business integrity principles) The Company has established the ethical corporate management best practice principles in 2016 with routine disclosure of the content and the result of implementation.

VI. Other information relevant to understanding the Company's business integrity (e.g. review of business integrity principles)
The Company has established the ethical corporate management best practice principles in 2016 with routine disclosure of the content and the result of implementation.
Note 1: Always provide explanations in the summary description column, regardless of whether there are any deviations from the best practice principles. (VII) If the Company has established the ethical corporate management best practice principles and related regulations, disclose the means for inquiry: The Company has disclosed the content of the ethical corporate management best practice principles and the parliamentary procedure of the Board at its official website in the section of information on corporate governance for the inquiry of the shareholders.
(VIII) Other important information material to the understanding of corporate governance within the Company:
1. Establishment and disclosure of board diversity policy, goals and current progress:
2. (1) Management goals:
  - According to Article 21 of the Ethical Corporate Management Best Practice Principles of the Company, the members of the Boards shall be qualified with the required knowledge, skills and education for the performance of their professed duties. For ideal corporate governance, the board of directors shall possess the following capacities overall:
  - I. Ability in judgment of operation.
  - II. Ability in accounting and financial analysis.
  - III. Ability in corporate management.
  - IV. Ability in risk management and knowledge.
  - V. Ability in risk management.
  - VI. Ability in finance and insurance.

VII. International view of market.

VIII. Leadership capacity.

IX. Decision-making capacity.

(2) Implementation of diversity policy:
The Company has a set of conditions and values that all directors (including independent directors) are required to meet as a minimum. In addition to professional background in the insurance business, directors are also expected to contribute expertise and experience from different industries as part of the Company's board diversity policy. The board currently has 1 independent director with 4~6 years of seniority and 2 independent directors with less than 3 years of seniority, which conformed with Best Practice Principles, and 1 director aged 30~50 and 12 directors aged 51 and above. The Company also elected 1 female independent director during the 2019 re-election to promote gender equality, and will continue enhancing board function, diversity and independence in the future by adhering to its Best Practice Principles and Director Election Policy.

Measurements of diversity Name of Director	Sex	Corporate management	Leadership and decision-making	industry knowledge	finance and accounting
C. H. Lee	Male	V	V	V	V
Cheng-TsungLee	Male	V	V	V
Cheng-Tu Lee	Male	V	V	V
Edward Y. C. Lee	Male	V	V	V
Shao-YingLee	Male	V	V	V
Chi-ChengTu	Male	V	V	V
David Huang	Male	V	V	V	V
Cheng-Chin Lee	Male	V	V	V
Chien-Yi Hsu	Male	V	V	V	V
Tien-ChingYang	Male	V	V	V	V
Jui-TungLu	Male	V	V	V	V
Jui-Chou Lin	Male	V	V	V
Hsiu-Mei Lin	Female	V	V	V	V

Succession plans for board members and key management personnel:
In addition to having excellent competence, board members and key management personnel of the Company must also have the spirit of honor, service, passion, stability, integrity and innovation. The Company ensures balanced development of the key management personnel's professional competence and capabilities in financial planning, business development, and management by devising planned position rotation systems in the succession plans for key management personnel and nurtures the key management personnel's decision-making and judgment capabilities by arranging the key management personnel to be responsible for dealing with matters in different specialties, lead special teams, address cross-departmental issues, and participate in business meetings, etc.
Matters related to the establishment by the Company of the office of corporate governance supervisor:
(1) With the approval shown in the board resolution of the Company dated April 30, 2019, Chuan-Wei HU, deputy manager of the Planning Dept., who has had experience of serving as a service supervisor at public companies for more than three years, will be promoted to manager of the Planning Dept. as of June 1, 2019 and concurrently serve as the corporate governance officer so as to protect shareholders' interests and strengthen the functions of the Board of Directors.
(2) The main duties of the corporate governance officer are to deal with the matters related to board meetings and shareholders' meetings in accordance with the law, make minutes of board meetings and shareholders' meetings, assist directors in taking up their posts, receiving continuous refresher training, and complying with laws, and provide the information required by directors to conduct their businesses.
(3) Businesses conducted in 2019:
- The corporate governance officer has assisted directors and independent directors in performing their duties and arranged for directors to receive refresher
- training.

The corporate governance officer has amended the relevant internal systems in accordance with the law and reviewed the same in accordance with the

Corporate Governance Best Practice Principles for the Insurance Industry.

The corporate governance officer has made arrangement for and notified directors in accordance with the law of the proceedings of shareholders' meetings and board meetings and provided the relevant meeting materials.

The corporate governance officer has disclosed the relevant information and dealt with the matters related to corporate social responsibility.

(4) Information about the 2019 refresher training courses related to corporate governance:

In accordance Article 24 (2) of the Operation Directions for Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board's Exercise of Powers, a person who serves as a corporate governance supervisor for the first time shall complete a 18-hour refresher training course within one year after serving as such. Therefore, the Company's corporate governance supervisor will complete the refresher training course within one year after serving as such in accordance with such provisions.

Course date	Organizer	Name of course	Course hours
2019/06/04	Taiwan Corporate Governance Association	Analysis of Annual Report Information and Responsibilities: From Directors'/Supervisors' Perspective	3
2019/08/02	Taiwan Corporate Governance Association	Role and Responsibilities of the Corporate Governance Officer	3
2019/08/07	Securities & Futures Institute	Compliance Seminar on "Share Transfers by Insiders of Listed andUnlistedCompanies"	3
2019/10/25	TaiwanStock ExchangeCorporation	2019 Insider TradingPreventionSeminar	3
2019/11/21	Taiwan Stock Exchange Corporation	Seminar on Effective Enforcement of Director Duties	3
2019/11/27	Taiwan Corporate Governance Association	The 15th International Corporate Governance Summit Forum	3

(IX) Disclosures relating to the execution of internal control system:
Statement of Declaration of Internal Control (please see page 52).
If the internal control system was reviewed by an external CPA, the result of such review must be disclosed (please refer to page 56).

The First Insurance Co., Ltd. Statement of Declaration of Internal Control

We have conducted internal audit in accordance with its Internal Control Regulation
covering the period from January 1 to December 31, 2019, and hereby declares as follows:
I. The company acknowledges and understands that, the establishment, enforcement and management of internal control system is the responsibility of the Board and the managers, and that the Company has already established such system. The purpose it to reasonably ensure the effect and efficiency of operation, the reliability of financial reporting and the compliance with relevant legal rules. Operation efficiency and effective is the ultimate goal of operation, including profitability, performance and security of assets. Reliability is the objective of financial reporting while compliance will be the objective of law abiding. The compliance system constituted an integral part of the internal control system. The financial records and statements were compiled in accordance with Insurance Act and applicable rules and regulations and the basis of compilation remained congruent and exemplified the result of internal control system in financial reporting.
II. There is limitation inherent to internal control system, no matter how perfect the design. As such, effective internal control system may only reasonably ensure the achievement of the aforementioned goals. Further, the operation environment and situation may vary, and hence the effectiveness of the internal controls system. The internal control system of the company features the self-monitoring mechanism. Once identified, any shortcoming will be corrected immediately.
III. The company judges the effectiveness of the internal control system in design and enforcement in accordance with the “Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises” (hereinafter referred to as “the Regulations”). The Regulations is instituted for judging the effectiveness of the design and enforcement of internal control system. There are five components of effective internal control as specified in the Regulations with which the procedure for effective internal control is composed by five elements, namely, 1. Control environment, 2. Risk assessment, 3. Control operations, 4. Information and Communication, and 5. Monitoring operations. Each of the elements in turn contains certain audit items, and shall be referred to the Regulations for detail.
IV. The company has adopted the aforementioned internal control system for internal audit on the effectiveness of the design and enforcement of the internal control system.
V. Basing on the aforementioned audit findings, the Company holds that it has reasonably preserved the achievement of the aforementioned goals within the aforementioned period of internal control (including operation, financial reporting, and compliance with laws), including the effectiveness and efficiency in operation, reliability in financial reporting and compliance with the relevant legal rules, and that except for the matters listed in the attached tables, the design and enforcement of internal control are effective. In addition, it considers that its financial records and financial statements are prepared in accordance with the Insurance Act and the relevant regulations, and the basis of preparation is consistent as ever, accurate, and fair.
VI. This statement of declaration shall form an integral part of the annual report and prospectus on the company and will be announced. If there is any fraud, concealment and unlawful practice discovered in the content of the aforementioned information, the company shall be liable to legal consequences under Article 20, Article 32, Article 171 and Article 174 of the Securities and Exchanges Act or the Insurance Act.
VII. This statement of declaration has been approved by the Board on March 26 2020. To

Financial Supervisory Commission Declared By: The First Insurance Co., Ltd. Chairman: C. H. Lee (signature/seal) President: Jack Chen (signature/seal) Chief Internal Auditor: Ching-Chang Chen (signature/seal) Corporate HQ Chief Compliance Officer: Jen-Huai Liu (signature/seal)

March 26, 2020

The First Insurance Co., Ltd. Areas of Improvement and Rectification of the Internal Control System (Date: December 31, 2019)

Areasrequiringimprovement	Improvements	Expectedtime of rectification
I. The Financial Examination Bureau raised the following defects after completing its general inspection: (I) Renewal of residential fire insurance sold through bancassurance channels was not carried out according to FSC's Letter No. Jin-Guan-Bao-Chan-106025 2424 dated July 28, 2017. Not only was there an absence of internal control procedures, the Company was found to have underwritten insurance coverage against unsigned application forms without obtaining sufficient evidence on the applicant's intention to purchase coverage. This practice did not comply with Subparagraph 2, Paragraph 1, Article 7 and Item 5, Subparagraph 9, Paragraph 1, Article 7 of "Regulations Governing Business Solicitation, Policy Underwriting and Claim Adjusting of Insurance Enterprises," a law created in accordance with Paragraph 2, Article 148-3 of the Insurance Act. (II) With regards to the renewal of small- and medium-sum commercial fire insurance, the Company was found to have calculated renewal premiums using rates applicable to lower risk building, which did not comply with Item 2, Subparagraph 9,Paragraph	Instructions of Letter No. Jin-Guan-Bao-Chan-1060252424 dated July 28, 2017 have been incorporated into the internal control system since December 2018. Bank Sinopac commenced insurance agency service on January 15, 2019 under the approval of Insurance Bureau, Financial Supervisory Commission. Currently, all applications sourced through Bank Sinopac are approved and underwritten only if they are stamped with the insurance agency seal and countersigned by Sinopac Insurance Brokers Ltd. Systematic control on the calculation of commercial fire insurance renewal premiums has been proposed and implemented on April 26, 2019. The issue in question has also been highlighted in Notes on Commercial Fire Insurance Underwriting System and Procedures for compliance.	Rectified. Rectified.

1, Article 7 of "Regulations Governing Business Solicitation, Policy Underwriting and Claim Adjusting of Insurance Enterprises," a law created in accordance with Paragraph 2, Article 148-3 of the Insurance Act. (III) When calculating premiums on compulsory automobile liability insurance, the Company did not offer premium discount for applicants who visited liaison offices in person. This practice did not conform with the compulsory automobile liability insurance premium rate sheet and Paragraph 4, Article 45 of "Compulsory Automobile Liability Insurance Act." (IV) With regards to the placement of advertisements at automobile companies, displays that cost (including advertising fee and rent) NT$200,000 ~ NT$1,000,000 (inclusive) were not approved according to the Company's "Internal Approval Policy," and failed to comply with Subparagraph 8, Paragraph 1,Article 5 of "Regulations	The insurance underwriting system has been reconfigured so that, when an applicant or agent applies for compulsory and voluntary automobile insurance simultaneously over counter, the voluntary insurance underwriting system will check the applicant's compulsory insurance coverage, and if the compulsory insurance is also underwritten by the Company, a premium discount will have to be applied to the compulsory insurance before issuing the voluntary insurance policy. Online payment controls for the premiums collection system: For every payment received online, the system will check the corresponding policy and channel and release funds only if details match, and thereby protect customers' interest. This function has been implemented since the end of May. The Company has revised its advertisement placement process so that details regarding displays and yields are reported to the Chairman on a yearly basis, whereas the President is authorized to approve individual contracts.	Rectified. Rectified.

Governing Implementation of Internal Control and Auditing System of Insurance Enterprises," a law created under Paragraph 1, Article 148-3 of the Insurance Act. (V) With regards to the collection of premiums on automobile insurance, there were instances where checks were dated more than 2.5 months from the effective date of insurance contract, and that checks were not issued by parties that meet the eligibility criteria outlined in "Notes on Automobile Insurance Premium Collection and Underwriting." These practices did not conform with Subparagraph 2, Paragraph 1, Article 5 of "Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises," a law created under Paragraph 1, Article 148-3 of the Insurance Act. II. The Insurance Bureau had raised the following defects: (I) With regards to the two employer's liability insurance policies (policy No. 1000-07EL000150, coverage from January 17, 2018 to January 17, 2019; and policy No. 1000-07EL000151, coverage from January 17, 2018 to May 28, 2019) underwritten to the primary and secondary contractors of a civil engineering project, the Companywas found to	The information system has been reconfigured since May 30, 2019 to compare check date and the policy effective date, and verify that the difference is compliant with policy requirement. Underwriting personnel have been instructed to obtain procurement contract from customers (the insured party) that are purchasing insurance to cover risks arising from purchases and tenders under the Government Procurement Act. No quotation will be given unless the underlying contract is presented for reference. To prevent errors from the underwriting and data entry personnel,the information	Rectified. Rectified.

	have adjusted the sum assured on February 11, 2019 at the insured party's request solely against approval document, and applied the changes retrospectively from the effective date of policy (January 17, 2018). This practice did not conform with Item 4, Subparagraph 9, Paragraph 1, Article 7 of "Regulations Governing Business Solicitation, Policy Underwriting and Claim Adjusting of Insurance Enterprises," a law created under Paragraph 2, Article 148-3 of the Insurance Act.	system has been reconfigured to ensure that policy issuance date and effective date are not more than 90 days apart.

Auditor’s Report on Internal Control System

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

The following is the declaration of internal control system (including the declaration with the competent authority on internal control system contained in financial reporting) and compliance system (in accordance with the content of Ministry of Finance Letter Tai-Cai-Bao-Zi No. 0930014734) prepared by The First Insurance Co., Ltd. on March 26, 2020. We have audited the declarations, which was effective in design and enforcement as of December 31, 2019. The establishment and preservation of appropriate internal control system is the responsibility of the management. Our responsibility is to express an opinion on the basis of our audit findings from the aforementioned statement of declaration of internal control made by the insurance company.

We conducted our audits in accordance with Ministry of Finance Letter Tai-Cai-Bao-Zi No. 0930014734 dated 2004.03.30, Financial Supervisory Commission Letter Jin-Guan-Bao-Cai-Zi No. 10602506430 dated 2018.01.15, Letter Jin-Guan-Bao-Cai-Zi No. 10402085521 dated 2015.08.14, which require an understanding of the internal control system of the Company, an evaluation of the process of the effective enforcement of the overall internal control system by the management, examination and evaluate the effectiveness of the design and enforcement of the internal control system, and other audit procedures where we deemed necessary. We believed that our audits could serve a reasonable basis to support our opinions.

There is limitation inherent to internal control system, no matter how perfect the design. The First Insurance Co., Ltd. may not be able to prevent or detect mistakes or wrongdoings already happened with the aforementioned internal control system. Any change in the environment of the future may downgrade the level of compliance of the internal system. The effectiveness of the internal control system in current period cannot be guaranteed in the future.

In our opinions, the design and enforcement of the internal control system of The First Insurance Co., Ltd., in all material aspects, in external financial reporting (including the accuracy of the financial information declared with the competent authority under the internal control system for financial reporting) and asset security (safe from unauthorized acquisition, use, and disposition) was effective as of December 31, 2019, in conformity to the “Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises,” and the “Regulations Governing Establishment of Internal Control Systems by Public Companies” released by the Financial Supervisory Commission for the judgment of the effectiveness of internal control system. The design and enforcement of the internal control system (including the declaration of internal control system of financial reporting with the competent authority), and compliance system (as stated in Ministry of Finance Letter Tai-Cai-Bao-Zi No. 0930014734) as declared by The First Insurance Co., Ltd. in its statement of declaration of internal control dated March 26, 2020, in all material aspects, in external financial reporting (including the accuracy of the financial information declared with the competent authority under the internal control system for financial reporting) and asset security (safe from unauthorized acquisition, use, and disposition), was fairly presented, except for the issues described in the "Areas requiring improvement" and "Improvement" paragraphs of the statement of declaration of internal control of The First Insurance Co., Ltd., for which the Company had rectified as of December 31, 2019.

Deloitte Taiwan

CPA Alice Huang

CPA Wan-Yi Liao

March 27, 2020

(X) Penalties imposed against the Company for regulatory violation, or penalties against employees for violation of internal control system, in the most recent year up till the publication date of annual report that may significantly impact shareholders' interest or security price; describe details of the penalty, areas of weakness and any corrective actions taken: Refer to attachment of the Statement of Declaration of Internal Control. (XI) Major resolutions passed in shareholder meetings and board of directors meetings held in the last year up till the publication date of this annual report.

Date of session	Major resolutions of the General Meetingof Shareholders and the Board	State of execution
2019/6/27	General Meeting of Shareholders - The Company’s 2018 Business Report and financial statements.	The motion is passed as stated. Declaration will be made with the attachment of related information with the Insurance Bureau of Financial Supervisory Commission and Taiwan Stock Exchange Corporation after presenting to the General Meeting of Shareholders.
2019/6/27	General Meeting of Shareholders- The proposal of the distribution of earnings of the Companyin 2018.	The motion is passed as stated.
2019/6/27	General Meeting of Shareholders- the proposal of the distribution of dividends of the Companyin 2018.	The motion is passed as stated. Cash dividend at NT$0.49/share waspaid on 2019.08.23.
2019/6/27	General Meeting of Shareholders-Amendment to the “Procedure for the Acquisition or Disposition of Assets”	The motion is passed as stated and executed accordingly.
2019/6/27	General Meeting of Shareholders- Re-election of the Company's directors	The 20th board of directors has been elected accordingtopolicy.
2019/7/11	The Board - "2019 Risk and Solvency Assessment Report (Regulatory Report)," "2019 Risk and Solvency Assessment Report (Internal Report)."	The motion is ratified as stated.
2019/7/11	The Board - To elect 1 Chairman among directors in accordance with the Articles of Incorporation.	Chairman election has been completed.
2019/7/11	The Board - Appointment of executive directors.	The motion is passed as stated.
2019/7/11	The Board - Appointment of directors for concurrent consultancyrole.	The motion is passed as stated.
2019/7/11	The Board - Appointment of Remuneration Committee members.	Remuneration Committee members have been appointed.
2019/7/11	The Board - Appointment of Risk Management Committee members.	Members of the Risk Management Committee have been appointed.
2019/7/11	The Board - Appointment of Audit	Members of the Audit Committee

	Committee members.	have been appointed.
2019/7/11	The Board – The cash dividend day of the Company in 2018 with ex-dividend day, base day and dividendpayment dayset.	The motion is passed as stated. Cash dividend at NT$0.49/share was paid on 2019.08.23.
2019/7/11	The Board – The AML/CFT Training Plan of the Companyin 2019.	The motion is passed as stated.
2019/7/11	Board of Directors - Implementation of the internal audit business of the Company.	The motion is passed as stated.
2019/7/11	The Board - Presentation of the Company's Inspection Findings Improvement Report(Chart B).	The motion is passed as stated.
2019/7/11	The Board - Amendments to the Company's "Business Integrity Code of Conduct."	The motion is passed as stated.
2019/7/11	The Board - Amendments to the Company's Business Integrity Procedures and Behavioral Guidelines.	The motion is passed as stated.
2019/7/11	The Board – Amendment to the corporate governance best practice principles of the Company.	The motion is passed as stated.
2019/7/11	The Board – Amendment to the organization code of the Corporate Governance Center.	The motion is passed as stated.
2019/7/11	The Board – Amendment to the internal control system and internal audit system of the Company.	The motion is passed as stated.
2019/8/23	The Board – Financial Statements covering the first half of 2019.	The motion is passed as stated with declaration with and disclosure at MOPS of Taiwan Stock Exchange Corporation.
2019/8/23	The Board - Report on Evaluation of Self-audit by Various Departments of the Company in 2019	The motion is passed as stated.
2019/8/23	The Board – Amendment to the internal control system.	The motion is passed as stated.
2019/11/12	The Board – The 2nd report on risk management in 2019.	The motion is ratified as stated.
2019/11/12	The Board - Presentation of minutes for the Company's 2019 internal control defect conference.	The motion is passed as stated.
2019/11/12	Board of Directors - Review and amend the regulations governing performance evaluation of, and compensation and remuneration to the Company's managers.	The motion is passed as stated.

2019/11/12	The Board – The dismissal and appointment of the managers of the Company.	The motion is ratified as stated.
2019/11/12	The Board – Approval of the pension for the managers of the Company.	The motion is passed as stated.
2019/11/12	The Board – The salaries for the newly appointed President of the Company.	The motion is passed as stated.
2019/12/27	The Board – The business plan of the Companyin 2020.	The motion is passed as stated.
2019/12/27	The Board – The Compliance Plan of the Companyin 2020.	The motion is passed as stated.
2019/12/27	The Board – The audit plan of the Companyin 2020.	The motion is passed as stated.
2019/12/27	The Board – The investment policy of the Companyin 2020.	The motion is passed as stated.
2019/12/27	The Board – The AML/CFT Training Plan of the Companyin 2020.	The motion is passed as stated.
2019/12/27	Board of Directors - Implementation of the internal audit business of the Company.	The motion is passed as stated.
2019/12/27	The Board - Presentation of the Company's 2018 F137 Inspection Findings Improvement Report II (Chart B).	The motion is passed as stated.
2019/12/27	The Board - Change of the Company's spokesperson and acting spokesperson.	The motion is passed as stated.
2019/12/27	The Board - Amendments to Salesperson Compensation Principles	The motion is passed as stated.
2019/12/27	The Board – amendment to the Articles of Incorporation of the Company.	The motion is passed as stated.
2019/12/27	The Board - Amendments to the Company's consumer dispute resolution system.	The motion is passed as stated.
2019/12/27	The Board – amendment to the internal control system and internal audit system of the Company.	The motion is passed as stated.
2020/02/27	The Board – Approval of the remuneration to the Directors and employees (including the managers) of the Company in 2019.	Passed as stated and presented to the regular session of the General Meeting of Shareholders in 2020.
2020/02/27	Board of Directors - Review of the appointment and compensation of the managers of the Company.	The motion is passed as stated.

2020/02/27	The Board - Establishment of procedures on special-purpose transaction and investment in non-profit or social welfare organization involving the Company's capital.	Passed as stated and presented to the regular session of the General Meeting of Shareholders in 2020.
2020/02/27	The Board – Amendment to shareholder meeting conference rules of the Company.	Passed as stated and presented to the regular session of the General Meeting of Shareholders in 2020 for discussion.
2020/02/27	The Board – Amendment to the parliamentary procedure of the Company.	Passed as stated and presented to the regular session of the General Meetingof Shareholders in 2020.
2020/02/27	The Board - Amendment to the Company's independent director responsibility principles.	The motion is passed as stated.
2020/02/27	The Board – amendment to the organization code of the Audit Committee of the Company.	The motion is passed as stated.
2020/02/27	The Board – Amendment to the organization code of the Remuneration Committee of the Company.	The motion is passed as stated.
2020/02/27	The Board – amendment to the internal control system and internal audit system of the Company.	The motion is passed as stated.
2020/03/26	The Board – The Business Report of the Company in 2019.	Passed as stated and presented to the regular session of the General Meeting of Shareholders in 2020 for ratification.
2020/03/26	The Board – Financial Statements for 2019.	Passed as stated and presented to the regular session of the General Meeting of Shareholders in 2020 for ratification.
2020/03/26	The Board – Distribution of 2019 earnings.	Passed as stated and presented to the regular session of the General Meeting of Shareholders in 2020 for discussion.
2020/03/26	The Board – Distribution of 2019 dividends.	Passed as stated and presented to the regular session of the General Meeting of Shareholders in 2020 for discussion.
2020/03/26	The Board – Execution of the 2019 audit plan.	The motion is passed as stated.
2020/03/26	The Board – Statement of Declaration of Internal Control in 2019	The motion is passed as stated.
2020/03/26	Board of Directors - Statement of Overall Implementation of Information SecuritySystems	The motion is passed as stated.

	bythe Companyin 2019
2020/03/26	The Board – Statement of Declaration of Internal Control in AML/CFT in 2019.	The motion is passed as stated.
2020/03/26	The Board – Announcement of the regular session of the General Meeting of Shareholders in 2020.	The motion is passed as stated.
2020/03/26	The Board – Assessment report on the independence of the CPAs from Deloitte Taiwan, the external auditor firm commissioned by the Companyin 2019.	The motion is passed as stated.
2020/03/26	The Board – Auditing fee charged by Deloitte Taiwan in 2020 for auditingservice.	The motion is passed as stated.
2020/03/26	The Board – Procedure for converting investment property of the Companyto business use.	The motion is passed as stated.
2020/03/26	The Board – Amendment to the internal control system and internal audit system of the Company.	The motion is passed as stated.
2020/04/29	The Board – The 1st report on risk management in 2020.	The motion is ratified as stated.
2020/04/29	The Board - "2020 Risk and Solvency Assessment Report (Regulatory Report)," "2020 Risk and Solvency Assessment Report (Internal Report)."	The motion is ratified as stated.
2020/04/29	The Board - Distribution of 2019 director remuneration.	The motion is passed as stated.
2020/04/29	Board of Directors - Assessment of the changes in the performance bonus of the Chairman, resident directors and manager of the Company.	The motion is passed as stated.
2020/04/29	The Board - Appointment of the head of Risk Management Department.	The motion is passed as stated.
2020/04/29	The Board – Dismissal of managers of the Company.	The motion is passed as stated.
2020/04/29	The Board – Update of the Company's 2020 auditplan.	The motion is passed as stated.
2020/04/29	The Board - Amendments to the Company's Business Integrity Procedures and Behavioral Guidelines.	The motion is passed as stated.
2020/04/29	The Board - Amendment to the Company's "Corporate Social Responsibility Code of Conduct."	The motion is passed as stated.

2020/04/29 The Board – Amendment to the internal control system and internal The motion is passed as stated. audit system of the Company.

(XII) Documented opinions or declarations made by Directors or Supervisors against board resolutions in the most recent year, up till the publication date of annual report: None.

(XIII) Resignation or dismissal of the Chairman, President, head of accounting, head of finance, chief internal auditor, corporate governance officer or head of R&D in the most recent year up till the publication date of annual report: Resignation/dismissal of relevant personnel

				April 30,2020
Title	Name	Date onboard	Date departed	Reasons for resignation or departure
President	Jack Chen	1990/3/1	2020/2/25	Retirement at designated age

Note: Relevant personnel include Chairman, President, head of accounting, head of finance, chief internal auditor, corporate governance officer, Head of R&D etc.

IV. Information on auditing fees

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

Unit: NTD thousands

Name of CPA firm	Name of CPA	Auditing fee		Non-auditing fee	Non-auditing fee	Non-auditing fee		Examination period	Remarks
			System design	Business registration	Human resources	Others	Subtotal	Examination period
Deloitte Taiwan	Alice Huang, Wan-Yee Liao	3,200	-	-	-	-	-	2019	-

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

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

(IV) Report on Independence of Certified Public Accountants:

Assessment Report on Independence of CPA in 2019

The Company appointed Alice Huang, CPA, and Wan-Yi Liao, CPA, of Deloitte Taiwan for the audit and certification of the 2019 financial statements covering relevant period. As dictated by internal control, the assessment of the independence of CPA is necessary. The following is a list of assessments performed and the outcomes:

I. The Company does not have direct or indirect financial interest with Alice Huang and Wan-Yi Liao, CPAs of Deloitte Taiwan that affected their independence.

II. Alice Huang and Wan-Yi Liao, CPAs of Deloitte Taiwan have never been a

Director, Independent Directors, or any other position of the Company at present of in the last 2 years that may directly and significantly affect the audit.

III. The Company did not defend against the stance and opinions of Alice Huang and Wan-Yi Liao, CPAs of Deloitte Taiwan that may affect their independence.
IV. Alice Huang and Wan-Yi Liao, CPAs of Deloitte Taiwan, and their audit team has not tolerated or felt any intimidation from the Company that may cause their objectivity and professional standing in the audit.
V. Alice Huang and Wan-Yi Liao, CPAs of Deloitte Taiwan, and their audit team did not provide any other forms of non-auditing service for the Company that may affect their impartiality.
VI. No violation of any requirement of the SAS that may affect the impartiality of the CPAs.
VII. The aforementioned assessment was made in accordance with the Republic of China Professional Code of Conduct of Certified Public Accountants No. 10, “Integrity, Fair, Objective, and Independence”.

Assessor: Fei-Fen Hsiao Person in charge: Chu-Minn Leu

V. Change of CPA:

The Company had changed its financial statement auditors from CPA Yung-Fu Liu and CPA Wan-Yi Liao to CPA Alice Huang and CPA Wan-Yi Liao of Deloitte Taiwan due to an internal rotation within Deloitte Taiwan.
VI. Disclosure of any of the Company’s Chairman, President, or managers responsible for financial or accounting affairs being employed by the auditor’s firm or any of its affiliated company in the last year, including their names, job titles, and the periods during which they were employed by the auditor’s firm or any of its affiliated company: None.

VII. Changes in shareholding by Directors, Managers and dominant shareholders in the most recent year to the day this report was printed

Title (Note 1)	Name	2019	2019	Year-to-date April 30	Year-to-date April 30
		Increase (decrease) in shares held	Increase (decrease) in shares pledged	Increase (decrease) in shares held	Increase (decrease) in shares pledged
Chairman	Yi Chih Co., Ltd. Representative: C. H. Lee	-	-	-	-
Director	Chien Yi Industrial Co., Ltd. Representative: Cheng-TsungLee	-	-	-	-
Director	Cheng-Tu Lee	-	-	-	-
Director	Yi-Lung Lai (Departed on 2019/6/27)	-	-	-	-
Director	Edward Y. C. Lee (Onboard since 2019/6/27)	-	-	-	-
Director	Shao-YingLee	-	-	-	-
Director	Chimax Development Company Representative: Chi-ChengTu	-	-	-	-
Director	Cheng-Chin Lee	-	-	-	-
Independent Director	Ming-Chieh Chen (Departed on 2019/6/27)	-	-	-	-
Independent Director	Jui-Ping Lee (Departed on 2019/6/27)	-	-	-	-
Independent Director	Jui-Tung Lu	-	-	-	-
Independent Director	Jui-Chou Lin (Onboard since 2019/6/27)	-	-	-	-
Independent	Hsiu-Mei Lin	-	-	-	-

Director	(Onboard since 2019/6/27)
Director	David Huang	-	-	-	-
Director	Chien Cheng Development Co., Ltd. Representative: Tien-ChingYang	-	-	-	-
Director	Da Feng Construction Engineering Co., Ltd. Representative: Chien-Yi Hsu	-	-	-	-
Manager	Jack Chen (relieved from office on 2020/2/25)	-	-	-	-
Manager	ChingChangChen	-	-	-	-
Manager	Jen-Huai Liu
Manager	C. S. Lin	-	-	-	-
Manager	Tom C. T. Chen
Manager	Stephen S.C. Shen	-	-	-	-
Manager	Chu-Minn Leu	-	-	-	-
Manager	Emerson Chien	-	-	-	-
Manager	Jack Chu	-	-	-	-
Manager	Edward Y. C. Lee	-	-	-	-
Manager	Yeong-RongHsiao	-	-	-	-
Manager	Chen-HsiungLin	-	-	2,000	-
Manager	Beiru Lee	-	-	-	-
Manager	Fei-Fen Hsiao	-	-	-	-
Manager	Teh-Chun Chiang	-	-	-	-
Manager	Ping-Change Chou	-	-	-	-
Manager	Chang-HongChen	-	-	-	-
Manager	Chien Wen Chen	-	-	-	-
Manager	S.Q. Chen	-	-	-	-
Manager	TonyJ.Y. Wang	-	-	-	-
Manager	Hsu-Wei Chen	-	-	-	-
Manager	Wen-TungYen	-	-	15,000	-
Manager	H. C. Huang	-	-	62,000	-
Manager	Tung-Sen Shih	-	-	-	-
Manager	Chuan-Wei Hu (Onboard since 2019/6/1)	-	-	-	-

Note 1: Shareholders holding more than 10% of the outstanding shares issued by the Company shall be singled out as dominant shareholders.

Note 2: If the counterparty of the transfer or pledge of shares is a related party, fill in the Table below. Information of transfer of shares

Name (Note 1)	Reason for transfer (Note 2)	Date of transactio n	Counterpartie s	Counterparty's relationship with the Company, directors, supervisors, managers and shareholders with more than 10% ownershipinterest	Number of shares	transaction price

Note 1: The names of directors, supervisors, managers and shareholders with more than 10% ownership interest.

Note 2: Acquisition or disposal.

Information on pledge of shares

Name (Note 1)	Reason for change of pledge (Note 2)	Date of change	Counterparties	Counterparty's relationship with the Company, directors, supervisors, managers and shareholders with more than 10% ownershipinterest	Number of shares	Proportion of shareholding	Percentage pledged	Amount pledged (redeemed)

Note 1: The names of directors, supervisors, managers and shareholders with more than 10% ownership interest.

Note 2: Specify "pledged" or "redeemed."

VIII. Information on the relations among the top 10 shareholders of the Company by quantity of shareholding

hareholding
Name (Note 1)	Shares held in own name		Shareholding by spouse or dependents		Shareholding under the title of a third party		If the top 10 shareholders are related parties, or spouses, kindred within the 2nd tier under the Civil Code, the titles or names and relations.(Note 3)		Remarks
	Number of shares	Proportion of shareholding	Number of shares	Proportion of shareholdi ng	Numb er of shares	Proporti on of sharehol ding	Title (or name)	Relation
Sheng Ching Investment Co., Ltd.	19,615,289	6.51%	-	-	-	-	-	-
Deputy Agent: Shu-Huei Huang	-	-	-	-	-	-	-	-
Chien Cheng Development Co.,Ltd.	18,806,192	6.24%	-	-	-	-	Chien Yi Industrial Co.,Ltd.	With the same chairman.
Deputy Agent: Cheng-Tsung Lee	1,329,102	0.44%	183,647	0.06%	-	-	Cheng-Tu Lee Pei-Chuen Lee	Brothers Elder brother and younger sister
Da Feng Construction Engineering Co.,Ltd.	15,823,085	5.25%	-	-	-	-	Tsai Cheng Enterprise Co., Ltd.	With the same chairman.
Deputy Agent: C. T. Lee	3,296,991	1.09%	606,203	0.20%	-	-	Cheng-Tsung Lee Pei-Chuen Lee	Brothers Elder sister and younger brother
Tsai Cheng Enterprise Co., Ltd.	11,373,501	3.70%	-	-	-	-	Da Feng Construction Engineering Co.,Ltd.	With the same chairman.
Deputy Agent: C. T. Lee	3,296,991	1.09%	606,203	0.20%	-	-	Cheng-Tsung Lee Pei-Chuen Lee	Brothers Elder sister and younger brother
Pao Shan Construction Co.,Ltd.	9,969,950	3.31%	-	-	-	-	-	-
Deputy Agent: Cheng-Chin Lee	347,000	0.12%	190,000	0.06%	-	-	-	-
Chien Yi Industrial Co., Ltd.	7,385,189	2.44%	-	-	-	-	Chien Cheng Development Co.,Ltd.	With the same chairman.
Deputy Agent: Cheng-Tsung Lee	1,329,102	0.44%	183,647	0.06%	-	-	Cheng-Tu Lee Pei-Chuen Lee	Brothers Elder brother and younger sister
Yi Chih Co., Ltd.	4,928,750	1.64%	-	-	-	-	-	-
Deputy Agent: Hsiu-Chuan Lee-Yang	3,719,751	1.24%	1,699,367	0.56%	-	-	Hsiu-Chuan Lee-Yang	The same person
Tsai Rui Enterprise Co., Ltd.	4,498,464	1.49%	-	-	-	-	-	-

Deputy Agent: Pei-Chuen Lee	1,139,000	0.38%	-	-	-	-	Cheng-Tsung Lee Cheng-Tu Lee	Elder brother and younger sister Elder sister and younger brother
Taian Insurance Co. Ltd.	4,210,000	1.40%	-	-	-	-	-	-
Deputy Agent: Sung-Chih Lee	-	-	-	-	-	-	-	-
Hsiu-Chuan Lee-Yang	3,719,751	1.24%	-	-	-	-	Yi Chi Co., Ltd.	With the same chairman.

Note 1: List out the top 10 shareholders. List both the titles of the shareholders and the names of the representatives for institutional shareholders.

Note 2: The percentages of shares held under own name, spouse's name, underage children's names, or in the names of others are calculated separately.

Note 3: The aforementioned shareholders for disclosure shall include institutional shareholders and natural persons, with the relations between the shareholders as required by the Criteria for the Compilation of Financial Statements by Securities Issuers.

IX. The quantity of shares of the same investee held by the business under direct or indirect control of the Company, the Directors, Supervisors, managers of the Company, and shall be included in the overall proportion in shareholding.

Unit: shares; %

					Unit: shares; %	Unit: shares; %
Business investments (Note)	Investment of the Company		Investment of the Directors, Supervisors, managers and business under direct or indirect control.		Comprehensive investment
	Number of shares	Shareholding percentage	Number of shares	Shareholding percentage	Number of shares	Shareholding percentage

Note: Long-term investment of the Company accounted for under the equity method.

Four. Funding Status

I. Source of capital

Year / month	Issued price (NTD)	Authorized capital	Authorized capital	Paid-up capital	Paid-up capital	Remarks	Remarks	Remarks
		Shares (thousand shares)	Amount (NTD thousands)	Shares (thousand shares)	Amount (NTD thousands)	Sources of share capital (NTD thousands)	Paid in properties other than cash	Others
1993/10	10	40,500	405,000	40,500	405,000	Capitalization of retained earnings 27,720 Cash issue 69,280	None	Approved under Letter (82)-Tai-Cai-Zheng- (I) No. 30551 dated October 2, 1993
1994/07	10	49,005	490,050	49,005	490,050	Capitalization of retained earnings 76,950 Capitalization of special reserves 8,100	None	Approved under Letter (83)-Tai-Cai-Zheng- (I) No. 32388 dated July 22, 1994
1995/07	10	61,000	610,000	61,000	610,000	Cash issue 119,950	None	Approved under Letter (84)-Tai-Cai-Zheng- (I) No. 38516 dated July5,1995
1996.07	10	76,000	760,000	76,000	760,000	Cash issue 137,800 Capitalization of capital reserves 6,100 Capitalization of special reserves 6,100	None	Approved under Letter (85)-Tai-Cai-Zheng- (I) No. 41412 dated July 9, 1996
1997/07	10	94,000	940,000	94,000	940,000	Cash issue 96,400 Capitalization of retained earnings 76,000 Capitalization of special reserves 7,600	None	Approved under Letter (86)-Tai-Cai-Zheng- (I) No. 52271 dated July 7, 1997
1998/07	10	115,000	1,150,000	115,000	1,150,000	Cash issue 97,200 Capitalization of retained earnings 103,400 Capitalization of special reserves 4,700 Capitalization of capital reserves 4,700	None	Approved under Letter (87)-Tai-Cai-Zheng- (I) No. 59513 dated July 14, 1998

1999/07	10	140,000	1,400,000	140,000	1,400,000	Cash issue 169,500 Capitalization of retained earnings 69,000 Capitalization of special reserves 5,750 Capitalization of capital reserves 5,750	None	Approved under Letter (88)-Tai-Cai-Zheng- (I) No. 62487 dated July 7, 1999
2000/08	10	170,000	1,700,000	170,000	1,700,000	Cash issue 206,200 Capitalization of retained earnings 93,800	None	Approved under Letter (89)-Tai-Cai-Zheng- (I) No. 56269 dated June 29, 2000
2001/07	10	200,000	2,000,000	200,000	2,000,000	Cash issue 204,000 Capitalization of retained earnings 96,000	None	Approved under Letter (90)-Tai-Cai-Zheng- (I) No. 141707 dated July 6, 2001
2003/06	10	210,230	2,102,300	210,230	2,102,300	Capitalization of retained earnings 102,300	None	Approved under Letter (92)-Tai-Cai-Zheng- I No. 0920128642 dated June 30,2003
2004/07	10	234,977	2,349,776	234,977	2,349,776	Capitalization of retained earnings 247,476	None	Approved under Letter (93)-Zheng-Qi-I-Zi No. 0930129931 dated July7,2004
2005.07	10	258,075	2,580,753	258,075	2,580,753	Capitalization of retained earnings 230,977	None	Jin-Guan-Zheng-I-Zi No. 0940124581 dated June 27, 2005
2007.07	10	282,782	2,827,828	282,782	2,827,828	Capitalization of retained earnings 257,075	None	Jin-Guan-Zheng-I-Zi No. 0960034642 dated July 13, 2007
2008.07	10	301,163	3,011,637	301,163	3,011,637	Capitalization of retained earnings 183,808	None	Jin-Guan-Zheng-I-Zi No. 0970032127 dated July 4, 2008

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

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

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

								April 30, 2020	April 30, 2020
Share category				Authorized capital				Remarks
		Outstanding shares(Note)		Unissued shares		Total
Common shares		301,163,784 shares		0		301,163,784 shares		TWSE-listed
Note: The place of		listing (i.e. TWSE or TPEx) along with any listing restrictions has been Information relevant to the aggregate reporting policy
Type of securities	Planned amount of issuance		Issued quantity		Purpose and expected benefits of issued		Scheduled date of issuance for		Remarks

	Total shares	Amount approved	Number of shares	Price	securities	unissued securities

II. Shareholder structure

II. Shareholder structure	II. Shareholder structure	II. Shareholder structure	II. Shareholder structure	II. Shareholder structure	II. Shareholder structure	II. Shareholder structure
April 30, 2020 Shareholder structure Count Government agencies Financial institutions Other corporate entities Natural persons Foreign institutions and foreigners Total count 0 4 122 20,876 84 21,086 Shares held(shares) 0 4,582,000 119,905,274 164,197,342 12,479,168 301,163,784 Shareholding percentage(%) 0% 1.52% 39.81% 54.52% 4.15% 100%
Shareholder structure Count	Government agencies	Financial institutions	Other corporate entities	Natural persons	Foreign institutions and foreigners	Total
count	0	4	122	20,876	84	21,086
Shares held(shares)	0	4,582,000	119,905,274	164,197,342	12,479,168	301,163,784
Shareholding percentage(%)	0%	1.52%	39.81%	54.52%	4.15%	100%

Note: All TWSE/TPEx/Emerging Stock Market companies listing for the first time are required to disclose Mainland investors' holding interests. A Mainland investor refers to an individual,

corporation, organization, or institution of Mainland origin, or any company owned by the above party in a foreign location, as defined in Article 3 of Regulation Governing Mainland Residents' Investment in Taiwan .

III. Diversity of ownership

. III. Diversity of ownership	. III. Diversity of ownership	. III. Diversity of ownership	. III. Diversity of ownership
April 30, 2020 Shareholding range Number of shareholders Shares held Shareholding percentage 1 to 999 14,371 561,463 0.19% 1,000 to 5,000 3,951 9,031,734 3.00% 5,001 to 10,000 1,003 8,163,929 2.71% 10,001 to 15,000 424 5,388,084 1.79% 15,001 to 20,000 281 5,152,737 1.71% 20,001 to 30,000 244 6,218,920 2.06% 30,001 to 40,000 148 5,278,929 1.75% 40,001 to 50,000 116 5,346,578 1.78% 50,001 to 100,000 222 16,059,275 5.33% 100,001 to 200,000 151 21,312,753 7.08% 200,001 to 400,000 82 22,800,666 7.57% 400,001 to 600,000 24 11,647,948 3.87% 600,001 to 800,000 16 10,949,617 3.64% 800,001 to 1,000,000 10 8,967,010 2.98% 1,000,001 and above - Range to be determined as deemed appropriate 43 164,284,141 54.55% Total 21,086 301,163,784 100.00%
Shareholding range	Number of shareholders	Shares held	Shareholding percentage
1 to 999	14,371	561,463	0.19%
1,000 to 5,000	3,951	9,031,734	3.00%
5,001 to 10,000	1,003	8,163,929	2.71%
10,001 to 15,000	424	5,388,084	1.79%
15,001 to 20,000	281	5,152,737	1.71%
20,001 to 30,000	244	6,218,920	2.06%
30,001 to 40,000	148	5,278,929	1.75%
40,001 to 50,000	116	5,346,578	1.78%
50,001 to 100,000	222	16,059,275	5.33%
100,001 to 200,000	151	21,312,753	7.08%
200,001 to 400,000	82	22,800,666	7.57%
400,001 to 600,000	24	11,647,948	3.87%
600,001 to 800,000	16	10,949,617	3.64%
800,001 to 1,000,000	10	8,967,010	2.98%
1,000,001 and above - Range to be determined as deemed appropriate	43	164,284,141	54.55%
Total	21,086	301,163,784	100.00%
			April 30, 2020 Shareholding percentage
	Number of shareholders	Shares held	Shareholding percentage

Total	21,086	301,163,784	100.00%
Preferred shares
			April 30, 2020
Shareholding range	Number of	Shares held	Shareholding
	shareholders		percentage
Range to be determined as
deemed appropriate
Total

IV. List of major shareholders:

	April 30, 2020 Shareholding percentage %
Shares held	Shareholding percentage %

ShengChingInvestment Co.,Ltd.	19,651,289	6.51%
Chien ChengDevelopment Co.,Ltd.	18,806,192	6.24%
Da Feng Construction Engineering Co.,Ltd.	15,823,085	5.25%
Tsai ChengEnterprise Co.,Ltd.	11,373,501	3.78%
Pao Shan Construction Co.,Ltd.	9,969,950	3.31%
Chien Yi Industrial Co.,Ltd.	7,385,189	2.45%
Yi Chih Co.,Ltd.	4,928,750	1.64%
Tsai Rui Enterprise Co.,Ltd.	4,498,464	1.49%
Taian Insurance Co. Ltd.	4,210,000	1.40%
Kanlin Investment Co.,Ltd.	4,061,000	1.35%

V. Information relating to market price, net worth, earnings, and dividends per share for the last 2 years

2years
Item	Year		2018	2019	Year-to-date March 31, 2020
Market price per share(Note 1)	Highest		16.10	15.70	14.80
	Lowest		13.25	14.00	10.25
	Average		14.26	14.64	13.57
Net worth per share (Note 2)	Before dividend		19.82	22.62	20.50
	After dividend		19.33	8	-
Earnings per share	Weighted average outstanding shares		301,164	301,164	301,164
	EPS(Note 3)		1.63	1.93	(0.57)
Dividends per share	Cash dividends		0.49	Note 8	-
	Stock dividends	From earnings	-	-	-
		From capital reserves	-	-	-
	Cumulative undistributed dividends(Note 4)		-	-	-
Analysis of investment returns	P/E ratio(Note 5)		8.75	7.59	-
	Price to dividends ratio(Note 6)		29.10	Note 8	-
	Cash dividend yield (Note 7)		3.44	Note 8	-

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 transacted prices against transacted 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 shareholders meeting is presented in the Table.

Note 3: Where stock dividends were issued, EPS are disclosed in amounts before and after retrospective adjustments. Note 4: Where 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 dividends ratio = average closing price per share for the year / cash dividends per share.

Note 7: Cash dividend yield = cash dividends per share / average closing price per share for the current year. Note 8: Dividends per share are specified in the amounts resolved during next year's shareholder meeting; the 2019 amounts are yet to be resolved during a shareholder meeting.

VI. Dividend policy and execution:
(I) 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. At least 30% of distributable earnings shall be distributed as dividends, with cash dividends amounting to no lesser than 10% of total dividends.
(II) Dividend distribution proposed for the next shareholder meeting:
During the board of directors meeting held on March 26, 2020, the board resolved to pay out NT$289,117,233 from cumulative undistributed earnings as cash dividends. Based on the 301,163,784 shares outstanding, the payout is equivalent to NT$0.96 per share. The board of directors shall be authorized to determine details relating to the dividend, including the baseline date, once the proposal has been resolved in the annual general meeting.
VII. Impacts of proposed stock dividends on the Company's business performance and earnings per share: None.
VIII. Percentage and scope of employee/director/supervisor remuneration:
(I) Pursuant to Article 31 of the 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 in shares. Employees who meet certain criteria are entitled to receive remuneration. Up to 0.6% of the aforementioned profit may be distributed as directors' remuneration at the discretion of the board of directors. Employee and director remuneration proposals are to be raised for resolution during shareholder meetings.
Profits must first be taken to offset against cumulative losses, if any, before the remainder can be distributed as employee/director remuneration in the above percentages.
(II) Allocation of employee and director remuneration from previous year's earnings: Employee remuneration: NT$6,744,000 and director remuneration: NT$4,046,000.

IX. (I) Shares repurchased by the Company: (completed)

Up till April 30, 2020

Buyback attempt (Note)	First (attempt)	Second (attempt)	Third (attempt)	Fourth (attempt)	Fifth (attempt)	Six (attempt)
Purpose of buyback	Transfer to employees	Transfer to employees	Transfer to employees	Transfer to employees	Transfer to employees	Transfer to employees
Buyback period	January 29, 2001~ March 28, 2001	April 02, 2001~ June 01, 2001	June 11, 2001~ August 10, 2001	August 07, 2001~ October 06, 2001	August 28, 2003~ October 27, 2003	February 18, 2004~ April 17, 2004
Buyback price range	8~12	10~12	9~12	8.5~10.5	8~12	17~23
Types and number of shares bought back	Common shares 6,000,000	Common shares 2,000,000	Common shares 2,000,000	Common shares 4,000,000	Common shares 3,000,000	Common shares 1,000,000
Value of	64,619,006	19,310,673	20,533,572	38,038,310	30,769,227	22,221,815

shares bought back
Quantity bought back as a percentage of planned buyback(%)	100%	100%	100%	100%	100%	100%
Number of shares retired and transferred	6,000,000	2,000,000	2,000,000	4,000,000	3,000,000	1,000,000
Cumulative holding of own shares	0	0	0	0	0	0
Cumulative holding of own shares as a percentage to total outstanding shares(%)	0%	0%	0%	0%	0%	0%

Note: Adjust the number of columns as needed.

(II) Shares repurchased by the Company: (ongoing)

o total outstanding hares(%) Note: Adjust the number of columns as needed. ares repurchased by the Company: (ongoing)	o total outstanding hares(%) Note: Adjust the number of columns as needed. ares repurchased by the Company: (ongoing)
		Uptill April 30,2020
Buyback attempt(Note)	First(attempt)	Second(attempt)
Purpose ofbuyback	-	-
Buybackperiod	-	-
Buybackpricerange	-	-
Types and number of shares boughtback	-	-
Value of shares bought back	-	-
Quantity bought back as a percentage of planned buyback(%)	-	-
Number of shares retired and transferred	-	-
Cumulative holding of own shares	-	-
Cumulative holding of own shares as a percentage to total outstanding shares (%)	-	-

X. Corporate bonds (including convertible bonds, exchangeable bonds, bonds issued under shelf registration, and corporate bonds with embedded options): None.

XI. Preferred shares (including preferred shares with embedded options): None. XII. Global depositary receipts: None. XIII.

(I) Employee stock options (including the names of managers receiving employee warrant, names of employees ranking top ten in terms of exercisable shares, amount acquired and amount exercised): None.

(II) Employee restricted shares (including the names of managers receiving employee

restricted shares, names of employees ranking top ten in restricted shares acquired, and total amount acquired): None.

XIV. New shares issued for merger or acquisition: None. XV. Progress on planned use of capital:

(I) Projects: For any issuance or private placement of securities that were not completed or issuance/private placements that were completed but have yet to achieve the intended benefits by the quarter before the publication date of annual report, disclose details of the securities offerings or private placements including plan changes, source and use of capital, reasons for change, benefits of change, the dates the proposals were presented during shareholder meeting, and the dates information was uploaded onto the reporting website designated by the Commission: None.
(II) Execution: Analyze each of the above projects up till the quarter before the publication date of annual report, and compare execution with expected benefits. For any project that does not meet the targeted progress or benefit, state the underlying reasons, how it affects shareholder equity, and improvement plans. Projects that involve any of the following must also disclose the details below:
Where capital is intended to acquire another company, expand or construct new property, plant or equipment, compare and explain the underlying effects in terms of fixed asset balance, operating revenues, operating costs, operating profits etc.: Not applicable.
Where capital is intended to invest into another company, explain impacts to the operations of the invested business and to the Company's investment gains: Not applicable.
Where capital is intended to provide working capital or repay debts, compare and explain any increase/decrease in current assets, current liabilities, total liabilities, interest expense, operating revenues and earnings per share, and analyze the financial structure:
- In 2007, the Company capitalized NT$183,808,000 of earnings and increased the size of share capital to allow greater room for treasury transactions, which will prove beneficial to earnings results in subsequent years.

Five. Operational Overview

I. Business activities

(I) Business activities:

1. Main business activities:

The Company is a non-life insurance business that specializes in the offering of insurance products and related services. Below is a list of the Company's current main products and services:

(1) Fire: A. Fire Insurance, B. Fire & Allied Perils Insurance, C. Residential Fire and Earthquake Insurance

(2) Marine: A. Marine Cargo Insurance, B. Marine Hull Insurance, C. Fishing Vessel Insurance, D. Carrier's Liability Insurance

(3) Motor: A. Automobile Hull Insurance, B. Automobile Theft Insurance, C.

Automobile Third Party Insurance, D. Automobile Insurance Rider, E. Compulsory Automobile Liability Insurance, F. Compulsory Motorcycle Liability Insurance, G. Compulsory

Automobile/Motorcycle Liability Insurance Driver's Injury Rider

(4) Machinery and Engineering: A. Erection All Risks Insurance, B. Installation All Risks Insurance, C. Electronic Equipment Insurance, D. Contractors’ Plant & Machinery Insurance, E. Boiler & Pressure Vessel Insurance, F. Machinery Breakdown Insurance, G. Construction Bond Insurance, H. Civil Engineering Completed Risks Insurance

(5) Liability: A. Public Liability Insurance, B. Elevator Liability Insurance, C.

Contractors’ Liability Insurance, D. Employers’ Liability Insurance, E. Product Liability Insurance, F. Golfers’ Liability Insurance, G. Security Liability Insurance, H. Public Transportation Liability Insurance, I. Professional Indemnity for Architects & Engineers, J. Professional Indemnity for Accountants, K. Professional Indemnity for Lawyers, L. Financial Industry Safety Deposit Box Liability Insurance, M. Medical Malpractice Insurance, N. Hospital Comprehensive Liability Insurance, O. Professional Indemnity for Insurance Agents/Brokers, P. Professional Indemnity for Travel Agencies, Q. Human Clinical Trial Insurance, R. Golfers All Risk Insurance, S. Directors and Supervisors & Officers Liability Insurance

(6) Performance Bond Insurance: A. Blanket Fidelity Bond Insurance, B. Insurance Brokers’ Blanket Bond Insurance

(7) Credit: A. Small Loan Credit Insurance

(8) Aviation Insurance

(9) Others: A. Money Insurance, B. Burglary & Theft Insurance, C. Bankers' All Risk Insurance, D. Commercial Property Floater Comprehensive Insurance,

E. Artwork Comprehensive Insurance, F. Shop Insurance

(10) Personal Accident: A. Personal Accident Insurance, B. Group Accident Insurance,

C. Comprehensive Personal Travel Insurance, D. Women's Comprehensive Insurance, E. Credit Card Comprehensive Insurance

(11) Health Insurance: A. Daily Hospitalization Insurance, B. Hospitalization Rider, C. Critical Illness Insurance, D. Daily Hospitalization Rider, E. Travel Insurance Overseas Illness Benefit Rider, F. Daily Hospitalization Rider [Type A], G. First-time Cancer Diagnosis Rider, H. First-time Cancer Insurance

(12) Reinsurance: Reinsurance of various non-life risks

(13) Damage Prevention Services: A. Infrared Thermal Imaging, B. Ultraviolet (UV) Imaging, C. Fire Safety Seminar and Certification, D. Fire Safety Design and Advice for New Buildings/Plants, E. Quantitative Fire Risk Assessment and Improvement Advice

2. Revenue weight of main products:

2019 Premiums Revenues by Insurance Category

	Unit: NTD thousands	Unit: NTD thousands	Unit: NTD thousands	Unit: NTD thousands	Unit: NTD thousands
Insurance category	Fire	Marine	Automobile	Others	Total
Premium revenues	1,076,828	356,998	4,549,863	891,365	6,875,054
Reinsurance Premium	79,099	10,359	258,074	57,053	404,585
Total	1,155,927	367,357	4,807,937	948,418	7,279,639

(II) Industry overview:

Increasing popularity of wearable devices and portable electronic equipment allow usage-based insurance (UBI) to be introduced in tandem for more appropriate pricing and planning.
The first UBI to be introduced in Taiwan in 2016 was one that calculates premiums based on drivers' habits. Given the vast number of motorcycles in Taiwan, application of UBI may expand to motorcyclists.
The Insurance Bureau, Financial Supervisory Commission, has amended the "Standard Private Vehicle Insurance Template Contract" so that excess premiums on hull damage, theft and third party liability can be refunded according to the "short-term premium rate" and calculated on a "daily" basis in favor of policyholders.
The Insurance Bureau, Financial Supervisory Commission, standardized cancer insurance and re-defined 22 critical illnesses/injuries this year (2019). This ensures consistent definition of cancer across different policies such as "cancer insurance," "critical injury" and "critical illness," and thereby minimizes claim dispute associated with differences in standards.
"Automobile Insurance Fleet Rider," exclusive for corporate entities, has been subjected to such a high level of price competition that premiums no longer sufficiently cover costs, and in April 2019, the Financial Supervisory Commission allowed The Non-Life Insurance Association to exercise discretion on whether to discontinue the rider. Given that a sudden cancellation of the long-running fleet rider will greatly increase operating costs for transportation service providers, we expect further negotiation from the two industries for a win-win solution.
Given that loss rate and combined ratio of residential fire insurance have been stable, The Non-Life Insurance Association of The Republic of China made a decision in October 2019 to expand coverage of residential fire insurance, increase assurance limits for building structure, personal assets, theft and third-party liability, and cover related expenses including relocation, rental commission, inconvenience benefit and Typhoon/flood insurance without raising premium.
(III) Technological research and development:

The Company allocates budget to train professional talents and develop new products on a yearly basis.

(IV) Long and short-term business plans:
Short-term plan:
(1) Optimize asset allocation for improved capital efficiency.
(2) Offer talent transformation training programs to accommodate changes in the financial market.

     - (3) Adjust premium rates and underwriting strategies based on the loss rate.

     - (4) Develop/package suitable products and value-adding solutions for increased revenue.

     - (5) Secure and maintain existing businesses; increase the percentage of new businesses and expand scale of operation.

     - (6) Expand bancassurance, insurance broker/agency and direct sales channels for higher market share.

     - (7) Improve customer service quality with 0800 front office customer services, cloud middle office services, and network platform services.

     - (8) Enforce sound KYC (Know Your Customer), compliance and anti-money laundering practices to prevent financial and reputation loss.

     2. Long-term plan:

     - (1) Enhance human resource training as a means to secure competitiveness for future growth.

     - (2) Create a technology-powered platform that replaces manual works with automated file conversion processes.

     - (3) Introduce innovative marketing channels, products and risk management tools that reduce loss rate.

     - (4) Utilize bank channels and form strategic alliances with participants from different industries for business expansion and broader customer reach.

     - (5) Enhance and enforce enterprise risk management (ERM); apply stringent risk control that contributes toward corporate sustainability.

II. Market and sales overview
(I) Market analysis:
1. Sale of main products and market share:

Unit: NTD thousands

Insurance category	Company - 2019 direct written premium	Domestic non-life insurance market - 2019 writtenpremium	Market share
Fire Insurance	1,076,828	25,081,273	4.29%
Marine Insurance	356,998	7,192,835	4.96%
Automobile Insurance	4,549,863	93,960,063	4.84%
Others	891,365	50,155,776	1.78%
Total	6,875,054	176,389,947	3.90%

2. Product locations:

Unit: NTD thousands

. Product locations:		U
Location	Amount	%
Head Office	2,290,904	33.32%
Taipei Branch Office	947,795	13.79%
Taochu Branch Office	944,923	13.74%
Taichung Branch Office	770,324	11.20%
Tainan Branch Office	864,680	12.58%
Kaohsiung Branch Office	1,056,428	15.37%
Total	6,875,054	100.00%

Future market supply and demand:

(1) Supply

A. Develop new and differentiated products that satisfy customers' needs.
B. Provide insurance planning and damage prevention advices to customers.
C. Develop and market suitable products according to laws and market demands.
D. Refine product marketing and service procedures in ways that satisfy customers' needs.
E. Utilize cloud platforms for online sale and service for customers' convenience.
F. Given the high concentration of large-sum insurance policies, the Company shall tighten financial assessment and exercise greater caution for customers that exhibit poor management and financial performance.

(2) Demand

A. Uprise of online delivery service gives rise to demand for accident insurance among couriers.
B. Purchase of fire insurance riders used to be low, but has shown progressive increase in recent years.
C. Rising awareness on the protection of personal interest has increased demand for new services and products.
D. A rising number of companies are starting to acquire group insurance coverage for their employees, which may stimulate growth of certain insurance categories.
E. Demands for certain insurance coverage have increased due to implementation of the Long-term Care Service Act, under which long-term care service providers are required to be covered by public accident liability insurance.
F. With the impact of network, technologies, and human-induced environmental damage, cyber-attacks, artificial intelligence, and risk of extreme weather have become the focus of prevention.

4. Opportunities and threats:

(1) Opportunities:
A. Launch of packaged and customized products may address the market's different needs.
B. The Company has the flexibility to adjust its strategies and business activities in line with market competition.
C. Tightened supervision by the authority is conducive to market discipline and restoration of reasonable premium rate.
D. The public is increasingly aware of corporate governance and directors'/supervisors' responsibility, which gives rise to demands for directors'/supervisors' liability insurance.
E. Rapid advancement of electronics and technology have enabled the Company to reduce operating costs via the use of e-commerce and high-tech platforms.
F. Increasingly frequent incidents such as earthquake, heavy rain and fire give businesses the motivation to plan and subscribe insurance coverage.
G. Customers' rising risk awareness and availability of damage prevention measures help control the severity and frequency of accidents.
H. Frequent public accidents combined with increasing claims from consumers present additional business risks to most companies. Both developments are favorable to the sale of liability insurance coverage.
(2) Threats:
A. Some industry participants have resolved to malicious competition as a means to expand market share, which poses additional operating costs for the Company.
B. Some high-tech industries, such as solar power and optoelectronics, are

operating under increasing risks.

  - C. Uprise of Internet banking and mobile APP has caused a reduction in the number of financial branches, and narrowed the channels through which the Company can market its products.

  - D. With the gradual effect of Hotains event, the competition for vehicle insurance business and commercial fire insurance business has intensified, and the solicitation of talents has been intensified.

  - E. Due to abnormal climates around the world, the insurance industry has experienced increase in both the frequency and extent of damage caused by natural disasters, which adversely affect business performance.

  - F. The global economy remains stagnant due to the China-USA trade war; loss of domestic and foreign demand weakens commodity import and export.

  - G. In recent years, peers have actively integrated marketing resources, such as Nan Shan Life Insurance acquiring AIG Taiwan Insurance, Fubon Insurance effectively promoting the joint marketing business, CTBC Life Insurance combining with TLG Insurance, etc.

(3) Responses:
- A. Create profits by exploring direct service to small and medium-sized businesses and individuals.
- B. Utilize innovation and expertise of the central database team to help promote business and growth
- B. Provide consumers with more convenient ways of purchasing insurance products and expand marketing channels.
- C. Utilize existing channels and promote residential all-risk products of higher premiums that meet consumers' requirements.
- D. In light of the needs for new technologies, new products, new channels, etc., carry out digital transformation such as transfer of accounting system platforms and core systems for various types of insurance.
- E. Engage banks and insurance brokers/agencies in joint marketing, coordinated service and partnered business arrangements for mutual benefit.
- F. Exercise caution when underwriting coverage for high-risk business activities and locations. Control risks of retained insurance coverage on natural disaster by developing risk management system and reinsurance channels.
- G. Enrich the contents of insurance products and customer claims services, and when appropriate, review the adequacy of the premium rate of the automobile third-party liability insurance with a high loss ratio.
- H. Upgrade the official portal and introduce SEO for better user experience and higher exposure, which favors development of online businesses in the future.
(II) Main product applications and production processes
Main applications

Non-life insurance is about providing businesses, families and individuals with protection against property, liability, accident, and health-related risks. The industry not only contributes to the stability of the society and prosperity of the economy, but also provides the country with the capital needed to proceed with constructions. For the above reasons, growth of the insurance industry has become a key measurement for a country's economic development and social welfare in recent years.

2. Production process

All government policy-based insurance products designed and underwritten by non-life insurance companies must have premium rates approved by the competent

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authority based on a number of factors including loss rate and expense ratio, whereas other insurance products also require the approval or acknowledgment of the competent authority before underwriting.

(III) Supply of key raw materials: Not applicable as the Company is not a manufacturer.
(IV) List of main suppliers/buyers:
Name of trade partner representing more than 10% of total purchases (sales) in any of the previous two years, and the amount and percentage of purchase (sale). Describe the cause of any variation. Code names can be used instead if contract prohibits the Company from disclosing customers' names, or if the counterparty is a non-related party: Not applicable.
(V) Production volume and value in the last two years: Not applicable.
(VI) Insurance underwritten (direct written premiums) in the last two years:

previous two years, and the amount and percentage of purchase (sale). Describe the cause of any variation. Code names can be used instead if contract prohibits the Company from disclosing customers' names, or if the counterparty is a non-related party: Not applicable. (V) Production volume and value in the last two years: Not applicable. (VI) Insurance underwritten (direct written premiums) in the last two years:	previous two years, and the amount and percentage of purchase (sale). Describe the cause of any variation. Code names can be used instead if contract prohibits the Company from disclosing customers' names, or if the counterparty is a non-related party: Not applicable. (V) Production volume and value in the last two years: Not applicable. (VI) Insurance underwritten (direct written premiums) in the last two years:	previous two years, and the amount and percentage of purchase (sale). Describe the cause of any variation. Code names can be used instead if contract prohibits the Company from disclosing customers' names, or if the counterparty is a non-related party: Not applicable. (V) Production volume and value in the last two years: Not applicable. (VI) Insurance underwritten (direct written premiums) in the last two years:	previous two years, and the amount and percentage of purchase (sale). Describe the cause of any variation. Code names can be used instead if contract prohibits the Company from disclosing customers' names, or if the counterparty is a non-related party: Not applicable. (V) Production volume and value in the last two years: Not applicable. (VI) Insurance underwritten (direct written premiums) in the last two years:	previous two years, and the amount and percentage of purchase (sale). Describe the cause of any variation. Code names can be used instead if contract prohibits the Company from disclosing customers' names, or if the counterparty is a non-related party: Not applicable. (V) Production volume and value in the last two years: Not applicable. (VI) Insurance underwritten (direct written premiums) in the last two years:	previous two years, and the amount and percentage of purchase (sale). Describe the cause of any variation. Code names can be used instead if contract prohibits the Company from disclosing customers' names, or if the counterparty is a non-related party: Not applicable. (V) Production volume and value in the last two years: Not applicable. (VI) Insurance underwritten (direct written premiums) in the last two years:	previous two years, and the amount and percentage of purchase (sale). Describe the cause of any variation. Code names can be used instead if contract prohibits the Company from disclosing customers' names, or if the counterparty is a non-related party: Not applicable. (V) Production volume and value in the last two years: Not applicable. (VI) Insurance underwritten (direct written premiums) in the last two years:	previous two years, and the amount and percentage of purchase (sale). Describe the cause of any variation. Code names can be used instead if contract prohibits the Company from disclosing customers' names, or if the counterparty is a non-related party: Not applicable. (V) Production volume and value in the last two years: Not applicable. (VI) Insurance underwritten (direct written premiums) in the last two years:	previous two years, and the amount and percentage of purchase (sale). Describe the cause of any variation. Code names can be used instead if contract prohibits the Company from disclosing customers' names, or if the counterparty is a non-related party: Not applicable. (V) Production volume and value in the last two years: Not applicable. (VI) Insurance underwritten (direct written premiums) in the last two years:	previous two years, and the amount and percentage of purchase (sale). Describe the cause of any variation. Code names can be used instead if contract prohibits the Company from disclosing customers' names, or if the counterparty is a non-related party: Not applicable. (V) Production volume and value in the last two years: Not applicable. (VI) Insurance underwritten (direct written premiums) in the last two years:	previous two years, and the amount and percentage of purchase (sale). Describe the cause of any variation. Code names can be used instead if contract prohibits the Company from disclosing customers' names, or if the counterparty is a non-related party: Not applicable. (V) Production volume and value in the last two years: Not applicable. (VI) Insurance underwritten (direct written premiums) in the last two years:
Unit:policies;NTD thousands
Item Year	Fire Insurance		Marine Insurance		Automobile Insurance		Others		Total(Note)
	No. of cases	Premium	No. of cases	Premium	No. of cases	Premium	No. of cases	Premium	No. of cases	Premium
2018	227,150	1,144,364	90,264	424,498	1,341,654	4,493,231	615,060	952,640	2,274,128	7,014,733
2019	407,493	1,076,828	84,044	356,998	1,353,568	4,549,863	485,194	891,365	2,330,299	6,875,054

Note: Premium revenue does not include reinsurance.

III. Employee information in the last 2 years up till the publication date of this annual report

ort
	Year	2018	2019	Year-to-date 2020 April 30,2018
Employee count	Head Office	344	339	340
	Branches	512	513	513
	Total	856	852	853
	Average age	43.4	43.5	43.5
Averageyears of service		14.8years	15.1years	15years
Academic background	Doctoral Degree	0	0	0
	Masters Degree	48	47	48
	Bachelor Degree	681	682	683
	Senior high school	125	121	121
	Below senior high school	2	2	1

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IV. Contribution to environmental protection: None.
V. Labor-management agreement:
(I) Current major labor-management agreements and execution
Employee welfare measures:
- Apart from mandatory Labor Insurance and National Health Insurance, the Company has also purchased group accident insurance, life insurance and cancer insurance coverage for employees, and assembled an "Employee Welfare Committee" to organize welfare activities. The committee organizes regular incentive trips, distributes concessions and cash on occasions such as Dragon Boat Festival and Mid-Autumn Festival, subsidizes employees for wedding and hospitalization, and pays compassionate money for death of relative. Both the employer and employees are engaged in active communication. Through teamwork and coordination, they work towards achieving mutual benefit and ensuring the Company's prosperous future.
Training:
- The Company's training programs have been designed according to operating strategies and human resource plans. The Company has internal and external training courses available to help all employees gain professional knowledge, improve work efficiency/quality and develop the professional character needed to compete in the market. The Company also encourages employees to acquire insurance-related certificates, and offers incentives to train professional insurance talents.

The Company completed 1,608 internal and external training sessions in 2019 for a total of 5,228 hours. Enrollment count totaled 18,173, and NT$1,537,000 in training expenses were incurred.

Pension system:
- The Company has retirement and pension policies in place that apply to all full-time employees. According to the above policies, employees' pension benefits and severance pay are calculated based on their years of service and 6-month average salary leading up to their retirement. Since July 1, 2005, the Company has been making monthly contributions totaling 6% of monthly for all employees who have adopted the new pension system introduced under the Labor Pension Act. These contributions are deposited into employees' individual pension accounts held under the Bureau of Labor Insurance.
Other material agreements: None.
(II) Losses suffered in the last 3 years as a result of employment dispute: During the labor inspection conducted by Kaohsiung City Labor Affairs Bureau in 2016, the company was found to have violated Article 24 of the Labor Standards Act, for which it was fined NT$20,000 according to Subparagraph 1, Paragraph 1, Article 79 and Article 80-1 of the Labor Standards Act. The Company has made immediate improvements and compensated employees for overtime hours according to Article 24 of the Labor Standards Act since the penalty.

VI. Major contracts

Contract nature	Principals	Contract start/end date	Main contents	Restrictive clauses
General agency agreement	A group of 96 including Kai Hsing Insurance AgencyCo.,Ltd.	2019/01/01 to 2019/12/31	Agency of non-life insurance service	None
Reinsurance contract	All reinsurance participants; the lead reinsurers were CRC and Toa Re	2019/01/01 to 2019/12/31	Reinsurance of the Company's direct underwritten coverage	None, except for exclusions stated in the contract

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Six. Financial Status

I. Summary balance sheet and statement of comprehensive income for the last 5 years (I) Summary balance sheet

Unit: NTD thousands

Year Item	Year Item		Financial information for the last 5years	Financial information for the last 5years	Financial information for the last 5years		Year-to-date March 31, 2020
		2019	2018	2017	2016	2015
Cash		1,860,014	1,626,898	1,157,174	1,231,822	946,805	1,592,874
Receivables		463,385	728,303	593,893	584,878	694,540	474,175
Financial assets and loans		9,023,322	8,288,023	8,568,649	8,208,131	7,873,043	8,639,211
Reinsurance Contracts Assets		2,269,819	2,907,356	2,473,583	2,758,745	2,352,616	2,323,876
Property, Plant and Equipment		620,038	624,243	626,390	622,106	631,433	666,821
Right-of-use asset		4,320	-	-	-	-	3,713
Intangible Assets		7,203	10,955	12,611	15,747	4,870	9,183
Other assets		1,608,713	1,541,694	1,557,269	1,555,229	1,565,022	1,581,117
Total assets		15,856,814	15,727,472	14,989,569	14,976,658	14,068,329	15,290,970
Payables		725,268	769,330	764,602	682,912	721,202	717,783
Lease liabilities		4,139	-	-	-	-	3,753
Liabilityreserves		8,081,929	8,764,982	8,317,402	8,711,701	8,313,180	8,148,435
Other liabilities		234,217	224,250	209,087	208,183	128,436	248,377
Total liabilities	Before dividend	9,045,553	9,758,562	9,291,091	9,602,796	9,162,818	9,118,348
	After dividend	Note 2	9,906,132	9,471,789	9,798,552	9,162,818	-
Capital,fully paid		3,011,638	3,011,638	3,011,638	3,011,638	3,011,638	3,011,638
Retained Earnings	Before dividend	3,392,600	2,929,970	2,660,677	2,402,882	1,940,381	3,273,507
	After dividend	Note 2	2,782,400	2,479,979	2,207,126	1,940,381	-
Other equityitems		407,023	27,302	26,163	( 40,658)	( 46,508)	(112,523)
Total equity	Before dividend	6,811,261	5,968,910	5,698,478	5,373,862	4,905,511	6,172,622
	After dividend	Note 2	5,821,340	5,517,780	5,178,106	4,905,511	-

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

Note 2: Distribution of 2019 earnings has yet to be resolved in a shareholder meeting.

(II) Summary 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	Financial information for the last 5years		Year-to-date March 31, 2020
	2019	2018	2017	2016	2015
Revenue	6,049,197	6,129,389	5,881,343	5,613,575	5,070,354	1,168,833
OperatingCost	4,045,100	4,251,229	4,122,629	3,844,794	3,688,766	984,936
OperatingExpense	1,339,907	1,314,345	1,242,794	1,203,086	1,127,829	332,867
Non-operating income and expenses	( 565)	( 647)	( 386)	( 1,440)	219	383
OPERATING INCOME BEFORE TAX	663,625	563,168	515,534	564,255	253,978	(148,587)
Net Income After Tax	580,968	491,309	460,310	479,755	195,022	(172,346)
Other comprehensive income	408,953	( 33,636)	60,062	( 11,404)	( 80,502)	(466,293)
Earningsper share	1.93	1.63	1.53	1.59	0.65	(0.57)

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

(III) Names of financial statement auditors in the last 5 years and audit opinions

Year of audit	Certifyingaccountant	Audit opinion
2015	Yung-Fu Liu, Wan-Yi Liao	Unqualified opinion
2016	Yung-Fu Liu, Wan-Yi Liao	Unqualified opinion
2017	Yung-Fu Liu, Wan-Yi Liao	Unqualified opinion
2018	Yung-Fu Liu, Wan-Yi Liao	Unqualified opinion
2019	Alice Huang, Wan-Yi Liao	Unqualified opinion

II. Financial analysis for the last 5 years

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	Year-to-date March 31, 2020
		2019	2018	2017	2016	2015
Business performance indicators	Variation of written premiums revenue	( 1.99)	0.21	5.47	6.80	5.11	(5.28)
	Variation of lossespaid	1.92	( 7.50)	13.76	13.03	2.19	(7.01)
	Variation of retainedpremium	( 0.70)	0.39	6.14	5.86	3.68	1.13
	Net worth ratio	42.95	37.95	38.02	35.88	34.87	40.37
Profit indicators	Return on Asset	3.68	3.20	3.07	3.30	1.41	(4.43)
	Return on Equity	9.09	8.42	8.31	9.33	3.98	(10.62)
	Net Investment Income Ratio	2.92	2.04	2.37	2.20	0.62	(4.67)
	Return on Investment	2.70	1.88	2.18	2.04	0.57	(4.34)
	Combined Ratio	95.47	97.80	96.23	100.06	96.70	92.07
	Retained Expense Ratio	40.18	39.03	37.23	38.42	38.52	37.04
	Retained Earned Loss Ratio	55.29	58.77	59.00	61.64	58.18	55.03
Operational indicators	Retained premium to equity ratio	78.61	90.33	94.25	94.17	97.44	93.72
	Grosspremium to equityratio	106.88	123.95	129.51	130.31	133.69	123.51
	Net reinsurance commission to equityratio	2.94	3.75	3.70	4.02	4.04	3.22
	Insurance liabilities to equity ratio	116.16	143.86	142.34	158.11	165.31	129.43
	Percentage of equityvariation	14.11	4.75	6.04	9.55	-	(9.38)
	Expense ratio	33.51	32.49	31.01	31.84	31.90	32.02
Explanation to significance changes in the last two years: 1. Variation of written premiums revenue decreased: mainly due to lower premium revenues from fire insurance, engineering insurance and accident insurance compared to the previous year. 2. Increase in the rate of changes in directly paid claims: Mainly due to the increase in current claims under motor insurance and engineering insurance. 3 Variation of retained premium decreased: Mainly due to lower retained premium compared to the previous year. 4. Net investment income ratio and return on investment increased: Mainly due to higher net gain on investment compared to the previous year 5. Net reinsurance commission to equity ratio decreased: Mainly due to lower reinsurance commission revenues compared to the previous year 6. Percentage of equityvariation increased: Mainlydue to increase in retained earnings and other equityitems.

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

Note 2: Formulas for calculation of various analyses:

Business performance indicators
(1) Variation of written premiums revenue = (cumulative written premiums revenue in the current period - cumulative written

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premiums revenue for the corresponding period of the previous year) / cumulative written premiums revenue for the corresponding period of the previous year

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

(2) Variation of losses paid = (cumulative direct losses paid in the current period - cumulative direct losses paid in the corresponding period of the previous year) / cumulative direct losses paid in the corresponding period of the previous year
- ["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 corresponding period of the previous year) / cumulative retained premium in the corresponding period of the previous year
- [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) Return on assets = [net income after tax + interest expenses × (1tax 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 year's equity + previous year's equity) / 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]

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  - (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]

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 year's equity - previous year's equity) / absolute value of previous year's equity
- (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]
III. Other information material to understanding the Company's financial position, financial performance, cash flow and changes: None.

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IV. Audit Committee's report on the review of the latest financial report

The First Insurance Co., Ltd. Audit Committee Report

We have reviewed the Company's 2019 financial statements, business report and earnings appropriation proposal prepared by the board of directors. The financial statements have been audited by Deloitte Taiwan, to which the firm issued an independent auditor's report with unqualified opinion.

The Audit Committee has reviewed the abovementioned reports prepared by the board of directors and found them to be in compliance with regulatory requirements. We hereby issue this report in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of The Company Act.

For

2020 Annual General Meeting of The First Insurance Co., Ltd.

Audit Committee convener:

March 26, 2020

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V. Independent auditor's report and financial statements for the most recent year:

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, 2019 and 2018, the comprehensive income statement, statement of changes in equity, and cash flow statement for the periods January 1 to December 31, 2019 and 2018, and the accompanying footnotes (including 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, 2019 and 2018, and business performance and cash flow for periods January 1 to December 31, 2019 and 2018.

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 2019 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 2019 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, 2019 amounted to NT$2,491,233,000, of which NT$680,803,000 were NR/NS reserves. Because the amount was presented based on 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 loss 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 36(3) of the financial statements.

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

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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:

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.
Developing the required level of understanding on relevant internal controls and designing audit procedures that are appropriate under the prevailing circumstances, but without proving opinion on the effectiveness of internal control system of The First Insurance Co., Ltd.
Assessing the appropriateness of accounting policies adopted by the management, and the rationality of accounting estimates and related disclosures made.
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 disclosures if material uncertainties exist in regards to the abovementioned 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.

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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).

We have identified the key audit issues after communicating with the governance body regarding the 2019 financial statements of The First Insurance Co., Ltd. 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 CPAAlice Huang

CPAWan-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. 1000028123

March 26, 2020

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The First Insurance Co., Ltd. Balance Sheet As at December 31, 2019 and 2018

Unit: NTD thousands

Code 11000 12100 12200 12500 14110 14145 14180 14190 14200 15000 16000 16700 17300 17800 18300 18700 1XXXX 21200 21400 21500 21600 21700 23800 24000 27100 28000 25300 25900 2XXXX 31000 33100 33200 33300 33000 34000 3XXXX	Assets Cash (Notes 4 and 6) Notes receivable - Net (Notes 4, and 12) Premiums receivable - net (Notes 4, 12, and 30) Other receivables (Notes 4 and 12) 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) Reinsurance contract assets (Notes 4, 14 and 36) 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) Guarantee deposits paid (Notes 8 and 18) Other assets - Others (Note 19) TOTAL ASSETS Liabilities and equity Insurance claims and benefits payable (Notes 4 and 36) Commission payable (Notes 4 and 36) Reinsurance accounts payable (Note 4, 36) Other payables (Note 20) Current income tax liabilities (Note 4) Lease liabilities (Notes 4 and 16) Insurance liabilities (Notes 4, 5, 21 and 36) Provision for employee benefits (Notes 4 and 22) Deferred income tax liabilities (Notes 4 and 26) Guarantee deposits received Other liabilities - Others (Note 23) 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 31,201	9 % 12 1 2 - 10 10 17 20 6 14 4 - - - 4 - 100 - 1 3 1 - - 50 1 1 - - 57 19 8 11 2 21 3 43 100		December 31,201	8
			Amount $ 1,860,014 139,251 278,527 45,607 1,645,093 1,529,333 2,663,153 3,185,743 943,248 2,269,819 620,038 4,320 7,203 52,582 562,858 50,025 $ 15,856,814 $ - 110,162 436,418 178,688 49,329 4,139 7,911,750 170,179 92,934 15,114 76,840 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			Amount $ 1,626,898 163,155 395,446 169,702 3,667,879 1,337,877 2,574,677 707,590 950,186 2,907,356 624,243 - 10,955 50,799 519,158 21,551 $ 15,727,472 $ 4,445 107,181 487,821 169,883 22,026 - 8,587,098 177,884 95,196 15,114 91,914 9,758,562 3,011,638 1,156,391 1,530,505 243,074 2,929,970 27,302 5,968,910 $ 15,727,472	%
							10 1 3 1 23 9 16 5 6 19 4 - - - 3 - 100 - 1 3 1 - - 55 1 1 - - 62 19 7 10 2 19 - 38 100

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

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The First Insurance Co., Ltd. Comprehensive Income Statement For periods from January 1 to December 31, 2019 and 2018

Unit: NTD thousands, except EPS which is in dollars

Code Operating revenues (Note 4) 41110 Written premiums (Notes 30 and 36) 41120 Reinsurance premiums (Note 36) 41100 Premium revenues 51100 Less: Reinsurance expenses (Note 36) 51310 Less: Net change in unearned premium reserve 41130 Retained earned premiums (Note 36) 41300 Reinsurance commissions received (Note 36) 41400 Service fee Net investment gains 41510 Interest income 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 (Note 29) 41500 Total net investment gains Other operating revenues 41890 Other operating revenues - Others 41000 Total operating revenues Operating Cost Retained claims and benefits paid (Notes 30 and 36) 51200 Insurance claim and benefit payments 41200 Less: Claims recovered from reinsurers 51260 Total retained claims and benefits paid		2019		% 113 7 120 32 ) - 88 5 - 2 3 1 - 1 - 7 - 100 73 22) 51		2018		% 115 6 121 33 ) 1 89 5 - 2 3 - - 1 - 6 - 100 70 20) 50	Variation percentage (%)	Variation percentage (%)
		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				Amount $ 7,014,733 383,845 7,398,578 2,006,642 ) 60,368 5,452,304 299,240 24,466 107,383 148,054 16,486 18,852 56,000 5,126 351,901 1,478 6,129,389 4,274,824 1,227,024) 3,047,800
	( ( ( ( (		( (		( (		( (		( ( ( ( ( ( ( ( ( ( (	2 ) 5 2 ) 4 ) 114 ) 2 ) 4 ) - 11 ) 13 460 185 ) - 194 ) 11 35 ) 1 ) 3 7 1

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Code Net change in other liabilities (Note 36) 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 36) 51600 Service charges (Note 36) Other operating costs 51810 Contribution to insurance stabilization fund (Note 36) 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 30) 58100 Selling expenses 58200 Administrative expenses 58300 Employees training expenses 58000 Total operating expenses 61000 TOTAL OPERATING INCOME Non-operating income and expenses 59100 Gain on disposal of property, plant and equipment 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)		2019		% 2 ) - - 2) 16 2 - - - - - 67 33 20 2 - 22 11 - - - 11 2		2018		% 2 1 ) - 1 15 2 - - - 1 1 69 31 20 2 - 22 9 - - - 9 1	Variation percentage (%)
		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				Amount $ 156,514 74,902 ) 7,237 88,849 929,630 145,802 14,038 9 507 24,594 39,148 4,251,229 1,878,160 1,218,036 92,911 3,398 1,314,345 563,815 647 ) - 647) 563,168 71,859
	( ( ( ( ( ( (		( (		( ( (		(		( 172 ) ( 92 ) ( 180 ) ( 241 ) 2 ( 4 ) ( 2 ) 356 298 ( 100 ) ( 60 ) ( 5 ) 7 1 10 7 2 18 ( 26 ) - ( 13 ) 18 15

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(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		2019		% 9 - - 7 7 - 7 16		2018		% 8 - - 1) 1) - 1) 7	Variation percentage (%)	Variation percentage (%)
		Amount 580,968 1,799 ) $ 360 387,894 386,455 22,498 408,953 $ 989,921 $ 1.93 $ 1.93				Amount 491,309 8,275 $ 226 39,850) 31,349) 2,287) 33,636) $ 457,673 $ 1.63 $ 1.63
	(				( ( ( (		( ( (		(	18 122 ) 59 1,073 1,333 1,084 1,316 116

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

114

The First Insurance Co., Ltd. Statement of Changes in Equity For periods from January 1 to December 31, 2019 and 2018

Code A1 Balance as at January 1, 2018 A3 Effect of retrospective application A5 Adjusted balance as at January 1, 2018 Appropriation and distribution of earnings: B1 Legal reserve B3 Special reserve B5 Cash dividend D1 2018 net income D3 2018 other comprehensive income D5 2018 total comprehensive income Q1 Disposal of equity instruments at fair value through other comprehensive income (Note 8(1)) Z1 Balance as at December 31, 2018 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	Shar	e capital(Note 24) $ 3,011,638 - 3,011,638 - - - - - - - 3,011,638 - - - - - - - $ 3,011,638		R	etained earnings(Note 24)	etained earnings(Note 24)
				Legal reserve $ 1,065,068 - 1,065,068 91,323 - - - - - - 1,156,391 90,358 - - - - - - $ 1,246,749	Special reserve $ 1,319,782 - 1,319,782 - 210,723 - - - - - 1,530,505 - 209,612 - - - - - $ 1,740,117	Und

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

115

The First Insurance Co., Ltd. Cash Flow Statement

For periods from January 1 to December 31, 2019 and 2018

(in NT$ 1,000)

Code Cash flow from operating activities A10000 Pre-tax profit for the current period A20000 Adjustments: A20010 Income, expenses and losses A20100 Depreciation A20200 Amortizations 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 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 A52120 Insurance claim and benefit payments payable A52140 Commission payable A52150 Reinsurance accounts payable A52160 Other payables	2019 $ 663,625 20,928 6,771 130 ( 95,210) ( 127,887) ( 675,348 ) 4,835 476 23,904 116,919 133,402 2,022,786 ( 2,118,191) ( 197,521 ) ( 88,476 ) 637,537 4,251 ( 28,474) ( 4,445) 2,981 ( 51,403) 8,805	2018
		$ 563,168 17,538 7,223 - ( 107,383) ( 109,406) 475,706 ( 5,126) 647 55,789 ( 69,679 ) ( 133,714) ( 745,659 ) 123,573 700,000 159,707 ( 433,773) 5,741 ( 6,360 ) ( 15,181 ) ( 9,084 ) 21,198 7,795

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Code A52200 Provision for employee benefits 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 EEEE Increase in cash and cash equivalents for the current period E00100 Opening cash and cash equivalents E00200 Closing cash and cash equivalents	2019 ($ 9,504) ( 15,074) 235,817 89,612 127,887 ( 130) ( 59,039) 394,147 ( 8,589) ( 3,019) ( 11,608) ( 1,853) ( 147,570) ( 149,423) 233,116 1,626,898 $ 1,860,014	2018
		($ 19,851 ) 7,989 490,858 122,400 109,406 - ( 57,575) 665,089 ( 9,100 ) ( 5,567) ( 14,667) - ( 180,698) ( 180,698) 469,724 1,157,174 $ 1,626,898

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

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The First Insurance Co., Ltd. Notes to financial statements For periods from January 1 to December 31, 2019 and 2018 (Unless otherwise specified, all amounts are presented in NTD thousands)

I. 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).

II. Financial statement approval date and procedures

This financial report was passed during the board of directors meeting dated March 26, 2020.

III. Adoption of new and amended standards and interpretations

(I) First-time adoption of amended Regulations Governing the Preparation of Financial Reports by Insurance Enterprises, International Financial Reporting Standards (IFRS) approved by the Financial Supervisory Commission ("FSC"), International Accounting Standards (IAS), and interpretations (IFRIC) and announcements (SIC) thereof (collectively referred to as "IFRSs" below)

Except explained below, adoption of amended Regulations Governing the Preparation of Financial Reports by Insurance Enterprises and FSC-approved IFRSs will not result in any material change to the Company's accounting policies: IFRS 16 - "Leases"

IFRS 16 regulates identification of lease agreement and accounting treatments for lessor and lessee. This standard will supersede corresponding rules and interpretations in IAS 17 - "Leases” and IFRIC 4 - “Determining whether an Arrangement contains a Lease.” See Note 4 for accounting policy.

Lease definitions

The Company has chosen to evaluate all contracts signed (or changed) on and after January 1, 2019 whether they meet the criteria of (or contain arrangements characterized as) lease. Contracts that have already been recognized as lease according to IAS 17 and IFRIC 4 will not be re-evaluated and will be handled according to the transition rules of IFRS 16.

Where the Company is the lessee

The Company recognizes right-of-use assets and lease liabilities on the balance sheet, except for low-value and short-term leases where expenses are recognized on a straight-line basis. The statement of comprehensive income makes separate presentations of depreciation expense on right-of-use asset and interest expense accrued on lease liabilities using the effective interest method. In the cash flow statement, repayment of lease liabilities is presented as a financing activity, while payment of interest on leases is presented as an operating activity. Prior to the adoption of IFRS 16, operating lease contracts were expensed on a straight-line basis. Cash flows associated with operating leases are presented under operating activities.

The Company chose to adopt the retrospective approach outlined in IFRS 16 and adjusted cumulative impacts into retained earnings as of January 1, 2019 without restating comparative information.

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The Company also adopted the following compromise solutions:

Leases of similar characteristics shall have lease liabilities measured using a single discount rate.
Leases with lease tenors ending on or before December 31, 2019 were treated as short-term lease.
When assessing lease liabilities, the Company applies hindsight to determine various details such as lease tenor.

The Company's weighted average interest rate of incremental borrowings for recognition of lease liabilities was calculated at 2.65% as of January 1, 2019. Difference between the amount of lease liability calculated from above and amount of minimum lease payments on irrevocable operating lease arrangements as of December 31, 2018 is explained below:

Minimum lease payments on irrevocable operating lease arrangements as of December 31, 2018 $ 5,045 Less: short-term leases subject to exemption ( 1,637) - Less: low-value leases subject to exemption Total non-discounted amount as of January 1, 2019 $ 3,408 Present value after discounting at the incremental borrowing rate as of January 1, 2019 $ 3,285 Plus (less): adjustments for extension and termination of lease option ( 578 ) Balance of lease liability as of January 1, 2019 $ 2,707

Adjustments to asset, liability and equity balances as of January 1, 2019 after first-time adoption of IFRS 16 are presented below:

Right-of-use asset Effect on assets Lease liabilities Effect on liabilities	Amount before restatement - January 1, 2019 $ - $ - $ - $ -	Adjustments for initial adoption $ 2,707 $ 2,707 $ 2,707 $ 2,707	Amount after restatement - January 1, 2019	Amount after restatement - January 1, 2019
				$ 2,707 $ 2,707 $ 2,707 $ 2,707

Where the Company is the lessor

No adjustment was be made to leases where the Company was the lessor during the transition period. IFRS 16 has been adopted since January 1, 2019. (II) FSC-approved IFRSs applicable in 2020

New/Amended/Modified Standards and Effective date of IASB Interpretations announcement Amendments to IFRS 3 - "Definition of a Business" January 1, 2020 (Note 1) Amendments to IFRS 9, IAS 39 and IFRS 7 - January 1, 2020 (Note 2) "Interest Rate Benchmark Reform" Amendments to IAS 1 and IAS 8 - "Definition of January 1, 2020 (Note 3) Material"

Note 1: These amendments are applicable to business mergers and asset acquisitions occurring and for financial years covering January 1, 2020 and onwards.

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Note 2: These amendments will be applied retrospectively in financial years starting from January 1, 2020.

Note 3: These amendments will be applied prospectively in financial years starting from January 1, 2020.

The Company expected no material impact from the above amendments and interpretations on its financial position and business performance as of the publication date of this financial report.

(III) IFRSs published by IASB but yet to be approved by FSC New/Amended/Modified Standards and Effective date of IASB Interpretations announcement (Note 1) 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" Friday, January 1, 2021 Amendments to IAS 1 - "Classification of Liabilities Saturday, January 1, 2022 as Current or Non-current"

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.

IFRS 17 - "Insurance Contracts"

Accounting treatment of insurance contracts stated under IFRS 17 will supersede IFRS 4 - "Insurance Contracts." Main context of IFRS 17 is 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 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 the coverage period of 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. The fulfillment cash flows (“FCF”) comprise estimates of future cash flows, an adjustment to reflect the time value of money (“TVM”) and the financial risks

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associated with the future cash flows, and a risk adjustment for non-financial risk. Contractual service margin represents the unearned profit of the 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 on initial recognition of a group of insurance contracts at an amount that results in no income or expenses arising from: (a) The initial recognition of an amount for the FCF; (b) The de-recognition at that date of any asset or liability recognized for insurance acquisition cash flows; and (c) Any cash flows arising from the contracts in the group at that date.

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), that excess shall be recognized in profit or loss immediately.

Onerous contracts

An insurance contract is onerous at initial recognition if the total of the FCF, any previously recognized acquisition cash flows and any cash flows arising from the contract at that date is a net outflow. The Company shall recognize a loss in profit or loss for the net outflow, resulting in the carrying amount of the liability for the group being equal to the FCF and the CSM of the group being 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) on the condition that, at the inception of the group:

(a) The Company reasonably expects the size of liability for remaining coverage measured 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).

Using the PAA, the liability for remaining coverage shall be initially recognized as the premiums received at initial recognition minus any insurance acquisition cash flows. Subsequently, the carrying amount of the liability shall be adjusted for premiums received, amortization of acquisition cash flows, minus the amount recognized as insurance revenue for coverage provided in that period, and minus any investment component 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 DFP 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.

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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 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.

IV. Summary of significant accounting policies

(I) 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.

(II) 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:

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.
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.
Level 3 input: Refers to inputs that cannot be observed for an asset or liability.
(III) 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.
(IV) 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 that have fair value changes recognized in other comprehensive income shall also have exchange differences recognized in other comprehensive income.

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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.

(V) Property, plant and equipment Property, plant and equipment are initially recognized at cost, and subsequently presented at cost after accumulated depreciation and impairment.

Property, plant, and equipment are depreciated on a straight-line basis. Depreciation is recognized separately for each material category. The Company reviews the estimated useful life, residual 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.

(VI) 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.

Difference between the disposal proceeds and book value of decommissioned investment property is recognized in profit and loss.

(VII) 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 a straight-line basis over their useful lives. The estimated useful life, residual value and depreciation method are reviewed at least once at the end of each year. Impacts of changes in accounting estimates are applied prospectively.

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

(VIII) Impairment of tangible and intangible assets (except goodwill)

The Company evaluates all tangible 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 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

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impairment losses were recognized in the first place. Reversal of impairment loss is recognized in profit and loss.

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

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 29 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.

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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 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.

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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 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 consideration received plus any cumulative gains or losses previously recognized under other comprehensive income is recognized in profit and loss.

Financial liabilities
(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.

(X) Ceded reinsurance

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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 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.

(XI) 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.

(XII) 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.

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

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reserve for Reported but unpaid claims is estimated on a case-by-case basis and provided for different insurance categories.

3.

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

Liabilities adequacy reserve

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With regards to contracts that are subject to liability adequacy test under IFRS 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.

(XIII) 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.

(XIV) 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 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.

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

For assumed reinsurance coverage, claims payable to reinsurers are recognized based on invoice delivery date. Reinsurance claims payable accruing as of the

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balance sheet date are estimated using rational and systematic methods, and recognized as 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."

(XVI) Leases 2019

The Company evaluates whether a contract meets the criteria of (or contains arrangements characterized as) lease on the day of establishment.

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.

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

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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. Lease liabilities are presented individually on the standalone balance sheet.

2018

A lease arrangement is classified as a finance lease if the terms involve a transfer of virtually all risks and returns associated with ownership to the lessee. All other lease arrangements are classified as operating lease.

Where the Company is the lessor

Proceeds received from operating leases are recognized as income on a straight-line basis over the lease tenor. All initial direct costs incurred in relation to the negotiation and arrangement of operating lease are added to the book value of the lease asset, and recognized as expenses using the straight-line basis over the lease tenor.

Where the Company is the lessee

Amount of implicit interest in each lease payment is presented as current financial expense; amounts that are attributable to certain assets that satisfy the necessary criteria can be capitalized.

Proceeds paid on operating leases are recognized as expense on a straight-line basis over the lease tenor.

(XVII) 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.

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.

(XVIII) Income tax

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

Current income tax

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Current income tax payable is calculated based on 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 tax rate applicable as of the balance sheet date.

Undistributed earnings are subject to an additional 5% income tax according to the Income Tax Act. Due to uncertainties concerning the distribution of current year's earnings, this additional income tax expense will be recognized in the year when earnings appropriation is resolved through shareholder 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.

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.

(XIX) Coinsurance organization, coinsurance and guarantee fund arrangements

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

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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. 2. 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" that requires all underwritten residential earthquake insurance coverage to be subject to coinsurance. All contract participants have agreed to auditing 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.

(XX) Accounting policy of the headquarter and branches

The Company's head office and branches adopt independent accounting practices. Each branch will calculate profit and loss separately and have results consolidated at head office level for financial statement preparation. Insurance policies are reviewed and underwritten separately by the head office and branches before consolidating at the head office level. The head office's Reinsurance Department then determines the amount of retained and ceded coverage based on terms of the reinsurance contract. The head office retains all premiums received on assumed reinsurance coverage and does not allocate them to branches. The head office also makes overall decisions on the planning and use of available capital. Provisions for unearned premium reserve, claim reserve, special claim reserve and deficiency reserve are made on an aggregate basis for the head office and branches.

V. Main source of uncertainty for major 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 management will continually review its estimates and basic assumptions. If a revision of accounting estimate affects only the current period, the effect shall be

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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.

VI.

Cash

liability may be higher or lower than the Cash	amount estimated.
Cash Bank deposit Cheque deposit Demand deposit Foreign currency deposit	December 31,2019 $ 357 1,082,146 673,345 104,166 $ 1,860,014	December 31,2018
			$ 885 953,646 600,706 71,661 $ 1,626,898

Foreign currency deposits are placed with domestic banks. As at December 31, 2019 and 2018, the Company held NT$2,663,153,000 and NT$2,574,677,000 of time deposit, respectively, that had initial maturity date of more than 3 months (refer to Note 11).

VII. Financial assets at fair value through profit and loss

11). I. Financial assets at fair value through profit and loss
December 31,2019 Mandatory at fair value throughout profit and loss Non-derivative financial assets - TWSE/TPEx listed shares $ 735,535 - Beneficiary certificates 434,142 - Securitized beneficiary certificates 424,851 - Bank debentures 50,565 Subtotal $ 1,645,093 II. Financial assets at fair value through other comprehensive income December 31,2019 Investment in equity instruments $ 2,676,438 Investment in debt instruments 509,305 $ 3,185,743 (I) Investment in equity instruments December 31,2019 Domestic investments TWSE/TPEx listed shares $ 1,730,675 Unlisted shares 945,763 $ 2,676,438	December 31,2018
	$ 1,949,398 823,387 844,538 50,556 $ 3,667,879 December 31,2018
	$ 700,464 7,126 $ 707,590 December 31,2018
		$ - 700,464 $ 700,464

VIII. Financial assets at fair value through other comprehensive income

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The Company held the abovementioned listed and non-listed common shares as strategic investments and not for trading purpose, and therefore opted to account them at fair value through other comprehensive income.

The Company subscribed to cash issues of the abovementioned non-TWSE/non-TPEx listed shares in September 2018 at NT$10 per share for a sum of NT$32,394,000.

To diversify risks, the Company made a series of adjustments to its investment position in 2019 and 2018. Listed common shares with a total fair value of NT$209,894,000 and NT$155,967,000 were sold during the process, and as a result, NT$30,671,000 of unrealized gains and NT$66,001,000 of unrealized losses on financial assets at fair value through other comprehensive income previously presented as other equity item were charged to retained earnings according to IFRS 9 in the respective years.

The Company recognized NT$92,357,000 and NT$16,486,000 of cash dividend and acquired 5,347,000 and 4,946,000 shares of stock dividend in 2019 and 2018, respectively.

(II)

Debt instruments at fair value through other comprehensive income

Domestic investments Government bonds Less: Amount placed as guarantee deposit	December 31,2019 $ 1,027,166 ( 517,861) $ 509,305	December 31,2018	December 31,2018
	(	(	$ 477,036 469,910) $ 7,126

Information on government bond investments as at the	Information on government bond investments as at the	balance sheet date:
	December 31,2019	December 31,2018
Face value of investment	$ 909,000	$ 459,000
Coupon interest rate	1.125%~5.000%	1.125%~5.000%
Average maturity	8.09 years	4.68 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 deposit for insurance business as of December 31, 2019.

IX. Financial assets carried at cost after amortization

Domestic investments Bank debenture (1) Corporate bond (2) Subtotal Less: loss provisions	December 31,2019 $ 1,516,154 30,000 1,546,154 ( 16,821) $ 1,529,333	December 31,2018	December 31,2018
	(	(	$ 1,320,000 30,000 1,350,000 12,123) $ 1,337,877

(I)	Information on bank debenture investments as of the balance sheet date: December 31,2019 December 31,2018 Domestic investments Face value of investment $ 1,510,000 $ 1,320,000 Effective interest rate 1.550%~3.000% 2.040%~3.000% Average maturity 3.82 years 2.56 years	Information on bank debenture investments as of the balance sheet date: December 31,2019 December 31,2018 Domestic investments Face value of investment $ 1,510,000 $ 1,320,000 Effective interest rate 1.550%~3.000% 2.040%~3.000% Average maturity 3.82 years 2.56 years
		$ 1,320,000 2.040%~3.000% 2.56 years

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(II) In November 2016, the Company purchased NT$30,000,000 of cumulative subordinated corporate bonds issued by Mercuries Life Insurance at face value. The coupon rate and effective interest rate were both 3.7%.
(III) Please refer to Note 10 for information relating to credit risk management and impairment assessment of financial assets carried at cost after amortization.
X. 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: December 31, 2019

December 31, 2019
Cost Loss provisions Cost after amortization Fair value adjustment December 31, 2018 Cost Loss provisions Cost after amortization Fair value adjustment	At fair value through other comprehensive income $ 988,541 ( 258) 988,283 38,883 $ 1,027,166 At fair value through other comprehensive income $ 460,634 ( 121) 460,513 16,523 $ 477,036		At cost after amortization $ 1,546,154 16,821) $ 1,529,333 At cost after amortization $ 1,350,000 12,123) $ 1,337,877		Total
		(		(	$ 2,534,695 17,079) 2,517,616 38,883 $ 2,556,499 Total
	(	(		(	$ 1,810,634 12,244) 1,798,390 16,523 $ 1,814,913

Please refer to paragraph 2. Credit risk in Note 29 - (4) Purpose and policy of financial risk management for detailed description of the Company's credit risk management policy on debt instruments.

XI. Other financial assets

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 Receivables Details: Note receivable-net At cost after amortization Arising from business	December 31,2019 $ 2,084,000 579,153 $ 2,663,153 0.13%~1.04% 2.10%~3.20% December 31,2019 $ 140,767	December 31,2018
		$ 2,084,000 490,677 $ 2,574,677 0.13%~1.04% 1.40%~3.70% December 31,2018
		$ 167,260

XII. Receivables (I) Details:

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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 proceeds receivable Others 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 (	2,057 3,573) ( $ 139,251 $ 318,833 40,306) ( $ 278,527 $ - 45,836 229) ( $ 45,607 $ 167,092 1,010) ( $ 166,082 $ 219,176 3,589) ( $ 215,587	81 4,186) $ 163,155 $ 435,962 40,516) $ 395,446 $ 135,552 35,003 853) $ 169,702 $ 248,006 1,803) $ 246,203 $ 215,284 1,349) $ 213,935

Claims recoverable from reinsurers and reinsurance accounts receivable are presented under reinsurance contract assets. Please refer to Notes 14 and 36(1) for details on insurance contract receivables.

(II)

Notes, premiums and other receivables

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 counterparty'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

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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

rate. Notes receivable
Not yet matured/redeemed/collected Returned notes Total Premiums receivable 0~90 days 91 days and above Total	December 31,2019 $ 142,818 6 $ 142,824 December 31,2019 $ 256,064 62,769 $ 318,833	December 31,2018
		$ 167,202 139 $ 167,341 December 31,2018
			$ 395,792 40,170 $ 435,962

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 31,2019 $ 45,836 - $ 45,836	December 31,2018
			$ 170,555 - $ 170,555

Aging analysis for other receivables was prepared based on bookkeeping date. Claims recoverable from reinsurers and reinsurance accounts receivable December 31,2019 December 31,2018 0~270 days $ 385,319 $ 461,840 271 days and above 949 1,450 Total $ 386,268 $ 463,290	Aging analysis for other receivables was prepared based on bookkeeping date. Claims recoverable from reinsurers and reinsurance accounts receivable December 31,2019 December 31,2018 0~270 days $ 385,319 $ 461,840 271 days and above 949 1,450 Total $ 386,268 $ 463,290	Aging analysis for other receivables was prepared based on bookkeeping date. Claims recoverable from reinsurers and reinsurance accounts receivable December 31,2019 December 31,2018 0~270 days $ 385,319 $ 461,840 271 days and above 949 1,450 Total $ 386,268 $ 463,290	Aging analysis for other receivables was prepared based on bookkeeping date. Claims recoverable from reinsurers and reinsurance accounts receivable December 31,2019 December 31,2018 0~270 days $ 385,319 $ 461,840 271 days and above 949 1,450 Total $ 386,268 $ 463,290
0~270 days 271 days and above Total	December 31,2019 $ 385,319 949 $ 386,268
			$ 461,840 1,450 $ 463,290

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

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(III) Change in loss provisions: December 31, 2019 Notes receivable

Change in loss provisions: December 31, 2019 Notes receivable	Change in loss provisions: December 31, 2019 Notes receivable	Change in loss provisions: December 31, 2019 Notes receivable
Not yet matured/redeemed/ 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 Premiums receivable 0~90 days 91 days and above Total Loss ratio 0.5% 2%~100% Total book value $ 256,064 $ 62,769 $ 318,833 Loss provisions ( 1,280) ( 39,026) ( 40,306) Cost after amortization $ 254,784 $ 23,743 $ 278,527 Other receivables 0~90 days 91 days and above Total Loss ratio 0.5% 2%~100% Total book value $ 45,836 $ - $ 45,836 Loss provisions ( 229) - ( 229) Cost after amortization $ 45,607 $ - $ 45,607 Claims recoverable from reinsurers and reinsurance accounts receivable 0~270 days 271 days and above Total Loss ratio 0.5%~1.5% 2%~100% Total book value $ 385,319 $ 949 $ 386,268 Loss provisions ( 4,485) ( 114) ( 4,599) Cost after amortization $ 380,834 $ 835 $ 381,669 December 31, 2018 Notes receivable Not yet matured/redeemed/ collected Returned notes Total Loss ratio 2.42%~50% 100% - Total book value $ 167,202 $ 139 $ 167,341 Loss provisions ( 4,047) ( 139) ( 4,186) Cost after amortization $ 163,155 $ - $ 163,155 Premiums receivable 0~90 days 91 days and above Total Loss ratio 0.5% 2%~100% - Total book value $ 395,792 $ 40,170 $ 435,962 Loss provisions ( 1,979) ( 38,537) ( 40,516) Cost after amortization $ 393,813 $ 1,633 $ 395,446				Total
			(	$ 142,824 3,573) $ 139,251 Total
			(	$ 318,833 40,306) $ 278,527 Total
Loss ratio Total book value Loss provisions Cost after amortization December 31, 2018 Notes receivable Loss ratio Total book value Loss provisions Cost after amortization Premiums receivable Loss ratio Total book value Loss provisions Cost after amortization		271 days and above 2%~100% $ 949 ( 114) $ 835 Returned notes 100% $ 139 ( 139) $ - 91 days and above 2%~100% $ 40,170 ( 38,537) $ 1,633
			(	$ 386,268 4,599) $ 381,669 Total
		(	(	- $ 167,341 4,186) $ 163,155 Total
	(	(	(	- $ 435,962 40,516) $ 395,446

Other receivables

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Loss ratio Total book value Loss provisions Cost after amortization		0~90 days 0.5% $ 170,555 853) $ 169,702		91 days and above 2%~100% $ - - $ -		Total
	(				(	- $ 170,555 853) $ 169,702

Claims recoverable from reinsurers and reinsurance accounts receivable

Loss ratio Total book value Loss provisions Cost after amortization		0~270 days 0.5% $ 461,840 2,750) $ 459,090	271 days and above 2%~100% $ 1,450 ( 402) $ 1,048		Total
	(		(	(	- $ 463,290 3,152) $ 460,138

Change in loss provisions by account category:

		2019
Notes receivable $ 4,186 - ( 613) $ 3,573	Premiums receivable $ 40,516 628 ( 838) $ 40,306	Other receivables $ 853 - ( 624) $ 229 2018	Claims recoverable from reinsurers $ 1,803 - ( 793) $ 1,010	Reinsuranc e accounts receivable
(	(	(	(	(	$ 1,349 2,528 288) $ 3,589
Notes receivable $ 3,102 1,084 - $ 4,186	Premiums receivable $ 43,066 - ( 2,550) $ 40,516	Other receivables $ 247 606 - $ 853	Claims recoverable from reinsurers $ 1,179 624 - $ 1,803	Reinsuranc e accounts receivable
	(				$ 1,113 236 - $ 1,349

Explanation to overdue receivables and loss provisions:

Balances of notes receivable and premiums receivable as of December 31, 2019 included NT$6,000 and NT$62,769,000 that were overdue, for which the Company had made loss provisions totaling NT$6,000 and NT$39,026,000, respectively. Reinsurance accounts receivable has been assessed for

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impairment and unrecoverable amounts. The balance includes NT$949,000 of overdue receivables, for which a loss provision of NT$114,000 has been made.
1. Balances of notes receivable and premiums receivable as at December 31, 2018 included NT$139,000 and NT$40,170,000 that were overdue, for which the Company had made loss provisions totaling NT$139,000 and NT$38,537,000, respectively. Reinsurance accounts receivable has been assessed for impairment and unrecoverable amounts. The balance includes NT$1,450,000 of overdue receivables, for which a loss provision of NT$402,000 has been made.

XIII. Investment property

made. Investment property
Cost Opening balance Closing balance Increase from revaluation Opening balance Closing balance Accumulated depreciation Opening balance Depreciation Closing balance Cumulative impairment Opening balance Closing balance Closing net balance Cost Opening balance Closing balance Increase from revaluation Opening balance Closing balance		2019
	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 2018	Total
			$ 973,717 973,717 163,480 163,480 165,313 6,938 172,251 21,698 21,698 $ 943,248
	Land $ 609,119 609,119 163,480 163,480	Buildings $ 364,598 364,598 - -	Total
			$ 973,717 973,717 163,480 163,480

(Continued next page)

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(Continued from previous page)

Accumulated depreciation Opening balance Depreciation Closing balance Cumulative impairment Opening balance Closing balance Closing net balance				2018
		Land $ - - - 15,526 15,526 $ 757,073		Buildings $ 158,375 6,938 165,313 6,172 6,172 $ 193,113		Total
						$ 158,375 6,938 165,313 21,698 21,698 $ 950,186

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, 2019 and 2018, amounted to NT$2,747,898,000 and NT$2,703,012,000, respectively. Fair value was determined by the 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.

Sum of lease payments collectible on investment properties leased out through operating lease as of December 31, 2019 is as follows:

operating lease as of December 31, 2019 is as follows:
Year 1 Year 2 Year 3 Year 4 Year 5 More than 5 years	December 31,2019
		$ 68,795 11,454 21,106 60,651 29,774 - $191,780

Sum of lease payments collectible on investment properties leased out through operating lease as of December 31, 2018 is as follows:

operating lease as of December 31, 2018 is as follows:
Year 1 1~5 years More than 5 years	December 31,2018
		$ 55,502 59,760 1,304 $116,566

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XIV. (I)	Reinsurance contract assets Details: Claims recoverable from reinsurers Reinsurance accounts receivable Reinsurance reserve assets	December 31,2019 $ 166,082 215,587 1,888,150 $ 2,269,819	December 31,2018	December 31,2018
				$ 246,203 213,935 2,447,218 $ 2,907,356

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.

With regards to ceded reinsurance as of December 31, 2018, the Company was required to disclose ceded claim reserve for reported and unpaid liability totaling NT$266,000 on the sum of marine hull insurance ceded under facultative reinsurance arrangement 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 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

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and Other Risk Spreading Mechanisms," the Company was required to disclose substandard reinsurance premium expenses totaling NT$21,000, claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months totaling NT$94,000, and ceded claim reserve for reported and unpaid liability totaling NT$379,000.

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 substandard reinsurance premium expenses totaling NT$1,589,000, reinsurance commission revenues totaling NT$467,000, claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months totaling NT$472,000, and ceded claim reserve for reported and unpaid liability totaling NT$34,000.

In addition, the Company was required to make provisions for substandard reinsurance reserve of NT$2,050,000 (including NT$805,000 of ceded unearned premium reserve, NT$566,000 of claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months, and NT$679,000 of ceded claim reserve for reported and unpaid liability) when preparing regulatory reports; however, this NT$2,050,000 of additional reserve and liability does not affect the Company's financial statements.

(II) Please refer to Notes 12 and 36(1) for details and changes in the amount of claims recoverable from reinsurers, reinsurance accounts receivable and related loss provisions presented above.

(III) Details of reinsurance reserve assets:

provisions presented above. Details of reinsurance reserve assets:
Ceded unearned premium reserve Ceded claim reserve Deficiency reserve for ceded coverage	December31,2019 $ 1,077,452 803,134 7,564 $ 1,888,150	December31,2018
			$ 1,391,535 1,048,997 6,686 $ 2,447,218

Please refer to Items (2), (3) and (5) in Note 36 - Disclosure of insurance contract-related information for more details on reinsurance reserve assets presented above.

XV. Property, plant, and equipment

Cost Opening balance Increase - current period Decrease - current period Closing balance Increase from revaluation Opening balance Closing balance				2019	2019	2019
		Proprietary land		Buildings $ 337,142 139 - 337,281 - -		Sundry equipment $ 47,133 8,450 3,274) 52,309 - -		Total
		$ 308,401 - - 308,401 123,786 123,786			(		(	$ 692,676 8,589 3,274) 697,991 123,786 123,786

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Accumulated
depreciation
Opening balance				-		154,126					31,421		185,547
Depreciation				-			6,662				5,656		12,318
Decrease -	current
period				-			-		(		2,798)	(	2,798)
Closing balance				-		160,788					34,279		195,067
Cumulative impairment
Opening balance			4,774				1,898				-		6,672
Closing balance			4,774				1,898				-		6,672
Closing net balance		$	427,413		$ 174,595					$	18,030	$	620,038
								2018
		Proprietary									Sundry
			land		Buildings					equipment			Total
Cost
Opening balance		$	308,401		$ 341,793					$	47,035	$	697,229
Increase -	current
period				-			848				8,252		9,100
Decrease -	current
period				-	(		5,499)		(		8,154)	(	13,653)
Closing balance			308,401			337,142					47,133		692,676
Increase	from
revaluation
Opening balance			123,786				-				-		123,786
Closing balance			123,786				-				-		123,786
Accumulated
depreciation
Opening balance				-		152,717					35,236		187,953
Depreciation				-			6,598				4,002		10,600
Decrease -	current
period				-	(		5,189)		(		7,817)	(	13,006)
Closing balance				-		154,126					31,421		185,547
Cumulative impairment
Opening balance			4,774				1,898				-		6,672
Closing balance			4,774				1,898				-		6,672
Closing net balance		$	427,413		$ 181,118					$	15,712	$	624,243
Depreciation expenses are provided						on	property,			plant and equipment on a
straight-line basis over the number of				useful		years shown			as follows:
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 2019 and 2018 exclude capitalized interest.

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The Company's property, plant, and equipment showed no sign of impairment as of December 31, 2019 and 2018.

December 31, 2019 and 2018.
XVI. Lease arrangements (I) Right-of-use assets - 2019 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 (II) Lease liabilities - 2019 Book value of lease liabilities Discount rate range for lease liabilities: Buildings Transportation equipment Interest expense on lease liabilities Buildings Transportation equipment (III) Other lease information 2019 Short-term rent expense Total cash (outflow) from lease	December 31,2019
		$ 3,452 868 $ 4,320 2019
	$ 3,285 $ 1,034 638 $ 1,672 December 31,2019
	$ 4,139 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. 2018

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. 2018	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. 2018
The sum of minimum lease payments on irrevocable operating lease
arrangements is explained below:
	December31,2018
No more than 1 year	$ 2,913
1~5 years	2,132

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More than 5 years

$ 5,045

Please refer to Note 13 for operating lease agreements in which the Company is a lessor.

XVII. Intangible assets

a lessor. Intangible assets
Cost Opening balance Increase - current period Impairments - current period Closing balance Accumulated depreciation Opening balance Amortization expenses Impairments - current period Closing balance Closing net balance		2019 $ 28,379 3,019 3,593) 27,805 17,424 6,771 3,593) 20,602 $ 7,203		2018
	( (		( (	$ 24,961 5,567 2,149) 28,379 12,350 7,223 2,149) 17,424 $ 10,955

The above computer software is amortized on a straight-line basis over 3 years. The Company's intangible assets showed no sign of impairment as of December 31, 2019 and 2018.

XVIII. Guarantee deposits paid

2019 and 2018. Guarantee deposits paid
Guarantee deposit for insurance business - Government bonds Others	December 31,2019 $ 517,861 44,997 $ 562,858	December 31,2018
			$ 469,910 49,248 $ 519,158

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

Other assets - others

XIX.

Other assets-others
Prepayments Prepaid equipment purchase Others Other payables Salary and bonus payable Share settlements payable Leave encashment payable Others	December 31,2019 $ 6,371 29,073 14,581 $ 50,025 December 31,2019 $ 84,563 16,147 415 77,563 $ 178,688	December 31,2018
		$ 8,039 8,616 4,896 $ 21,551 December 31,2018
			$ 78,545 15,395 511 75,432 $ 169,883

XX. Other payables

XXI. Insurance liabilities

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December 31,2019 December 31,2018	December 31,2019 December 31,2018	December 31,2019 December 31,2018
Unearned premium reserve	$ 3,726,659	$ 4,032,127
Claim reserve	2,491,233	2,850,200
Special reserve	1,669,565	1,675,600
Deficiency reserve	24,293	29,171
	$ 7,911,750	$ 8,587,098

Please refer to Items (2) to (5) in Note 36 - Disclosure of insurance contract-related information for more details on insurance liabilities presented above.

XXII. Retirement benefit plan (I) 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.

Please see Note 25(1) for details on pension costs recognized in 2019 and 2018. (II) 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(1) for details on pension costs recognized in 2019 and 2018.

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:	recognized on the balance sheet:
December 31,2019 Present value of defined benefit obligations $ 568,358 Fair value of plan assets ( 398,179) Net defined benefit liabilities $ 170,179 Details of changes in net defined benefit liabilities (assets): Present value of defined benefit obligations Fair value of plan assets January 1, 2019 $ 573,355 ($ 395,471) Service costs Current period service costs 9,042 - Interest expense (income) 5,630 ( 4,000) Recognized through profit and loss 14,672 ( 4,000)			December 31,2018
				$ 573,355 ( 395,471) $ 177,884 Net defined benefit liabilities (assets)
	( ( (	$ 395,471) - 4,000) 4,000)			$ 177,884 9,042 1,630 10,672

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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 January 1, 2018 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 -	Present value of defined benefit obligations $ - 499 12,926 2,281 15,706 - ( 31,678) ( 3,697) $ 568,358 $ 590,862 11,200 6,610 17,810 - 7,794 6,626 ( 11,704)	Fair value of plan assets ($ 13,907) - - - ( 13,907) ( 16,479) 31,678 - ($ 398,179) ($ 384,852) - ( 4,422) ( 4,422) ( 10,991) - - -	Net defined benefit liabilities (assets)
	( ( (		($ 13,907) 499 12,926 2,281 1,799 ( 16,479) - ( 3,697) $ 170,179 $ 206,010 11,200 2,188 13,388 ( 10,991) 7,794 6,626 ( 11,704)

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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, 2018	2,716 ( - ( 21,884) 16,149) $ 573,355 (	10,991) ( 17,090) ( 21,884 - ( $ 395,471)	8,275) 17,090) - 16,149) $ 177,884

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

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.
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.
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 31,2019 0.750% 2.000%	December 31,2018
		1.000% 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 0.25% increase 0.25% decrease Expected salary increase 0.25% increase 0.25% decrease	December 31,2019 ($ 12,927) $ 13,379 $ 12,979 ($ 12,607)	December 31,2018	December 31,2018
	( (	( (	$ 13,306) $ 13,783 $ 13,402 $ 13,007)

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.

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XXIII. XXIV. (I)	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 Capital, fully paid Retained Earnings Other Equity Share capital Common shares Authorized shares (thousands) Authorized capital Shares issued and fully paid up (thousands) Issued share capital	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 December 31,2019 301,163.8 $ 3,011,638 301,163.8 $ 3,011,638	December 31,2018	December 31,2018
			$ 16,373 9.4 years December 31,2018
			$ 90,661 1,253 $ 91,914 December 31,2018
			$ 3,011,638 2,929,970 27,302 $ 5,968,910 December 31,2018
				301,163.8 $ 3,011,638 301,163.8 $ 3,011,638

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. (II) 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-(2) - 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 28), 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

151

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 2018 and 2017 earnings appropriation resolved during annual general meetings held on June 27, 2019 and June 28, 2018, respectively:

respectively:
Legal reserve Special reserve (Note 1) Special reserve (Note 2) Dividends	Earnings appropriationplan 2018 2017 $ 90,358 $ 91,323 208,715 180,789 2,160 2,008 147,570 180,698	Dividends per share (NT$)
	2018 $ 90,358 208,715 2,160 147,570	2018 $ 0.49	2017
			$ 0.60

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 to the special reserve at the end of each year, starting from January 1, 2011. New provisions amounting to NT$208,715,000 for 2018 had been made to the special reserve on December 31, 2018.
Note 2: Represents net special reserve provided (reserved) for FinTech development according to LetterJin-Guan-Bao-Cai-Zi No. 10502066461 issued by the authority.

Earnings appropriation plan for 2019 was approved under board of directors resolution dated March 26, 2020, as follows:

Legal reserve Special reserve (Note 2) Special reserve (Note 3) Dividends	Earnings appropriationplan $ 116,194 ( 1,843) 207,452 289,117	Dividends per share (NT$)
		$ - - - 0.96

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 2019 amounted to NT$NT$207,452,000, and had already been accounted on December 31, 2019 in compliance with the above policy.
(III) Special reserve (including provision of special reserve required for first-time adoption of IFRSs)
Details of special reserve made for first-time adoption of IFRSs:

December 31, 2019 December 31, 2018 Special reserve $ 51,849 $ 51,849

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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$51,849,000 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 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 reserve 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.

Change of special reserve balance in 2019 and 2018 is explained below:

2019 Opening balance Provisions in the current year Year-end balance 2018 Opening balance Provisions in the current year Year-end balance	Special reserve	Special reserve		Financial technology $ 4,407 2,160 $ 6,567 $ 2,399 2,008 $ 4,407		Provision for first-time adoption of IFRSs $ 51,849 - $ 51,849 $ 51,849 - $ 51,849		Total
		$ 1,474,249 207,452 $ 1,681,701 $ 1,265,534 208,715 $ 1,474,249						$ 1,530,505 209,612 $ 1,740,117 $ 1,319,782 210,723 $ 1,530,505

(IV)	Other equity items Unrealized gains/losses on financial assets at fair value through	Other equity items Unrealized gains/losses on financial assets at fair value through	Other equity items Unrealized gains/losses on financial assets at fair value through	other comprehensive 2018 $ 3,438 ( 2,287) ( 39,850) 66,001 $ 27,302
	income 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		2019 $ 27,302 22,498 387,894 30,671) $ 407,023
		(

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XXV. Net income from continuing operations (I) Employee welfare expenses

Employee welfare expenses
2019 Presented as operatingcost Presented as operating expense Employee welfare expenses Salary expenses $ - $ 543,461 Labor/health insurance premium - 58,039 Pension expense - 30,430 Remuneration to Director - 12,306 Other employee welfare expenses - 342,015 $ - $ 986,251 Retirement benefits Defined contribution plan Defined benefit plan (Note 22)	2019	Total $ 543,461 58,039 30,430 12,306 342,015 $ 986,251 2019	2018
			Presented as operating expense Total $ 529,427 $ 529,427 56,783 56,783 32,881 32,881 11,453 11,453 354,590 354,590 $ 985,134 $ 985,134 2018		Total


		$ 19,758 10,672		$ 19,493 13,388 $ 32,881
		$ 30,430

(II) Employee and director remuneration According to the Articles of Incorporation, the Company may provide employee
remuneration at no less than 1% of pre-tax profit and director remuneration at no higher than 0.6% of pre-tax profit. 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. 2019 employee remuneration and director remuneration were estimated at NT$6,744,000 and NT$4,046,000, at 1% and 0.6% of pre-tax profit, respectively. In 2018, the Company had estimated remuneration to employees of NT$5,322,000 and remuneration to directors of NT$3,193,000 by applying 1% and 0.6%, respectively, to the abovementioned pre-tax profit after reimbursing NT$39,520,000 in losses (calculation: opening undistributed earnings - NT$275,827,000 plus effect of retrospective application - NT$16,182,000, interests in remeasurement of defined benefit plan - NT$6,620,000, income tax related to items that will not be reclassified - NT$1,881,000 minus 2017 provision for statutory surplus reserves - NT$91,323,000, net special surplus reserves provided for to respond to the development trend of fin-tech - NT$2,008,000, cash dividends to shareholders - NT$180,698,000, and losses on disposal of equity instruments at fair value through other comprehensive income - NT$66,001,000).

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 2019 and 2018 employee/director remuneration were resolved in board of directors meetings dated March 26, 2020 and March 26, 2019, respectively. Details are as follows:

Percentage

are as follows: Percentage
Employee remuneration Director remuneration	2019 1% 0.6%	2018
		1% 0.6%

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Amount

Amount
Employee remuneration Director remuneration	2019 Cash Shares $ 6,744 $ - 4,046 -	2018
	Cash	Cash $ 5,322 3,193	Shares
	$ 6,744 4,046		$ - -

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 2019 and 2018 financial statements.

Please visit "Market Observation Post System" for more information regarding employee/director remuneration resolved during the Company's board of director meetings in 2020 and 2019.

(III) Depreciation and amortization

meetings in 2020 and 2019. Depreciation and amortization
Property, Plant and Equipment Right-of-use asset Investment Property Intangible Assets		2019 $ 12,318 1,672 6,938 6,771 $ 27,699		2018
				$ 10,600 - 6,938 7,223 $ 24,761

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(IV) (V) XXVI. (I)	2019 2018 Depreciation and amortization expenses by function Depreciation (classified as operating expenses) $ 13,990 $ 10,600 Depreciation (classified as operating costs) 6,938 6,938 Amortization (classified as operating expenses) 6,771 7,223 $ 27,699 $ 24,761 Gain/loss on investment property 2019 2018 Rental income $ 70,015 $ 69,610 Direct expenses associated with rental income ( 14,035) ( 13,610) $ 55,980 $ 56,000 Gain/loss on foreign currency exchange 2019 2018 Total gain on foreign exchange $ 30,016 $ 54,510 Total loss on foreign exchange ( 48,096) ( 36,165) Net gain (loss) ($ 18,080) $ 18,345 Total gain/loss on foreign exchange Gain (loss) on exchange - investment (Note) ($ 16,063) $ 18,852 Gain (loss) on exchange - non-investment ( 2,017) ( 507) ($ 18,080) $ 18,345 Note: Derived from foreign currency time deposits. Income tax expense for continuing operations Main composition of income tax expense recognized in profit and loss 2019 2018 Current income tax Incurred in the current year $ 86,521 $ 62,111 Adjustment of previous year figures ( 179 ) 376 Deferred income tax Incurred in the current year ( 3,685) 17,670 Tax rate changes - ( 8,298) Income tax expense recognized in profit and loss $ 82,657 $ 71,859		2018
			$ 10,600 6,938 7,223 $ 24,761 2018
		(	$ 69,610 13,610) $ 56,000 2018
		(	$ 62,111 376 17,670 8,298) $ 71,859

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Reconciliation of accounting income and income tax expense:

			2019			2018
Pre-tax profit from continuing
operations		$	663,625		$	563,168
Income tax expense calculated
by applying statutory tax
rate to pre-tax profit		$	132,725		$	112,634
Tax impact of non-deductible
expenses and losses			780			512
Unrealized tax-exempt losses
(benefits)	(		12,295 )			15,834
Expected credit impairment
loss and reversal gain on
investment			967	(		1,025)
Tax-exempt income	(		39,400)	(		48,354 )
Additional tax on undistributed
earnings			59			180
Tax rate changes			-	(		8,298)
Adjustments to income tax
recognized in previous years	(		179)			376
Income tax expense recognized
in profit and loss		$	82,657		$	71,859

Following the amendment of Income Tax Act in 2018, the business income tax rate has been adjusted from 17% to 20%. The amendment also reduced the applicable tax rate for 2018 undistributed earnings from 10% to 5%.

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.

(II) Income tax recognized under other comprehensive income

Deferred income tax Tax rate changes Incurred in the current year - Defined benefit plan remeasurement amount		2019 $ - 360 $ 360		2018
			(	$ 1,881 1,655) $ 226

(III) Deferred income tax assets and liabilities

Below are changes in deferred income tax assets and liabilities:

2019

2019
Deferred Income Tax Assets Assets carried at cost Defined benefit plan	Opening balance $ 5,674 37,414	Recognized through profit andloss $ - ( 1,900 )	Recognized in other comprehensiv eincome $ - 360	Year-end balance
				$ 5,674 35,874

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Leave encashment payable Unrealized loss on exchange Loss provisions Deferred income tax liabilities Land value increment tax Unrealized gain on foreign exchange 2018 Deferred Income Tax 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 $ 102 - 7,609 $ 50,799 $ 92,934 2,262 $ 95,196 Opening balance $ 4,823 38,134 138 8,120 6,468 $ 57,683 $ 92,934 - $ 92,934	Recognized through profit andloss ( $ 19 ) 2,901 441 $ 1,423 $ - ( 2,262) ($ 2,262) Recognized through profit andloss $ 851 ( 946 ) ( 36 ) ( 8,120 ) 1,141 ($ 7,110) $ - 2,262 $ 2,262	Recognized in other comprehensiv eincome $ - - - $ 360 $ - - $ - Recognized in other comprehensiv eincome $ - 226 - - - $ 226 $ - - $ -		Year-end balance
						$ 83 2,901 8,050 $ 52,582 $ 92,934 - $ 92,934 Year-end balance
						$ 5,674 37,414 102 - 7,609 $ 50,799 $ 92,934 2,262 $ 95,196

(IV) Assessment of income tax return

The Company's profit-seeking enterprise income tax returns have been certified by the tax authority up till 2017.

XXVII. 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		2019 $ 580,968		2018
				$ 491,309

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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		Unit: 2019 301,164 316 301,480	Unit: 2019 301,164 316 301,480	thousand shares 2018
				301,164 269 301,433

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.

XXVIII. Capital risk management

Please refer to Note 35(6) for more information on the management of 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, 2019, the Company had maintained its capital above the percentage stated in the Insurance Act and was not subject to the above treatments.

XXIX. Financial instruments

(I) Fair value information - financial instruments that are not measured at fair value The management considers that all financial assets and liabilities not measured
at fair value have had book values closely resembling their fair values, or that their fair values cannot be determined reliably.
(II) Fair value information - financial instruments with fair value measured on a recurring basis
Fair value hierarchy December 31, 2019

ing basis Fair value hierarchy December 31, 2019
Financial Assets at Fair Value through Profit or Loss TWSE/TPEx listed shares Fund beneficiary certificates Bond investments - bank debentures Total		Level 1 $ 735,535 858,993 - $ 1,594,528		Level 2 $ - - - $ -		Level 3 $ - - 50,565 $ 50,565		Total
								$ 735,535 858,993 50,565 $ 1,645,093

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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, 2018 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 Non-listed domestic common shares Government bonds Total Guarantee deposits paid TWSE/TPEx listed securities - Bond investments		Level 1 $ 1,730,675 - 509,305 $ 2,239,980 $ 517,861 Level 1 $ 1,949,398 1,667,925 - $ 3,617,323 $ - 7,126 $ 7,126 $ 469,910		Level 2 $ - - - $ - $ - Level 2 $ - - - $ - $ - - $ - $ -		Level 3 $ - 945,763 - $ 945,763 $ - Level 3 $ - - 50,556 $ 50,556 $ 700,464 - $ 700,464 $ -		Total
								$ 1,730,675 945,763 509,305 $ 3,185,743 $ 517,861 Total
								$ 1,949,398 1,667,925 50,556 $ 3,667,879 $ 700,464 7,126 $ 707,590 $ 469,910

In periods 2019 and 2018, there was no change of fair value measurement between level 1 and level 2.

Reconciliation of level 3 fair value assessment on financial instruments 2019

2019
Financial assets	Measured at f	air	value throughprofit and loss		Financial assets at fair value through other comprehensive income			Total
	Derivatives		Equity instrument $ - - - $ -	Debt instrument	Equity instrument	D	ebt instrument
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	$ - - - $ -			$ 50,556 9 - $ 50,565	$ 700,464 - 245,299 $ 945,763		$ - - - $ -	$ 751,020 9 245,299 $ 996,328

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Unrealized gains and losses at the end of period 2018 Financial assets	$ - Measured at fair	$ - Measured at fair	$ - Measured at fair	$ - value through	$ 565 profit and loss	$ 565 profit and loss	$ 255,957 $ - Financial assets at fair value through other comprehensive income	$ 255,957 $ - Financial assets at fair value through other comprehensive income	$ 255,957 $ - Financial assets at fair value through other comprehensive income		$ 256,522 Total
		Derivatives		Equity instrument		Debt instrument	Equity instrument		Debt instrument
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) Purchase Closing balance Unrealized gains and losses at the end of period		$ - - - - $ - $ -		$ - - - - $ - $ -		$ 49,748 808 - - $ 50,556 $ 556	$ 692,421 - ( 24,351 ) 32,394 $ 700,464 $ 10,658		$ - - - - $ - $ -	$ 742,169 808 ( 24,351 ) 32,394 $ 751,020 $ 11,214

Level 3 fair value measurement technique and input
- (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.
- (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.
(III) Types of financial instrument

yet unobservable input. Types of financial instrument
Financial assets Measured at fair value through profit and loss Mandatory at fair value throughout profit and loss Loans and receivables (Note 1) Financial assets carried at cost after amortization (Note 2) Financial assets at fair value through other comprehensive income Investment in equity instruments Investment in debt instruments (Note 3)	December 31,2019 $ 1,645,093 381,669 6,560,882 2,676,438 1,027,166	December 31,2018
		$ 3,667,879 460,138 6,317,003 700,464 477,036

Financial liabilities

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Carried at cost after amortization (Note 4) 655,404 705,388

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, guarantee deposits paid (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 insurance claims payable, commissions payable, reinsurance account payable, other payables (excluding salary, bonus and leave encashment payable), guarantee deposits paid, and financial liabilities carried at cost after amortization.
(IV) 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.

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 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, 2019, the Company had about 4.3% 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:

Unit: in thousands of foreign currency or NTD December 31, 2019

Financial assets Monetary items Bank deposit and	Foreign currency	Exchange rate	TWD(NTD)

162

notes receivable USD EUR CNY (RMB) GBP HKD Other financial assets USD CNY (RMB) Financial assets Monetary items Bank deposit and notes receivable USD EUR CNY (RMB) GBP HKD Other financial assets USD CNY (RMB)	$ 3,376 29.980 $ 101,211 17 33.590 558 29 4.305 126 6 39.360 247 524 3.849 2,018 18,600 29.980 557,628 5,000 4.305 21,525 December 31,2018	$ 3,376 29.980 $ 101,211 17 33.590 558 29 4.305 126 6 39.360 247 524 3.849 2,018 18,600 29.980 557,628 5,000 4.305 21,525 December 31,2018	$ 3,376 29.980 $ 101,211 17 33.590 558 29 4.305 126 6 39.360 247 524 3.849 2,018 18,600 29.980 557,628 5,000 4.305 21,525 December 31,2018
	Foreign currency $ 2,288 17 82 8 31 13,500 17,000	Exchange rate 30.715 35.200 4.472 38.880 3.921 30.715 4.472	TWD(NTD)
			$ 70,273 591 365 305 121 414,653 76,024

Unrealized foreign currency gain/loss of material impact:

Foreign currency USD CNY (RMB)	2019	Unrealized net loss on exchange ($ 13,671) ( 835) ($ 14,506)	2018
	Exchange rate 1:29.980 (USD:TWD) 1:4.305 (CNY:TWD)		Exchange rate 1:30.715 (USD:TWD) 1:4.472 (CNY:TWD)		Unrealized net gain on currency exchange
				(	$ 12,893 1,581) $ 11,312

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 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%

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weakening of the NTD against the respective foreign currencies would be the positive figure of the same amount.

2019 2018 Gain (loss) on USD ($ 6,588) ($ 4,849) Gain (loss) on CNY ( 217) ( 764 )

(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, 2019 December 31, 2018 Risk of cash flow changes due to interest rate - Financial assets $ 777,511 $ 672,367 Risk of fair value changes due to interest rate - Financial assets 1,027,166 477,036

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. A. Risk of cash flow changes due to interest rate

If interest rate increased/decreased by 1 basis point, the Company's 2019 and 2018 pre-tax profit and equity would increase/decrease by NT$78,000 and NT$67,000, 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 2019 and 2018 would decrease/increase by NT$1,229,000 and NT$240,000, 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.

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If prices increased/decreased by 1%, pre-tax profit or loss and shareholders' equity for 2019 and 2018 would increase/decrease by NT$15,945,000 and NT$36,173,000, 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 2019 and 2018 would increase/decrease by NT$26,764,000 and NT$7,005,000, 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 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 investment portfolio given extreme changes in a series of financial variables.

variables.	variables.
Date: December 31, 2019			Unit: NTD thousands
				Portfolio
Risk factors		Variation	gains/losses
Price risk - at fair	Down 10%		($ 159,453)
value through profit
and loss
Price risk - at fair	Down 10%		(	267,644)
value through other
comprehensive
income
Risk of fair value	A	100bps increase in the	(	122,874)
changes due to		yield curve
interest rate
Exchange rate risk -	1% strengthening of NTD		(	5,792)
other financial		against all foreign
assets		currencies

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:

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(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:

Credit risk exposure - by region

Date: December 31, 2019 Unit: NTD thousands

Financial assets	Taiwan	Asia	America	Europe	Others	Total
Cash and cash equivalents	$ 1,860,014	$ -	$ -	$ -	$ -	$ 1,860,014
Financial assets at fair value through profit and loss (securitized beneficiary certificates and debt instruments)	475,416	-	-	-	-	475,416
Financial assets (debt instrument) at fair value through other comprehensive income(Note)	1,027,166	-	-	-	-	1,027,166
Financial assets carried at cost after amortization	1,529,333	-	-	-	-	1,529,333
Other financial assets (time deposit)	2,663,153	-	-	-	-	2,663,153
Total	7,555,082	-	-	-	-	7,555,082
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	$ 1,027,166	$ -	$ -	$ 1,027,166
Financial assets carried at cost after amortization	1,529,333	-	-	1,529,333
Total	$2,556,499	$ -	$ -	$2,556,499

Expected credit loss rates for the abovementioned Class I financial assets are 0.0261% ~ 1.9524%.

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

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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.

  - 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

2019:

2019:
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
	(	$ 12,244 4,835 $ 17,079 $ 7,103 1,397) $ 5,706		$ - - $ - $ - - $ -		$ - - $ - $ - - $ -	(	$ 12,244 4,835 $ 17,079 $ 7,103 1,397) $ 5,706		$ - - $ - $ 41,604 1,397 $ 43,001		$ 12,244 4,835 $ 17,079 $ 48,707 - $ 48,707

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Liquidity risk
(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

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 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, 2019

December 31, 2019
Non-derivative financial liabilities Non-interest bearing liabilities Lease liabilities December 31, 2018	Repayable upon demand or within 1 month $ 261,262 - $ 261,262 Repayable upon demand or within 1 month $ 268,366	1 to 3 months $ 54,168 510 $ 54,678 1 to 3 months $ 65,374	3 months to 1year $ 323,190 1,790 $ 324,980 3 months to 1year $ 435,590	1 to 5years $ - 1,961 $ 1,961 1 to 5years $ -	5 years and above
					$ - - $ - 5 years and above
Non-derivative financial liabilities Non-interest bearing liabilities
						$ -

XXX. Related party transactions

(I) Name and relationship of related parties Name of related party Yi Chih Co., Ltd.

Relationship with the Company Other related parties

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Da Feng Construction Engineering Co., Other related parties Ltd. Zong Cheng Enterprise Co., Ltd. Other related parties Tu 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 AOPEN Inc. 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 Chiyi Construction Management Co., Ltd. Other related parties Jui San Co., Ltd. Other related parties Fu Bi Shi Construction Co., Ltd. Other related parties Other related parties Second degree relatives or closer to the company's director, Chairman or President

(II) Major transactions with related parties 1. Premium revenues Type of relatedparty Other related parties 2. Insurance claims paid Type of relatedparty Other related parties	(II) Major transactions with related parties 1. Premium revenues Type of relatedparty Other related parties 2. Insurance claims paid Type of relatedparty Other related parties	2019 $ 3,353 2019 $ 157		2018
				$ 3,368 2018
				$ -

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

Rental expense

Rental expense
Type of relatedparty Other related parties		2019 $ 6		2018
				$ 36

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

Premiums receivable

Premiums receivable
Type of relatedparty Other related parties	December 31,2019 $ 464	December 31,2018
			$ 512

(III) Remuneration to the executive management

2019 2018

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Short-term employee benefits Retirement benefits	$ 48,571 2,654 $ 51,225	$ 46,258 2,451
		$ 48,709

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

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XXXI. 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.

(I) Major unrecognized contractual commitments As at December 31, 2019, the Company had NT$149,994,000 of system
implementation expenses that were contracted but unpaid and NT$191,780,000 of operating lease income that were uncollected from contractual lease commitment.
(II) Contingent liabilities As of December 31, 2019, the Company had 10 unresolved major lawsuits
concerning its insurance business. The Company was being claimed for a sum of NT$36,753,000, and NT$31,705,000 of which were covered by reinsurance while the remaining balance was covered by adequate claim reserve. These cases are currently being reviewed by court.

XXXII. Losses from major disasters: None. XXXIII. Major post-balance sheet events: None.

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

Please refer to paragraph 1. Market risk in Note 29(4) for foreign
currency-denominated financial assets of material impact.

XXXV. Risk management goals, policies, procedures and methods

(I) 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.
(II) Risk management framework, organization and responsibilities 1. 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.

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

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

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(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.

(III) 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 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.

(IV) 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:

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.

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.

Underwriting risks

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

Reinsurance risks

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

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.

Claims risks

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

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.

(V) 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 36(9) for retention limits of each insurance category.

(VI) 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 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.

XXXVI.Disclosure of insurance contract-related information

(I) Insurance contract receivables and payables: Receivables

Receivables
Class Fire Insurance Marine Insurance Automobile Insurance Engineering insurance Personal accident insurance	December 31,2019
	Notes receivable $ 8,908 29,028 97,810 409 2,323	Premiums receivable $ 106,686 35,254 56,820 19,388 68,833	Total
			$ 115,594 64,282 154,630 19,797 71,156

174

(	2,289 31,852 140,767 318,833 3,573) ( 40,306) $ 137,194 $ 278,527 December 31,2018	2,289 31,852 140,767 318,833 3,573) ( 40,306) $ 137,194 $ 278,527 December 31,2018	(	34,141 459,600 43,879) $ 415,721
	Premiums receivable	Total $ 163,310 70,595 155,403 18,660 175,838 19,416 603,222 ( 44,702) $ 558,520 December 31,2018		Total
(
			$ 12,508 7,735 71,106 1,239 14,593 $ 107,181

Reinsurance accounts receivable (payable) - retained reinsurance

MAT CRC CMP WIL FPH Others Less: loss provisions Net amount MAT WIL WOC CMP PAN Others	December 31,2019	December 31,2019
	Reinsurance accounts receivable Reinsurance accountspayable $ 74,186 $ 80,288 30,048 98,455 28,954 59,612 27,288 29,817 8,198 3,324 50,502 164,922 ( 3,589) - $ 215,587 $ 436,418 December 31,2018	Reinsurance accountspayable
	(
	Reinsurance accounts receivable $ 52,759 30,522 29,108 28,642 17,976 56,277	Reinsurance accountspayable
		$ 94,846 21,958 4,654 61,838 2,782 301,743

175

Less: loss provisions ( 1,349 ) Net amount $ 213,935 $ 487,821

(II) Unearned premium reserve 1. Details of unearned premium reserve: Class December 31,2019 One-year commercial fire insurance $ 193,492 General automobile hull insurance for private vehicle 914,858 General automobile liabilities insurance for private vehicle 836,070 Mandatory automobile liabilities insurance for private vehicle 255,166 Personal accident insurance 397,695 Others 1,129,378 $ 3,726,659	December 31,2018	December 31,2018
		$ 221,479 895,514 756,844 257,023 561,701 1,339,566 $ 4,032,127

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

Details of retained unearned premium reserve:

December	31,2019
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 December	Ceded unearned premium reserve Ceded reinsurance (Note)(3) $ 302,532 37,876 356,645 110,827 231,408 38,164 $ 1,077,452 31,2018	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
	Ceded unearned premium reserve Ceded reinsurance (Note)(3) $ 353,219 39,697	Retained insurance (4)=(1)+(2)-(3)
Direct insurance (1) $ 643,729 96,763
		$ 321,082 60,947

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Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance	2,065,680 233,170 685,426 99,757 $ 3,824,525	144,148 20,976 1,735 6,290 $ 207,602	355,707 116,625 490,856 35,431 $ 1,391,535	1,854,121 137,521 196,305 70,616
				$ 2,640,592

Note: Presented as reinsurance contract assets.

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	2019
	Unearned premium reserve $ 4,032,127 3,726,659 ( 4,032,127) $ 3,726,659	Ceded unearned premium reserve
	(	(	$ 1,391,535 1,077,452 1,391,535) $ 1,077,452

(III)

Item Amount at the beginning of year Provisions made in current year Recoveries made in current year Amount at the end of year Claim reserve 1. Details of claim reserve: Class One-year commercial fire insurance General automobile hull insurance for private vehicle General automobile liabilities insurance for private vehicle Mandatory automobile liabilities insurance for	2018
	Unearned premium reserve $ 3,917,841 4,032,127 ( 3,917,841) $ 4,032,127 December 31,2019 $ 303,266 215,473 605,136 481,165	Ceded unearned premium reserve
		$ 1,216,881 1,391,535 ( 1,216,881) $ 1,391,535 December 31,2018
		$ 522,363 210,603 538,002 586,233

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private vehicle Mandatory motorcycle liabilities insurance General liabilities insurance Other insurance	150,177 204,552 531,464 $ 2,491,233	160,744 194,089 638,166
		$ 2,850,200

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

Details of retained claim reserve:

		December 31,2019	December 31,2019
Claim r	es	erve Assumed reinsurance (2) $ 815 806 40,565 12,244 - 3,413 57,843	Ceded claim reserve Ceded reinsurance (Note)(3) $ 172,105 7,609 109,857 124,539 7,900 16,706 438,716	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
					$ 170,965 32,516 624,443 136,536 8,690 34,146 1,007,296

(Continued next page)

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(Continued from previous page)

		December 31,2019	December 31,2019
Claim r	es	erve Ceded claim reserve Assumed reinsurance (2) Ceded reinsurance (Note)(3) $ 277 $ 23 - 13,026 149,708 270,406 4,756 18,495 - 55,212 1,382 7,256 156,123 364,418 $ 213,966 $ 803,134 December 31,2018		Retained insurance (4)=(1)+(2)-(3)
Direct underwritten insurance (1) $ 2,753 20,830 691,511 45,754 111,320 16,930 889,098 $ 2,277,267
					$ 3,007 7,804 570,813 32,015 56,108 11,056 680,803 $ 1,688,099
Claim r	es	erve Assumed reinsurance (2) $ 2,786 317 38,798 15,189 - 3,615 60,705 778 - 144,849 3,764 - 1,117 150,508 $ 211,213	Ceded claim reserve Ceded reinsurance (Note)(3) $ 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	Retained insurance (4)=(1)+(2)-(3)
Direct underwritten insurance (1) $ 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
					$ 266,614 56,106 602,372 132,442 3,667 58,056 1,119,257 5,492 7,122 587,266 33,792 40,963 7,311 681,946 $ 1,801,203

Note: Presented as reinsurance contract assets.

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

					20	19	19
Direct underwr	itt	en insurance	Assumed r	ei	nsurance	Net change in claim reserves (5)=(1)-(2) +(3)-(4)		Ceded re	ins	urance	Net change in ceded claim reserve (8)=(6)-(7)
Provisions(1)		Recoveries(2)	Provisions(3)		Recoveries(4)			Provisions(6)		Recoveries(7)
$ 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		$ 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	$ 815 806 40,565 12,244 - 3,413 57,843 277 - 149,708 4,756 - 1,382 156,123 $ 213,966		$ 2,786 317 38,798 15,189 - 3,615 60,705 778 - 144,849 3,764 - 1,117 150,508 $ 211,213 20	($ 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) 18		$ 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		$ 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	($ 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)
Direct underwr	itt	en insurance	Assumed r	ei	nsurance		Net change in claim reserves (5)=(1)-(2) +(3)-(4)	Ceded re	ins	urance		Net change in ceded claim reserve (8)=(6)-(7)
Provisions(1)		Recoveries(2)	Provisions(3)		Recoveries(4)			Provisions(6)		Recoveries(7)
$ 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		$ 395,459 76,501 606,330 203,468 23,973 155,491 1,461,222 3,014 7,386 611,258 35,669 58,579 4,678 720,584 $ 2,181,806	$ 2,786 317 38,798 15,189 - 3,615 60,705 778 - 144,849 3,764 - 1,117 150,508 $ 211,213		$ 25,745 1,853 41,052 14,445 5 5,044 88,144 7,961 - 140,531 3,619 1 1,485 153,597 $ 241,741	$ 149,236 88,070 68,574 14,028 ( 17,051) ( 78,701) 224,156 ( 5,186) 150 183,689 ( 1,446) 21,286 4,004 202,497 $ 426,653		$ 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		$ 199,886 13,921 109,507 96,301 12,790 51,774 484,179 3 892 250,556 11,237 30,719 1,272 294,679 $ 778,858	$ 103,940 96,397 4,077 3,198 ( 9,530) ( 27,996) 170,086 294 ( 478) 97,656 ( 7,187) 8,184 1,584 100,053 $ 270,139

Changes in claim reserves and ceded claim reserves:

2019

Changes in claim reserves	and ceded claim reserves: 2019
Item Amount at the beginning of year Provisions made in current year Recoveries made in current year Amount at the end of year	Claim reserve $ 2,850,200 2,491,233 ( 2,850,200) $ 2,491,233		Ceded claim reserve
	(	(	$ 1,048,997 803,134 1,048,997) $ 803,134

180

2018

2018	2018
Item Claim reserve Amount at the beginning of year $ 2,423,547 Provisions made in current year 2,850,200 Recoveries made in current year ( 2,423,547) Amount at the end of year $ 2,850,200 (IV) Special claim reserve 1. Details of special claim reserve: Nature Class December 31, 2019 Major incident Commercial earthquake insurance $ 90,760 Typhoon and flood insurance 63,558 154,318 Change of risk Mandatory automobile liabilities insurance for private vehicle 35,881 Mandatory commercial automobile liabilities insurance ( 102,353) Mandatory motorcycle liabilities insurance 538,007 Nuclear risks insurance 74,687 Commercial earthquake insurance 587,411 Typhoon and flood insurance 184,083 Government-regulated earthquake insurance 197,531 1,515,247 $ 1,669,565			Ceded claim reserve
		$ 778,858 1,048,997 ( 778,858) $ 1,048,997 December 31, 2018
	$ 90,760 63,558 154,318 35,881 ( 102,353) 538,007 74,687 587,411 184,083 197,531 1,515,247 $ 1,669,565	$ 94,707 66,321 161,028 21,932 ( 111,906 ) 560,834 74,687 587,411 184,082 197,532 1,514,572 $ 1,675,600

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

insurance:
Item Amount at the beginning of year Provisions made in current	2019 $ 470,860 23,501	2018
		$ 539,052 -

181

year Recoveries made in current year ( Amount at the end of year	22,826) ( $ 471,535	68,192) $ 470,860

Special claim reserve - voluntary automobile/motorcycle liabilities insurance

20	20	20	19
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 20				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 18	Change of risk $ 970,079 163,547 ( 21,717) $ 1,111,909		Total
		(	18	(	(	$ 1,474,249 229,169 21,717) $ 1,681,701
Special				Special reserve
Major incident $ 167,738 - ( 6,710) $ 161,028	Change of risk $ 1,043,712 - - $ 1,043,712		Major incident $ 436,821 67,349 - $ 504,170	Change of risk $ 828,713 166,807 ( 25,441) $ 970,079		Total
		(		(	(	$ 1,265,534 234,156 25,441) $ 1,474,249

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 Letter No. Jin-Guan-Bao-Cai-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$958,425,000 (net of NT$239,606,000 tax impact) against an increase in special reserve of the same amount as of December 31, 2019; meanwhile, net income for the period from January 1 to December 31, 2019 would have fallen by NT$5,368,000 and earnings per share would have reduced by NT$0.02.
(V) Deficiency reserve

T$0.02. rve
Decembe	r 31,2019
Deficiencyreserve Direct insurance Assumed reinsurance	Deficiency reserve for ceded coverage Ceded reinsurance Retained insurance

182

Aviation Insurance Professional liability insurance Fishing Vessel Insurance Vessel hull insurance Health Insurance Engineering insurance		(1) $ 1,424 2,376 8,035 605 368 5,153 $ 17,961		(2) $ - 18 307 - - 6,007 $ 6,332		(Note)(3) $ - - 7,564 - - - $ 7,564	(4)=(1)+(2)-(3)	(4)=(1)+(2)-(3)
								$ 1,424 2,394 778 605 368 11,160 $ 16,729

December	31,2018
Deficiencyreserve Direct insurance (1) Assumed reinsurance (2) $ 924 $ - 8,718 1,058 6,913 221 540 - 1,017 - 6,180 3,600 $ 24,292 $ 4,879	Deficiency reserve for ceded coverage Ceded reinsurance (Note)(3) $ - - 6,686 - - - $ 6,686	Retained insurance (4)=(1)+(2)-(3)
Direct insurance (1) $ 924 8,718 6,913 540 1,017 6,180 $ 24,292
			$ 924 9,776 448 540 1,017 9,780 $ 22,485

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

(VI) Retained earned premium revenue

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

Class	Premium revenues (1)	Reinsurance Premium (2)	Reinsurance premiums expense (3)	Retained premium (4)=(1)+(2)-(3)

183

Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance	$ 788,254 6,086,800 $ 6,875,054	$ 258,074 146,511 $ 404,585	$ 327,486 1,598,132 $ 1,925,618	$ 718,842 4,635,179
				$ 5,354,021

For the voluntary automobile liabilities insurance, a sum of NT$12,174,000 was contributed to the stabilization fund using applicable percentages in 2019.

Class 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)+ (7)-(8) Provisions(5) Recoveries(6) Provisions(7) Recoveries(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)=(10)-(11) Retained earned gross premium (13)=(4)-(9)+(12) Provisions(10) Recoveries(11) $ 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)+ (7)-(8) Provisions(5) Recoveries(6) Provisions(7) Recoveries(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)=(10)-(11) Retained earned gross premium (13)=(4)-(9)+(12) Provisions(10) Recoveries(11) $ 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

	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

The following shows amount and calculation of retained earned gross premiums for the Company's mandatory and voluntary automobile liabilities insurance in 2018:

Class Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance		Premium revenues (1) $ 805,546 6,209,187 $ 7,014,733		Reinsurance Premium (2) $ 253,009 130,836 $ 383,845		Reinsurance premiums expense (3) $ 336,642 1,670,000 $ 2,006,642	Retained premium (4)=(1)+(2)-(3)	Retained premium (4)=(1)+(2)-(3)
								$ 721,913 4,670,023 $ 5,391,936

For the voluntary automobile liabilities insurance, a sum of NT$12,418,000 was contributed to the stabilization fund using applicable percentages in 2018. Direct written insurance Assumed reinsurance unearned Net change in unearned premium reserve premium reserve unearned premium reserve Class Provisions (5) Recoveries (6) Provisions (7) Recoveries (8) (9)=(5)-(6)+

184

Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance Item	(7)-(8) $ 319,204 $ 316,341 $ 144,164 $ 138,637 $ 8,390 3,505,321 3,402,702 63,438 60,161 105,896 $ 3,824,525 $ 3,719,043 $ 207,602 $ 198,798 $ 114,286 Ceded reinsurance unearned premium reserve Net change in ceded unearned premium reserve (12)=(10)-(11) Retained earned gross premium (13)=(4)-(9)+(12) Provisions(10) Recoveries(11) $ 191,527 $ 189,814 $ 1,713 $ 715,236 1,200,008 1,027,067 172,941 4,737,068 $ 1,391,535 $ 1,216,881 $ 174,654 $ 5,452,304	(7)-(8) $ 319,204 $ 316,341 $ 144,164 $ 138,637 $ 8,390 3,505,321 3,402,702 63,438 60,161 105,896 $ 3,824,525 $ 3,719,043 $ 207,602 $ 198,798 $ 114,286 Ceded reinsurance unearned premium reserve Net change in ceded unearned premium reserve (12)=(10)-(11) Retained earned gross premium (13)=(4)-(9)+(12) Provisions(10) Recoveries(11) $ 191,527 $ 189,814 $ 1,713 $ 715,236 1,200,008 1,027,067 172,941 4,737,068 $ 1,391,535 $ 1,216,881 $ 174,654 $ 5,452,304

	Provisions(10) $ 191,527 1,200,008 $ 1,391,535
Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance		$ 715,236 4,737,068 $ 5,452,304

(VII) Retained claims

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

31, 2019:
Class 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

The following shows amount and calculation of retained claims for the Company's mandatory and voluntary automobile liabilities insurance as of December 31, 2018:

31, 2018:
Class Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance	Insurance claims (including claim-related expenses) (1) $ 588,603 3,379,212 $ 3,967,815	Claims paid for reinsurance (2) $ 245,883 61,126 $ 307,009	Claims recovered from reinsurers (3) $ 352,377 874,647 $ 1,227,024	Retained claims (4)=(1)+(2)-(3)
					$ 482,109 2,565,691 $ 3,047,800

(VIII) Policyholders' reported claims liability

Policyholders' reported and paid/unpaid claims liability:

December 31, 2019

185

Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/heal th insurance Other insurance	Insurance claimspayable Reported and paid $ - - - - - - $ -			Claim reserves	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

186

December 31, 2018

Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance	Insurance claimspayable Reported and paid $ - - - - 31 4,414 $ 4,445			Claim reserves	Claim reserves
			Reported but notpaid $ 570,440 166,424 715,956 231,941 6,927 81,834 $ 1,773,522		Not reported $ 5,789 7,536 935,478 37,842 79,866 10,167 $ 1,076,678		Total
							$ 576,229 173,960 1,651,434 269,783 86,793 92,001 $ 2,850,200

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	2019 Actualpayments $ 4,968 17,977 76,637 11,682 49,562 6,266 167,092 ( 1,010) $ 166,082	2018 Actualpayments
	(	(	$ 73,191 5,100 83,489 17,230 67,081 1,915 248,006 1,803) $ 246,203

Reinsurance contract asset - please refer to Note 36(3) for the amount of ceded claim reserve provided on policyholders' reported and unpaid and unreported claims liability.

(IX) Retention limits by insurance category

Class Fire Insurance Engineering insurance Liabilities insurance Cargo insurance	2019 $ 250,000 250,000 150,000 75,000	2018
		$ 250,000 250,000 150,000 75,000

(Continued next page)

187

(Continued from previous page)

Class Vessel hull insurance Fishing Vessel Insurance Automobile hull insurance Automobile third-party liability insurance (per incident) Automobile passenger liability insurance (per incident) Personal accident insurance Health insurance	2019 $ 60,000 60,000 13,800 202,400 644,000 30,000 2,000	2018
		$ 60,000 60,000 13,800 202,400 644,000 30,000 2,000

(X) Acquisition costs for insurance contracts

	2019	2019
Commission Expenses $ 87,770 29,878 618,723 53,260 111,155 26,270 $ 927,056	Service Charges Reinsurance commission expense $ - $ 4,789 - 1,012 139,269 - - 10,853 - 128 - 2,299 $ 139,269 $ 19,081 2018		Total
			$ 92,559 30,890 757,992 64,113 111,283 28,569 $1,085,406
Commission Expenses $ 90,778 37,445 607,598 55,542 99,673 22,429 $ 913,465	Service Charges $ - - 145,802 - - - $ 145,802	Reinsurance commission expense $ 4,303 2,308 - 7,768 105 1,681 $ 16,165	Total
			$ 95,081 39,753 753,400 63,310 99,778 24,110 $1,075,432

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

188

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

2019

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

Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance					2018	2018	2018
		Premium revenues (1)	Net change in unearned premium reserve (2)		Acquisition costs for insurance contracts (3)	Insurance claims (including claim-related expenses) (4)		Net change in claim reserves (5)		Profit (loss) on insurance (6)=(1)-(2)-(3) -(4)-(5)
		$ 1,002,349 424,498 4,324,341 375,629 664,137 223,779 $ 7,014,733	( $ 35,713) 2,967 ( 40,402) ( 23,087) 197,477 4,240 $ 105,482		$ 90,778 37,445 753,400 55,542 99,673 22,429 $ 1,059,267		$ 322,421 234,758 2,739,749 159,166 440,358 71,363 $ 3,967,815	(	$ 174,192 89,756 250,199 11,693 4,241 72,900) $ 457,181	$ 450,671 59,572 621,395 172,315 ( 77,612) 198,647 $ 1,424,988

Profitability analysis for assumed reinsurance:

2019

Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance		Reinsurance Premium (1)	Net change in unearned premium reserve (2)		Reinsurance commission expense (3)		Claims paid for reinsurance (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					( $ 2,472) 489 6,626 ( 1,953) - 63 $ 2,753	$ 51,283 ( 518) ( 13,095) ( 12,838) 3,069 14,007 $ 41,908
		Reinsurance Premium (1)	Net change in unearned premium reserve (2)		Reinsurance commission expense (3)	Claims paid for reinsurance (4)		Net change in claim reserves (5)	Profit (loss) on assumed reinsurance (6)=(1)-(2)-(3) -(4)-(5)

189

Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance	$ 61,964 ( $ 1,499) 14,300 939 253,011 5,514 38,139 4,082 3,566 ( 228) 12,865 ( 4) $ 383,845 $ 8,804	$ 4,304 2,308 - 7,768 104 1,681 $ 16,165	$ 26,126 ( $ 30,142) $ 63,175 12,618 ( 1,536) ( 29) 245,883 2,064 ( 450) 17,693 889 7,707 752 ( 6) 2,944 3,937 ( 1,797) 9,048 $ 307,009 ($ 30,528) $ 82,395

190

Current profit/loss recognized on ceded insurance contracts:

2019

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

Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance					2018	2018	2018
		Reinsurance premiums expense (1)	Net change in ceded unearned premium reserve (2)		Reinsurance Commission Received (3)		Claims recovered from reinsurers (4)	Net change in ceded claim reserve (5)	(Profit) loss on ceded reinsurance(6) =(1)-(2)-(3)-(4 )-(5)
		$ 572,253 127,629 679,537 170,444 331,438 125,341 $ 2,006,642	( $ 18,012) 2,502 ( 13,272) ( 10,104) 212,569 971 $ 174,654		$ 33,259 16,595 132,331 52,041 53,135 11,879 $ 299,240		$ 213,564 69,479 577,627 58,066 278,107 30,181 $ 1,227,024	$ 104,234 95,919 101,733 ( 3,989) ( 1,345) ( 26,413) $ 270,139	$ 239,208 ( 56,866) ( 118,882) 74,430 ( 211,028) 108,723 $ 35,585

(XII) Information on insurance risks

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

December 31, 2019

Average cost of claim	Single-varia ble Variation 5%	Effect on gross claims reserve Increase (decrease) $ 90,377	Effect on net claims reserve Increase (decrease) $ 65,062	Effect on pre-taxprofit Increase (decrease) ( $ 65,062 )	Pre-tax effect on owners' equity
					Increase (decrease)
					( $ 65,062 )

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

191

2. 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	2019	% 13.61 5.19 63.66 5.32 8.73 3.49 100.00	2019
	Direct written premiums $ 935,526 356,997 4,376,953 365,591 600,327 239,660 $ 6,875,054		Cumulative retained premiums (Note) $ 455,623 243,426 3,965,955 239,500 311,821 137,696 $ 5,354,021	%
				8.51 4.55 74.07 4.47 5.82 2.58 100.00

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:

		December 31,2019	December 31,2019
		Year	count
1 $ 27,675,814 3,062,421 3,518,890 2,844,485 3,350,844 2,878,243	2 $ 27,916,555 3,211,281 3,768,046 3,138,851 3,575,988	3 $ 27,909,051 3,211,712 3,753,540 3,155,289	4 $ 27,960,894 3,202,644 3,755,040	5 $ 27,970,281 3,213,926	6
					$ 27,927,338

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

(XIII) Credit risk, liquidity risk and market risk of insurance contracts

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."

192

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.

With regards to ceded reinsurance as of December 31, 2018, the Company was required to disclose ceded claim reserve for reported and unpaid liability totaling NT$266,000 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 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 substandard reinsurance premium expenses totaling NT$21,000, claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months totaling NT$94,000, and ceded claim reserve for reported and unpaid liability totaling NT$379,000. 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 substandard reinsurance premium expenses totaling NT$1,589,000, reinsurance commission revenues totaling NT$467,000, claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months totaling NT$472,000, and ceded claim reserve for reported and unpaid liability totaling NT$34,000.

193

for obligatory payments made to policyholders in the last 9 months, and NT$679,000 of ceded claim reserve for reported and unpaid liability) when preparing regulatory reports; however, this NT$2,050,000 of additional reserve and liability does not affect the Company's financial statements. 2. Liquidity risk of insurance contracts

The Company manages liquidity risk of its insurance contracts in three liquidity levels: Normal, Cautious and Critical. The Company's liquidity position as of December 31, 2019 was considered to be at the Normal level, which posed no concern of liquidity risk.

Market risk of insurance contracts

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

(XVI) 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, 2019	December 31, 2018	Liabilities	December 31, 2019	December 31, 2018
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	$ 1,089,353 8,511 16,055 23,744 50,416 - - 185,437 296,837 - -	$ 1,138,393 9,671 13,088 24,869 49,578 2,103 - 191,527 383,052 4,084 -	Notes payable Insurance claim and benefit payments payable Claims payable for reinsurance Reinsurance accounts payable Unearned premium reserve Claim reserve Special reserve Receipts in suspense and pending settlement Other liabilities	$ - - - 59,612 455,847 683,359 471,535 - -	$ - - - 61,838 463,368 820,244 470,860 55 -
Total assets	$ 1,670,353	$ 1,816,365	Total liabilities	$ 1,670,353	$ 1,816,365

Note: As at December 31, 2019 and 2018, NT$373,353,000 and NT$222,393,000 of which were presented as cash, while NT$716,000,000 and NT$916,000,000 of which were presented as other financial assets, respectively.

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Revenues and costs of mandatory automobile liabilities insuranceUnit: NTD thousands

		2019		2018
Revenue Pure premium revenues Reinsurance Premium Premium revenues Less: reinsurance premium expenses 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$261,884,000 and NT$245,883,000, respectively) Less: claims recovered from reinsurers Retained claims Net change in claim reserves Net change in special claim reserves Total operatingcosts	$ 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		$ 561,054 253,009 814,063 ( 336,642) ( 6,677) 470,744 5,579 $ 476,323 $ 834,486 ( 352,378) 482,108 62,407 ( 68,192) $ 476,323

XXXVII. Other disclosures

(I) 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 that 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.

(II) Information on invested businesses: None.

(III) Information relating to investments and business activities in the Mainland: None. XXXVIII. Segment information

Non-life insurance was the Company's primary and only major business segment in 2019 and 2018, therefore segment-by-segment disclosure of financial information is not required.

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VI. Latest audited consolidated financial statements: None.
VII. Any financial distress experienced by the Company or its affiliated enterprise and impacts on the Company's financial position in the last year up till the publication date of annual report: None.

Seven. Review of financial position, business performance and risk issues

I. Comparative analysis of financial position

tive analysis of financial position	tive analysis of financial position
			(in NT$1,000)
Year Item	2019	2018	Variation
			Amount	%
Cash	$ 1,860,014	$ 1,626,898	$ 233,116	14.33
Receivables	463,385	728,303	( 264,918)	( 36.37)
Financial assets and loans	9,023,322	8,288,023	735,299	8.87
Reinsurance Contracts Assets	2,269,819	2,907,356	( 637,537 )	( 21.93)
Property, Plant and Equipment	620,038	624,243	( 4,205 )	( 0.67)
Right-of-useasset	4,320	-	4,320	100
IntangibleAssets	7,203	10,955	( 3,752)	( 34.25)
Other assets	1,608,713	1,541,694	67,019	4.35
Total assets	15,856,814	15,727,472	129,342	0.82
Payables	725,268	769,330	( 44,062)	( 5.73)
Lease liabilities	4,139	-	4,139	100
Liabilityreserves	8,081,929	8,764,982	( 683,053 )	( 7.79)
Other liabilities	234,217	224,250	9,967	4.44
Total liabilities	9,045,553	9,758,562	( 713,009)	( 7.31)
Capital,fully paid	3,011,638	3,011,638	-	-
RetainedEarnings	3,392,600	2,929,970	462,630	15.79
Otherequityitems	407,023	27,302	379,721	1390.82
Totalequity	6,811,261	5,968,910	842,351	14.11

Explanation to significant variations amounting to NT$10 million or 20% or above: Receivables in 2019 were lower compared to 2018 mainly due to a decrease in premiums receivable and other receivables from disposal of security investment in 2019.

Reinsurance contract assets in 2019 were lower compared to 2018 mainly due to a decrease in claims recoverable from reinsurers and reserve credit in 2019.

Other equity items in 2019 were higher compared to 2018 mainly due to increase from valuation of equity instruments at fair value through other comprehensive income in 2019.

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II. Analysis of financial performance

(in NT$ 1,000)

					(in	NT$1,000)
Item		2019		2018	Variation	Variation %
Revenue Operating Cost Operating Expense Total operating income Non-operating income and expenses	(	$ 6,049,197 4,045,100 1,339,907 664,190 565)	(	$ 6,129,389 4,251,229 1,314,345 563,815 647)	($ 80,192) ( 206,129) 25,562 100,375 82	( 1.31) ( 4.85) 1.94 17.80 ( 12.67)
Pre-tax profit from continuing operations Income tax Current net income from continuingoperations		663,625 82,657 $ 580,968		563,168 71,859 $ 491,309	100,457 10,798 89,659	17.84 15.03 18.25

(I). Explanation to significant variations of 10% or above:
Operating profit and net income for 2019 were higher compared to 2018 mainly due to lower net changes in insurance liability provisions in 2019.
Income tax in 2019 was higher compared to 2018 mainly due to an increase in pre-tax profit in 2019.
Increase in non-operating income and expenses in 2019 over 2018 was mainly due to a decrease of property obsolescence loss in 2019.
(II). Future response plans: The Company shall continue focusing on its core business activities while at the same time explore improvements with a focus on stability, pragmatism, and innovation. In terms of asset allocation, the Company will strive to raise capital efficiency and asset yields.

III. Cash flow variation analysis

(in NT$ 1,000)

				(in NT$1,000)	(in NT$1,000)
Opening cash balance	Net cash flow from operating activities for the year	Cash outflow for the year	Cash surplus (deficit)	Financing of cash deficits
				Investment plans	Financing plans
1,626,898	394,147	(161,031)	1,860,014	-	-
1. Analysis of cash flow for the year: (1) Operating activities: Net cash inflow of NT$394,147,000 was mainly attributed to disposal of financial assets at fair value through profit or loss and a decrease in reinsurance contract assets. (2) Investing activities: Net cash outflow of NT$11,608,000 was mainly due to acquisition of property, plant and equipment and intangible assets. (3) Financing activities: Net cash outflow of NT$149,423,000 was mainly due to payment of cash dividends. 2. Responsive measures and liquidity analysis for cash flow deficit: None. 3. Liquidity analysis for the next year:

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Opening cash balance	Projected net cash flow from operating activities for the year	Expected cash outflow for the year	Expected cash surplus (deficit)	Financing of projected cash deficits	Financing of projected cash deficits
				Investment plans	Financing plans
1,860,014	115,757	(207,757)	1,768,014	-	-

IV. Material capital expenditures in the last year and impacts on business performance: None.
V. Causes of profit or loss incurred on investments in the last year, and any improvements or investments planned for the next year: None.
VI. Risk management issues in the last year up till the publication date of this annual report that were subject to evaluation:
(I) Impact of interest rate, exchange rate, and inflation on the Company’s earnings, and response measures:
Interest rate: The spread of COVID-19 has severely impacted the global supply chain and undermined international trade, consumption and economic activities, inducing extreme volatility to financial markets around the world. Meanwhile, collapse of commodity prices including oil puts the world at risk of deflationary pressure. During the central bank's board meeting held on March 19, 2020, concerns about the deteriorating global economic outlook and extreme volatility in financial markets around the world were brought to attention, and a reduction of policy interest rate was considered necessary to help manufacturers avoid supply chain disruption and service providers avoid financial distress, while at the same time provide the proper support for businesses to maintain normal operations and stabilize the financial system amidst the pandemic. The central bank's decision to reduce rediscount rate, the rate on accommodations with collateral and rate on accommodations without collateral by 0.25 percentage point each from 1.375%, 1.75% and 3.625% to 1.125%, 1.5% and 3.375%, respectively, effective since March 20, 2020, may have somewhat adverse effects on the Company's use of capital. As a result, the Company will continue to increase holding positions of low-risk, high-yield fixed income assets such as government bond and real estate instrument for higher investment gains.
Exchange rate: The Company maintains close contact with banking partners and consults experts for opinions and the latest financial information. The Company constantly obtains banks' view and data on exchange rate movements, and thereby keeping itself informed of the latest developments at all times.
Inflation: Not applicable.
(II) Policies on high-risk and highly leveraged investments, loans to third parties, endorsements / guarantees, and trading of derivatives; describe the main causes of any profit or loss incurred and future response measures:
The Company did not engage in any high-risk or highly leveraged investment or transactions such as endorsement, guarantee, or trading of derivatives.
The Company has policies in place to govern loans to third parties, and the policies require third-party loans to be priced at 1.5% above the time deposit rates quoted by Chang Hwa Bank, First Commercial Bank, and Hua Nan Bank. The Company treats third-party loan as a form of stable income, but currently has no balance outstanding.
(III) Future research and development plans and projected expenses:
Future R&D plans:

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The Company is a non-life insurance service provider; its future R&D activities mostly involve modification of existing products and introduction of new products. New insurance products should primarily consist of liability insurance policies combined with riders.

Projected R&D expenses: The Company's new products are developed by various insurance departments in their respective areas of expertise. Their proposals are reviewed and priced by the Actuarial Department before submitting to the competent authority for acknowledgment or approval. As a result, no further R&D expense needs to be invested in the future.

(IV) Financial impacts and response measures due to change of local and foreign regulations in recent years:

In an attempt to enhance corporate governance within the insurance industry and provide additional support to directors in regards to their duties, the Financial Supervisory Commission made partial amendments to "Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises," which explicitly requires all insurance companies to assign adequate number of competent corporate governance personnel depending on the size, nature and needs of its business, as well as one Corporate Governance Officer.
In compliance with the new regulation, the Company has amended its internal policies and appointed one Corporate Governance Officer to oversee governance-related affairs, assist the board of directors in various functions, and thereby ensure compliance.
(V) Financial impacts and response measures due to technological or industrial changes in the last year: None.
(VI) Crisis management, impacts, and response measures due to change of corporate image in the last year: None.

(VII) Expected benefits, risks and response measures in relation to mergers and acquisitions undertaken in the last year: None.

(VIII) Expected benefits, risks and response measures associated with plant expansions in the last year: None.

(IX) Risks and response measures associated with concentrated sales or purchases in the last year: None.
(X) Impacts, risks and response measures following a major transfer of shareholding by directors, supervisors, or shareholders with more than 10% ownership interest in the last year: None.
(XI) Impacts, risks and response measures associated with a change of management: None.
(XII) Major litigations, non-contentious cases, or administrative litigations involving the Company or any director, supervisor, president, person-in-charge or major shareholder with more than 10% ownership interest, whether concluded or pending judgment, that are likely to pose significant impact to shareholders' equity or security prices of the Company. Disclose the nature of dispute, the amount involved, the date the litigation first started, the key parties involved, and progress as of the publication date of the annual report: None.
(XIII) Other significant risks and response measures:
In order to ensure the stability of the financial market and protect the interests of financial consumers, the Company has carried out information security protection operations, raised its personnel's awareness in and enhanced its personnel's professional functions related to information security, and reported to the Board of Directors the overall implementation of the information security measures. On March 26, 2020, the head of the Company's unit in charge of information security submitted a statement about the overall implementation of the information security measures in the

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period from January 1, 2019 to December 31, 2019 to the Board of Directors, and has taken improvement measures on the matters to be improved (such as adjustments to ISMS target, user account review etc.).

VII. Other important disclosures: None.

Eight. Special Remarks

I. Affiliated companies: None.

II. Private placement of securities in the last year up till the publication date of this annual report: None.

III. Holding or disposal of the company's shares by subsidiaries in the last year, up till the publication date of this annual report: None.

IV. Other supplementary information: None.

Nine. Any occurrence of event defined under Subparagraph 2, Paragraph 3, Article 36 of the Securities and Exchange Act in the previous year up till the publication date of this annual report that significantly impacted shareholders’ equity or security prices : None.

The First Insurance Co., Ltd. Chairman C. H. Lee

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AI assistant

FIRST INS — Annual Report 2019

52208_rns_2020-06-29_b3cb5e5b-53e5-4a25-b942-81e2f5d338e0.pdf

The First Insurance Co., Ltd.

2019 Annual Report

I. Spokesperson

II. Acting Spokesperson

III. Address and contact number of the headquarter, branches and offices (Please refer to page 5)

IV. Name, address, and contact number of share administration agency:

V. Name of CPA and the name, address, and contact number of the accounting firm for the latest financial report:

VI. Name of overseas exchange where securities are listed, and method of inquiry: None.

Table of contents

One. Letter to Shareholders

Chairman C. H. Lee

Two. Company Overview

III. Company history (I) Date of establishment:

2003

2004

2005

2006

2008

2009

2013

Three. Corporate Governance Report

I. Organization System

(I) Organizational Structure

II. Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:

(I) Directors

1. Profiles of Directors

2. Professional standing and independence of the Independent Directors

(II) Profiles of the President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches

1. Compensation to non-independent and independent directors (aggregate disclosure of directors' names and range of remuneration)

Payment scale

2. Compensation to supervisors (aggregate disclosure of Supervisors' names and compensation range)

Payment scale

3. Compensation to the President and Executive Vice Presidents (aggregate disclosure of name and compensation)

Payment scale

III. The pursuit of corporate governance

(I) Functionality of Board of Directors

(II) Authority:

(III) Empowerment:

(IV) Disclose the composition, responsibilities, and functioning of remuneration committee, if available:

1. Information of Remuneration Committee members

Note:

(V) Fulfillment of social responsibilities:

Fulfillment of social responsibilities and deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies.

Members and function of the committee:

(VI) Integrity policies and practices:

Enforcement of business integrity, deviation and causes of deviation from Ethical Corporate Management - Best Practice Principles for TWSE/TPEx Listed Companies

The First Insurance Co., Ltd. Statement of Declaration of Internal Control

The First Insurance Co., Ltd. Areas of Improvement and Rectification of the Internal Control System (Date: December 31, 2019)

Auditor’s Report on Internal Control System

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

V. Change of CPA:

Four. Funding Status

II. Shareholder structure

III. Diversity of ownership

IV. List of major shareholders:

Five. Operational Overview

I. Business activities

(I) Business activities:

1. Main business activities:

2. Revenue weight of main products:

(II) Industry overview:

2. Product locations:

(1) Supply

(2) Demand

4. Opportunities and threats:

2. Production process

III. Employee information in the last 2 years up till the publication date of this annual report

VI. Major contracts

Six. Financial Status

I. Summary balance sheet and statement of comprehensive income for the last 5 years (I) Summary balance sheet

(II) Summary statement of comprehensive income

II. Financial analysis for the last 5 years

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

The First Insurance Co., Ltd. Audit Committee Report

For

Audit Committee convener:

March 26, 2020

FIRST INS Annual Report 2019