Skip to main content

AI assistant

Sign in to chat with this filing

The assistant answers questions, extracts KPIs, and summarises risk factors directly from the filing text.

Sign up Log in

FIRST INS Annual Report 2020

Aug 18, 2021

52208_rns_2021-08-18_074aef0c-50a9-48e2-8065-d3a4afdf7e9c.pdf

Annual Report

Open in viewer

Opens in your device viewer

Stock ID: 2852

The First Insurance Co., Ltd.

2020 Annual Report

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

Published June 6, 2021

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: Assistant Vice President 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 6)

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: https://www.deloitte.com.tw

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

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

==> picture [191 x 617] intentionally omitted <==

Table of contents

One. Letter to Shareholders.........................................................................................................3
Two. Company Overview .............................................................................................................6
I. Date of establishment ......................................................................................................6
II. Address and contact number of the headquarter, branches and offices.............................. 6
III. Company history ............................................................................................................. 8
**Three. ** Corporate Governance Report.........................................................................................14
I. Organization System...................................................................................................... 14
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 .......................................................................................... 78
V. Information on replacement of CPA............................................................................... 80
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 ....................................................................................................................... 80
VII. Changes in shareholding by Directors, Managers and dominant shareholders
in the most recent year to the day this report was printed............................................... 80
VIII.Information on the relations among the top 10 shareholders of the Company
by quantity of shareholding........................................................................................... 83
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..................... 85
Four. Funding Status....................................................................................................................86
I. Capital, shares, corporate bonds, preferred shares, global depositary receipt, employee
stock options and M&A (including merger, acquisition and divestment)........................ 86
II. Progress on planned use of capital ................................................................................. 88
Five. Operational Overview .......................................................................................................94
I. Business activities ......................................................................................................... 94
II. Market and sales overview............................................................................................. 96
III. Employee information in the last 2 years ..................................................................... 100
IV. Contribution to environmental protection..................................................................... 100
V. Labor-management agreement..................................................................................... 100
VI. Major contracts............................................................................................................ 101
Six. Financial Status................................................................................................................102
I. Summary balance sheet and statement of comprehensive income for the last 5 years... 102
II. Financial analysis for the last 5 years........................................................................... 103
III. Other information material to understanding the company’s financial position,
financial performance, cash flow, and changes ............................................................ 105
IV. Audit Committee’s report on the review of the latest financial report........................... 106
V. Independent auditor’s report and financial statements for the most recent year............. 107
VI. Latest audited consolidated financial statements .......................................................... 200
VII. Any financial distress experienced by the Company or its affiliated enterprise and
impacts on the Company’s financial position in the last year until the publication
date of the annual report.............................................................................................. 200
Seven. Review of financial position, business performance and risk issues .............................201
I. Comparative analysis of financial position................................................................... 201

==> picture [193 x 624] intentionally omitted <==

1

II. Analysis of financial performance................................................................................ 201
III. Cash flow variation analysis ........................................................................................ 202
IV. Material capital expenditures in the last year and impacts on business performance..... 203
V. Causes of profit or loss incurred on investments in the last year, and any
improvements or investments planned for the next year............................................... 203
VI. Risk management issues .............................................................................................. 203
VII. Other important disclosures ......................................................................................... 205
Eight. Special Remarks...............................................................................................................206
I. Affiliated companies.................................................................................................... 206
II. Private placement of securities in the last year up till the publication date of
this annual report......................................................................................................... 206
III. Holding or disposal of the company’s shares by subsidiaries in the last year,
up till the publication date of this annual report........................................................... 206
IV. Other supplementary information ................................................................................ 206
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..............................................................................................................206

==> picture [193 x 624] intentionally omitted <==

2

One. Letter to Shareholders

Ladies and gentlemen:

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

First of all, the outbreak of the COVID-19 epidemic in the first half of 2020 caused the consumption and investment momentum to decline. Therefore, the production and trading activities were shrinking rapidly. The global economy declined in the short term or mid-term. Notwithstanding, in consideration of the adequate epidemic prevention policy adopted by Taiwan, the domestic production capacity of semi-conductor, information communications and audio/video products was expanded significantly. The return of Taiwanese businessmen resulted in the expansion of investment and production capacity in response to the emerging applications, such as 5G and high-performance computing, and business opportunities for work from home driven by the epidemic, thus helping mitigate the impact. In the second half of 2020, the global terminal demand declined due to the epidemic and, therefore, was disadvantageous to the expansion of Taiwan’s foreign trade and the epidemic drove online shopping at home. Besides, the government’s bailout policy also boosted the domestic economic recovery and helped the private consumption growth momentum. According to the forecast by the Directorate-General of Budget, Accounting and Statistics, Executive Yuan, the economic growth rate in 2020 was 2.97%, i.e. YOY 0.27% from 2.71% in 2019.

  • Below is a summary of the Company’s 2020 operational performance and 2021 business plans:

  • I. 2020 operational performance:

  • (I) Written premium revenues by insurance category:

operational performance:
Written premium revenues by insurance category:		 operational performance:
Written premium revenues by insurance category:		 operational performance:
Written premium revenues by insurance category:
Unit: NTD thousands
Insurance category
2020
2019
Fire
1,049,319
1,076,828
Marine
303,401
356,998
Motor
4,916,677
4,549,863
Others
793,487
891,365
Total
7,062,884
6,875,054
Insurance category 2020 2019
Fire 1,049,319 1,076,828
Marine 303,401 356,998
Motor 4,916,677 4,549,863
Others 793,487 891,365
Total 7,062,884 6,875,054

(II) Budget execution:

The Company did not publish an auditor-certified financial forecast for 2020, hence is not required to explain budget accomplishment.

(III) Income and expense:

The Company generated NT$5,854,672,000 of revenues in 2020 and incurred NT$4,246,729,000 of operating costs and NT$1,399,892,000 of operating expenses, which produced NT$208,051,000 of operating profit. After deducting income tax expense of NT$53,063,000, net income was concluded at NT$152,882,000.

(IV) Profitability analysis:

of NT$53,063,000, net income
Profitabilityanalysis:		 was concluded at NT$
Return on Asset 0.96%
Return on Equity 2.25%
Net Investment Income Ratio 1.98%
Return on Investment 1.84%
Combined Ratio 96.10%
Retained Expense Ratio 39.51%
Retained Earned Loss Ratio 56.59%
Earningsper share NT$0.51

==> picture [193 x 624] intentionally omitted <==

3

(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 2020, the Company submitted applications for 110 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 2021 business plan: (I) Operational guidelines: * Business guidelines 1. Practice the underwriting policy and strengthen the control over claims in order to increase the profit from underwriting.

  • Upgrade the percentage of niche business underwriting and strive for fine-quality customers and bancassurance partners.

  • Promote the digital transformation and expand potential customers through the digitalization of products and services.

  • Customer service guidelines 1. Improve the grievance mechanism’s response and processing as the basis for improvement.

  • Practice the fair treatment policy and user-friendly financial services to improve the protection of financial consumers’ interests and rights.

  • Upgrade colleagues’ profession and service quality, and strengthen the knowledge about protecting financial consumers and compliance with related laws and regulations.

  • Risk management and financial investment guidelines 1. Consider the fund utilization primarily based on safety, income and liquidity principles.

  • Utilize re-insurance channels, expand underwriting capacity and adjust risk over business structure.

  • Evaluate based on characteristics of various business insurance types, practice risk management, and ensure capital adequacy and solvency.

(II) Business objectives: Projected percentage of insurance sales for 2021: 1. Fire insurance 17.75%. 2. Marine insurance 5.77%. 3. Auto insurance 63.86%. 4. Other insurance 13.62%.

(III) Key production/sales policies: 1. Create a diversified marketing network and design suitable products for customers of different distribution channels.

  1. Adopt a client-oriented approach and raise customers’ satisfaction and loyalty by introducing high value-adding services.

  2. Form alliances with participants of different industries for further expansion of service scope and customer reach.

  3. Introduce customized products as a means to increase direct sales.

In November 2020, Taiwan Ratings Corp. published the Company’s credit rating and financial

==> picture [193 x 624] intentionally omitted <==

4

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.

Looking forward to 2021, internationally, the trade war and technology war between China and the USA remains unresolved, the increased trade conflict between China and Australia, the expanding Protectionism globally, prolonged Brexit, effective control over COVID-19 epidemic remaining uncertain, lockdown policies that disrupt the economic activities, tremendous debts all over the world and geopolitical risks are all the risk variables critical to the economic outlook. According to the latest forecast provided by leading international organizations, the global economic growth rate might range from 4.2% to 5.5%. Domestically, in terms of private consumption, the nationals’ domestic consumption has grown significantly due to the epidemic. Meanwhile, the employees’ salary remains growing positively, and the increase in basic living expenses may help increase the individual income tax deductions and also the nationals’ disposable income. Private consumption is expected to bottom up strongly therefor. The private investment is expected to keep increasing under the circumstance that the semi-conductor industry launches the high-end production process. The investment in green power, such as offshore wind power, is continuing. According to the latest forecast provided by leading international organizations, Taiwan’s economic growth rate might range from 4.24% to 4.64% and appears to grow stably. 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

==> picture [193 x 624] intentionally omitted <==

5

==> picture [193 x 624] intentionally omitted <==

Two. Company Overview

Two.
Company Overview		 Two.
Company Overview		 Two.
Company Overview		 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
10F and 11F, No. 54, Section 1, Zhongxiao East
Road, Zhongzheng District, Taipei City
(02)2391-3271
New Taipei City
Branch Office
16F, No. 37, Section 2, Sanmin Road, Banqiao
District, New Taipei City
(02)2964-9588
Taoyuan-Hsinchu
Branch Office
21F-2, No. 398, Huanbei Road, Zhongli District,
Taoyuan City
(03)426-2666
Taichung Branch
Office
9F, No. 726, Section 1, Taiwan Boulevard, West
District, Taichung City
(04)2201-3135
Tainan Branch Office
6F, No. 515, Chenggong Road, West Central
District, Tainan City
(06)258-5200
Kaohsiung Branch
Office
4F and 5F, No. 263, Siwei 3rd Road, Lingya
District, Kaohsiung City
(07)335-5669
Keelung Service
Center
4F, No. 11, Ai 9th Road, Renai District, Keelung
City
(02)2422-2279
Neihu Service Center
4F-1, No. 160, Section 6, Min Chuan East Road,
Neihu District, Taipei City
(02)2792-7902
Zhonglun Service
Center
1F and 2F, No. 26, Section 4, Bade Road,
Songshan District, Taipei City
(02)2764-5190
Sanchong Service
Center
1F and 2F, No. 46, Zhongzheng North Road,
Sanchong District, New Taipei City
(02)2981-3365
Xinshu Service Center 15F-1, No. 229, Xintai Road, Xinzhuang District,
New Taipei City
(02)2998-8600
Luzhou Service
Center
1F, No. 707, Changrong Road, Luzhou District,
New Taipei City
(02)2282-0978
Xindian Service
Center
11F, No. 103, Minquan Road, Xindian District,
New Taipei City
(02)8667-1586
Taitung Service Center No. 503, Xinsheng Road, Taitung City, Taitung
County
(08)932-2380
Hualien Service
Center
No. 215, Zhongzheng Road, Hualien City,
Hualien County
(03)832-3346
Lanyang Service
Center
6F, No. 338-6, Gongzheng Road, Luodong
Township, Yilan County
(03)955-0511
Taoyuan Service
Center
5F-2, No. 9, Jingguo Road, Taoyuan District,
Taoyuan City
(03)358-8328
Bade Service Center
2F, No. 234 & 236, Section 1, Jieshou Road, Bade
District, Taoyuan City
(03)367-2132
Hsinchu Service
Center
10F-5, No. 9, Section 3, Zhonghua Road, North
District, Hsinchu City
(03)523-9789
Toufen Service Center 2F, No. 485, Zhongyang Road, Toufen Town,
Miaoli County
(037)681-012
Miaoli Service Center No. 428--1, Zhigong Road, Miaoli City, Miaoli
County
(037)327-665
Fengyuan Service
Center
No. 52, Fengdong Road, Fengyuan District,
Taichung City
(04)2522-3928
Taichung Service
Center
No. 181, Section 8, Taiwan Boulevard, Wuqi
District, Taichung City
(04)2662-5539
Chunglung Liaison
Office
No. 100, Longchang Road, Longjing District,
Taichung City
(04)2630-6088
Unit description Address TEL
Head Office
New Taipei City
Branch Office
Taoyuan-Hsinchu
Branch Office
Taichung Branch
Office
Tainan Branch Office
Kaohsiung Branch
Office
Keelung Service
Center
Neihu Service Center
Zhonglun Service
Center
Sanchong Service
Center
Xinshu Service Center
Luzhou Service
Center
Xindian Service
Center
Taitung Service Center
Hualien Service
Center
Lanyang Service
Center
Taoyuan Service
Center
Bade Service Center
Hsinchu Service
Center
Toufen Service Center
Miaoli Service Center
Fengyuan Service
Center
Taichung Service
Center
Chunglung 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
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
No. 100, Longchang Road, Longjing 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)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
(04)2630-6088

6

==> picture [193 x 624] intentionally omitted <==

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

7

==> picture [193 x 624] intentionally omitted <==

  • 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 1. 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. 2. 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 1. 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. 2. 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 1. 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,

8

Taichung County.
2. 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
3. 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.
4. 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
1. 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.
2. 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
1. 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.
2. 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.
3. 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
1. On September 1, 2003, the Company renamed its Dounan Liaison Office to Yunlin
Liaison Office, and registered with The Non-Life Insurance Association.
2004
1. The Company created its Toufen Liaison Office on January 1, 2004, and registered
with The Non-Life Insurance Association.
2. 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.”
3. Customer Service Department was created on August 26, 2004.
4. Actuarial Department was created on August 26, 2004.
5. Direct Marketing Department was created on August 26, 2004.
6. Financial Insurance Marketing Department was created on August 26, 2004.
7. The Company created its Donggang Liaison Office on November 1, 2004, and
registered with The Non-Life Insurance Association.
8. The Company created its Madou Liaison Office on November 1, 2004, and
registered with The Non-Life Insurance Association.
9. The Company created its Chongde Liaison Office on November 1, 2004, and
registered with The Non-Life Insurance Association.
10. The Company created its Baojian Liaison Office on November 1, 2004, and
registered with The Non-Life Insurance Association.
11. The Company created its Puzi Liaison Office on November 1, 2004, and
registered with The Non-Life Insurance Association.

==> picture [193 x 624] intentionally omitted <==

9

12. The Company created its Douliu Liaison Office on November 1, 2004, and
registered with The Non-Life Insurance Association.
13. The Company created its Beidou Liaison Office on November 1, 2004, and
registered with The Non-Life Insurance Association.
14. The Company created its Bade Liaison Office on November 1, 2004, and
registered with The Non-Life Insurance Association.
15. 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.
16. The Company created its Xinzhuang Liaison Office on December 24, 2004, and
registered with The Non-Life Insurance Association.
2005
1. The Company created its Xiaogang Liaison Office on April 22, 2005, and
registered with The Non-Life Insurance Association.
2. The Company created its Zhubei Liaison Office on May 1, 2005, and registered
with The Non-Life Insurance Association.
3. The Company created its Xinyi Liaison Office on December 1, 2005, and
registered with The Non-Life Insurance Association.
2006
1. The Company created its Xinpu Liaison Office on January 1, 2006, and registered
with The Non-Life Insurance Association.
2. 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
1. The Company created its Penghu Liaison Office on September 1, 2007, and
registered with The Non-Life Insurance Association.
2. On November 20, 2007, Taiwan Ratings Corp. awarded the Company a rating
“twA+” for financial strength and issuer credit, along with a “positive” outlook.
3. The Company closed down Xiaogang Liaison Office on December 20, 2007, and
registered with The Non-Life Insurance Association.
2008
1. The Company closed down Madou Liaison Office on March 1, 2008, and
registered with The Non-Life Insurance Association.
2. The Company closed down Xinzhuang Liaison Office on April 1, 2008, and
registered with The Non-Life Insurance Association.
3. The Company closed down Daya Liaison Office on August 20, 2008, and
registered with The Non-Life Insurance Association.
4. 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.”
5. The Company closed down Shuanghe Liaison Office on October 1, 2008, and
registered with The Non-Life Insurance Association.
6. The Company closed down Chongde Liaison Office on October 31, 2008, and
registered with The Non-Life Insurance Association.
7. The Company closed down Dali Liaison Office on November 1, 2008, and
registered with The Non-Life Insurance Association.
8. 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.
9. The Company closed down Douliu Liaison Office on December 1, 2008, and

==> picture [193 x 624] intentionally omitted <==

10

registered with The Non-Life Insurance Association.
2009
1. The Company closed down Beidou Liaison Office on January 31, 2009, and
registered with The Non-Life Insurance Association.
2. The Company closed down Xindian Liaison Office on February 11, 2009, and
registered with The Non-Life Insurance Association.
3. 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.
4. The Company closed down Puzi Liaison Office on June 1, 2009, and registered
with The Non-Life Insurance Association.
5. The Company closed down Donggang Liaison Office on June 30, 2009, and
registered with The Non-Life Insurance Association.
6. The Company closed down Zhubei Liaison Office on July 17, 2009, and
registered with The Non-Life Insurance Association.
7. 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
1. Risk Management Department was created on August 25, 2010.
2. 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
1. The Company created its Luzhou Liaison Office on July 1, 2011, and registered
with The Non-Life Insurance Association.
2. The Company created its Xindian Liaison Office on July 1, 2011, and registered
with The Non-Life Insurance Association.
3. 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
1. 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
1. Shulin Liaison Office was renamed Xinshu Liaison Office on January 1, 2013.
2. 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.
3. The Company closed down Xinpu Liaison Office on September 1, 2013, and
registered with The Non-Life Insurance Association.
4. 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.
5. The Company closed down Xinyi Liaison Office on December 31, 2013, and

==> picture [193 x 624] intentionally omitted <==

11

registered with The Non-Life Insurance Association.
2014
1. 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.
3. 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
1. Compliance Department was created on January 1, 2015.
2. Direct Marketing Department was removed on February 15, 2015.
3. E-Commerce Marketing Department was created on February 16, 2015.
4. 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
1. Corporate Governance Center was created on March 28, 2016.
2. 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
1. 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, 2017, S&P gave First Insurance an issuer credit and financial
strength rating of “BBB+,” along with a “Stable” outlook.
2018
1. Removed Personal Lines Insurance Group, Commercial Lines Insurance Group
and Special Lines Insurance Group, and reorganized all subordinate departments
under the Business Group.
2. Removed Management Support Resource Group and Enterprise Development
Resource Group, and reorganized all subordinate departments under the Resource
Management Group.
3. Renamed Personal Insurance Department to Accident and Health Insurance
Department.
4. Established Xiaogang Liaison Office on May 1, 2018
5. On November 20, 2018, Taiwan Ratings adjusted First Insurance’s rating to
“twAA”for issuer credit and financial strength, along with a “Stable” outlook. On
November 20, 2018, S&P adjusted First Insurance’s issuer credit and financial
strength rating as “A-,” along with a “Stable” outlook.
2019
1. Established Chunglung Liaison Office on January 1, 2019
2. On November 25, 2019, Taiwan Ratings confirmed First Insurance’s rating as
“twAA” for issuer credit and financial strength, along with a “Stable” outlook. On
November 25, 2019, S&P confirmed First Insurance’s issuer credit and financial
strength rating as “A-,” along with a “Stable” outlook.
2020
1. On November 24, 2020, Taiwan Ratings confirmed First Insurance’s rating as
“twAA” for issuer credit and financial strength, and issued a “Stable” outlook. On

==> picture [193 x 624] intentionally omitted <==

12

December 28, 2020, S&P confirmed First Insurance’s issuer credit and financial strength rating as “A-,” and issued a “Stable” outlook.

2021

  1. Taipei Branch Office was renamed to New Taipei City Branch office on January 1, 2021. 29 Liaison Offices were changed to 29 Service Centers. Banqiao Liaison Office was removed.

  2. (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.

  3. (IV) Impacts following a major transfer of shareholding by directors, supervisors, or shareholders with more than 10% ownership interest, or change of management team, management practice or business activities, or any event capable of affecting shareholders’ interests: None.

==> picture [193 x 624] intentionally omitted <==

13

Three. Corporate Governance Report

  • I. Organization System: (I) Organizational Structure

==> picture [10 x 7] intentionally omitted <==

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

14
----- End of picture text -----

(II) The job function of the departments are specified below:
1. 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.
2. 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.
3. Accounting Dept.: administer the budgeting and account settlement of the Company,
design of the accounting system, accounting and statistical compilation, request for
commission payment, a joint effort in the acceptance of printed matters, stationary,
machines and equipment, and other duties as required by law.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. The Business Production Depts: development of all insurance business and
performing of assigned duties. Recruitment and management of marketing personnel,

==> picture [189 x 613] intentionally omitted <==

11

==> picture [189 x 613] intentionally omitted <==

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.

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.
11. 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
12. 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,
13. 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.
14. 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.
15. 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.
16. 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.
17. Financial Insurance Marketing Department: Preparation and execution of business
goals and strategies, planning and management of annual business goals,
development, promotion and maintenance of the financial channels, such as
management, banking, securities, life insurance and related brokerage (agency),
execution of administrative operations, the transmission of various files and
documents, and coordination of operations, planning and execution of various
insurance product marketing strategies, recruitment, training, employment and
management of market personnel, collection, analysis and suggestions of other
market information and activities, approval of the Department’s correspondences, and
organization and custody of files.
18. 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.

12

Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 Profiles of the Directors, President, Executive Vice Presidents, Vice Presidents, and the heads of the departments and branches:
(I)
Directors
1. Profiles of Directors		 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 30,2021
Other executive, Director or
Supervisor who is a spouse or
kindred within the 2nd tier under
the Civil Code.
Title
Name
None
None
None
-
Director
Director
Director
Cheng-Tsung
Lee
Cheng-Tu Lee
Edward Y. C.
Lee
Brothers
Brothers
Father and
son
None
None
None
None
-
Chairman
Director
C. H. Lee
Cheng-Tu Lee
Brothers
-		 April 30,2021
Other executive, Director or
Supervisor who is a spouse or
kindred within the 2nd tier under
the Civil Code.
Title
Name
None
None
None
-
Director
Director
Director
Cheng-Tsung
Lee
Cheng-Tu Lee
Edward Y. C.
Lee
Brothers
Brothers
Father and
son
None
None
None
None
-
Chairman
Director
C. H. Lee
Cheng-Tu Lee
Brothers
-		 April 30,2021
Other executive, Director or
Supervisor who is a spouse or
kindred within the 2nd tier under
the Civil Code.
Title
Name
None
None
None
-
Director
Director
Director
Cheng-Tsung
Lee
Cheng-Tu Lee
Edward Y. C.
Lee
Brothers
Brothers
Father and
son
None
None
None
None
-
Chairman
Director
C. H. Lee
Cheng-Tu Lee
Brothers
-		 April 30,2021
Other executive, Director or
Supervisor who is a spouse or
kindred within the 2nd tier under
the Civil Code.
Title
Name
None
None
None
-
Director
Director
Director
Cheng-Tsung
Lee
Cheng-Tu Lee
Edward Y. C.
Lee
Brothers
Brothers
Father and
son
None
None
None
None
-
Chairman
Director
C. H. Lee
Cheng-Tu Lee
Brothers
-
Job title
(Note 1)		 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.
Title Name
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 -
Republic of
China		 Representative:
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-Tsung
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 7,385,189 2.44% 7,385,189 2.45% 0 0% 0 0% None - None None None -
Republic of
China		 Representative:
Cheng-Tsung
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 -
13

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
Job title
(Note 1)		 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.		 [PT1]:
=-
Title Name
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		 Chairm
Feng C
Tsai Ch
Cheng
Instituti
Constru
Constru
Manage
Chien C
Fuji Die
Ltd., Ch
Directo
Chien C
Foundat
Constru
Instituti
Constru
Manage		 an: Tu Ho Enterprise Co., Ltd., Da
onstruction Engineering Co., Ltd.,
eng Enterprise Co., Ltd., Chung
Enterprise Co., Ltd.; Representative of
onal Director: Hwa Wang
ction Co., Ltd., Hai Hwa
ction Co., Ltd., Taiwan Architecture
ment Co., Ltd.; Executive Director:
heng Development Co., Ltd., Taiwan
Co., Ltd., Yung Chi Enterprise Co.,
in Shi Engineering Co., Ltd.;
r: Forbes Construction Co., Ltd., Lee
heng Memorial Education
ion; Supervisor: Chin Rai Chang
ction Co., Ltd.; Representative of
onal Supervisor: Chia Tai
ction Co., Ltd., Taiwan Apartment
ment 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		 Directo
Instituti
Develop
Enterpr		 r: Yi Chih Co., Ltd.; Representative of
onal Director: Chien Cheng
ment Co., Ltd., Tsai Cheng
ise 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 0% Department of
Civil
Engineering,
Tamkang
University		 Directo
Chien C
Shan C
Enterpr
Co., Ltd
Enginee		 r: Tsai Cheng Enterprise Co., Ltd.,
heng Development Co., Ltd., Bao
onstruction Co., Ltd., Yung Chi
ise Co., Ltd., Chin Shi Engineering
.; Supervisor: Da Feng Construction
ringCo.,Ltd.,Rai San Co.,Ltd.		 None None None -
Director Republic of
China		 Chimax
Development
Company		 - 2019/06/27 3 years 1993/0/527 1,357,389 0.45% 1,357,389 0.45% 0 0% 0 0% None - None None None -
Republic of
China		 Representative:
Chi-Chen Tu		 Male 2019/06/27 3 years 2014/05/05 241,968 0.80% 241,968 0.80% 83,830 0.03% 0 0% Dept. of Land
Administration,
University of
Chinese Culture		 Chairm
Nippon

Compan
Constru		 an: Chimax Development Company,
Elevator Co., Ltd. (
); Director: Yuanhu Construction		 None None None -
y: Supervisor: Bao Shan
ction Co.,Ltd.
Director Republic of
China		 David Huang Male 2019/06/27 3 years 2016/06/24 828,518 0.28% 828,518 0.28% 5,114 0% 0 0% Dept. of
Business
Administration,
Soochow
University		 None None None None -
Director Republic of
China		 Cheng-Chin
Lee		 Male 2019/06/27 3 years 2001/05/25 347,000 0.12% 347,000 0.12% 190,000 0.06% 0 0% Corporate
Management,
Dept. of
Business
Administration,
Takushoku
University,Japan		 Chairm
Directo
Ltd.; Ex
Chien C		 an: Bao Shan Construction Co., Ltd.;
r: Si Yuan Co., Ltd., Teng Hong Co.,
ecutive Director: Rai San Co., Ltd.,
heng Development Co., Ltd.		 None None None -
Director Republic of
China		 Da Feng
Construction
Engineering
Co.,Ltd.		 - 2019/06/27 3 years 2010/06/25 15,823,085 5.25% 15,823,085 5.25% 0 0% 0 0% None - None None None -
14

==> picture [204 x 469] intentionally omitted <==

==> picture [592 x 66] intentionally omitted <==

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

Quantity of Other executive, Director or
Shareholding of Shareholding in
shareholding at the time of elected to Current shareholding spouse and the name of a kindred within the 2nd tier under Supervisor who is a spouse or
office dependents third party the Civil Code.
(Note 1)Job title achievements Major career (academic) Company and other companies at Holding other positions of the
(Note 3) present Title Name
----- End of picture text -----

Job title
(Note 1)		 Quantity of
shareholding at the
time of elected to
office		 Quantity of
shareholding at the
time of elected to
office		 Current shareholding Current shareholding Shareholding of
spouse and
dependents		 Shareholding of
spouse and
dependents		 Shareholding in
the name of a
third party		 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.		 Other executive, Director or
Supervisor who is a spouse or
kindred within the 2nd tier under
the Civil Code.		 Other executive, Director or
Supervisor who is a spouse or
kindred within the 2nd tier under
the Civil Code.
Title Name
Republic of
China		 Representative:
Chien-Yi Hsu		 Male 2019/06/27 3 years 2010/06/25 0 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
Development
Co.,Ltd.		 - 2019/06/27 3 years 2004/05/27 18,806,192 6.24% 18,806,192 6.24% 0 0% 0 0% None - None None None -
Republic of
China		 Representative:
Tien-Ching
Yang		 Male 2019/06/27 3 years 2004/05/27 0 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 2006/06/24 0 0% 0 0% 0 0% 0 0% Dept. of
Business
Administration,
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.

15

Table 1: Dominant Shareholders of Institutional Shareholders Table 1: Dominant Shareholders of Institutional Shareholders
April 30, 2021
Name of institutional Dominant shareholders of institutional shareholders (Note 2)
shareholder(Note 1)
Cheng-Han Lee(47.97%), Hsiu-Chuan Lee-Yang(14.64%), Yi-Chi
Yi Chih Co., Ltd. Lee(7.93%), Chin-Ju Lee(6.67%), Wei-Ju Lee(6.67%), Te-Sung
Yang(3.33%),Te-Hui Yang(2.5%),Hsiu-Mei Yang(1.25%)
Chien Yi Industrial Co.,
Ltd.		 Cheng-Tsung Lee(56.57%), Yue-Hua 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-Hsiung Tu(5%),
Chi-Yuan Tu(9%),Li-JungTu(0.68%)
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
Chien Cheng Heng Co., Ltd. (4.47%), Tsai Rai Enterprise Co., Ltd. (3.51%),
Development Co., Ltd. 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%)
Tsai Cheng Enterprise Co., Ltd.,(13.09%) Kai Heng Co., Ltd.
OSTA TRADING CO.,
LTD.		 (6.78%), Tu Ho Enterprise Co., Ltd.(6.57%), Po-Wen Yang(4.57%),
Cheng-Han Lee(4.2%), Chien Yi Industrial Co., Ltd.(3.95%),
Cheng-Tsung Lee(3.9%), Chia-Lang Chang(3.09%), Tsai Rai
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.
Table 2: Table 1- Dominant shareholders of the Institutional Shareholders are institutional
shareholders.
April 30,2021
Name of institution (Note 1)
Dominant shareholders of the institution (Note 2)
Cheng-Han Lee(50.29%), Hsiu-Chuan Lee-Yang(16.96%), Yi-Chi
Yi Chih Co., Ltd. Lee(12.33%), Chin-Ju Lee(6.67%), Wei-Ju Lee(6.67%), Te-Sung
Yang(3.33%),Te-Hui Yang(2.5%),Hsiu-Mei Yang(1.25%)
Cheng-Tu Lee(38.85%), Cheng-Han Lee(1.43%), Chia-Chia
Du Ho Enterprise Co., Ltd. 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%)
Cheng-Tsung Lee(56.57%), Yue-Hua Lee Chang(6.24%), Po-Wei
Chien Yi Industrial Co., Ltd. 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., Pei-Ting Lee(42.28%), Cheng-Hsiu Tsai(5.58%), Ai-Ju
Ltd. Tsai(26.07%),Cheng-Han Tsai(26.07%)
Tu Ho Enterprise Co., Ltd.(18.18%), Chung Cheng Enterprise Co.,
Tsai Cheng Enterprise Co., Ltd.(8.33%), Chien Cheng Development Co., Ltd.(6.67%), Yi Chi
Ltd. Co., Ltd. (7.84%), Kai Heng Co., Ltd. (5.62%), Da Feng
Construction EngineeringCo.,Ltd.(5%),Po-Wen Yang(4.5%),
16
Chien Yi Industrial Co., Ltd.(6.02%), Hui-Li Chang(4.02%),
Chia-LangChang(2.71%)
OSTA TRADING 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%), Cheng-Han Lee(4.2%), Chien Yi Industrial Co.,
Ltd.(3.95%), Cheng-Tsung Lee(3.9%), Chia-Lang Chang(3.09%),
Tsai Rai 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%)

Note 1: If the dominant shareholders in Table 1 are institutional shareholders, fill in the names of the Institutional Directors.

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.

==> picture [193 x 622] intentionally omitted <==

17

2. Professional standing and independence of the Independent Directors

Condition
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) 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 the 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

==> picture [204 x 469] intentionally omitted <==

18

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.

  • Note 2: A “ � ” is placed in the box if the director or supervisor met the following conditions during active duty and two years 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 subsidiaries 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 subsidiaries 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 subsidiaries of the parent company 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 a 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.

==> picture [204 x 469] intentionally omitted <==

19

II) Profiles of the II) Profiles of the President, Executive Vice Executive Vice Presidents, Vice Presidents, Presidents, Vice Presidents, Presidents, Vice Presidents, Presidents, Vice Presidents, and the heads of the departments and branches and the heads of the departments and branches and the heads of the departments and branches and the heads of the departments and branches April 30,2021
A spouse or kindred within the
2nd tier under the Civil Code to
a manager
Occupational
title
Name
Relation
None
None
None
None
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-		 April 30,2021
A spouse or kindred within the
2nd tier under the Civil Code to
a manager
Occupational
title
Name
Relation
None
None
None
None
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-		 April 30,2021
A spouse or kindred within the
2nd tier under the Civil Code to
a manager
Occupational
title
Name
Relation
None
None
None
None
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-		 April 30,2021
A spouse or kindred within the
2nd tier under the Civil Code to
a manager
Occupational
title
Name
Relation
None
None
None
None
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
Title
(Note 1)		 Name Sex Date of
(elected to)
office		 Shareholding Shareholding by
spouse or
dependents		 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
Number of
shares		 Occupational
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
TsingHua 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		 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
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 2,000 0% 0 0% 0 0% Dept. of Applied
Mathematics, National
Chiao TungUniversity		 None None None None -
Assistant Vice
President,
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 -
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,		 None None None None -
20

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

A spouse or kindred within the
2nd tier under the Civil Code to
a manager
Occupational
title
Name
Relation
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-		 A spouse or kindred within the
2nd tier under the Civil Code to
a manager
Occupational
title
Name
Relation
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-		 A spouse or kindred within the
2nd tier under the Civil Code to
a manager
Occupational
title
Name
Relation
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-		 A spouse or kindred within the
2nd tier under the Civil Code to
a manager
Occupational
title
Name
Relation
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
None
None
None
-
Title
(Note 1)		 Name Sex Date of
(elected to)
office		 Shareholding Shareholding by
spouse or
dependents		 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
Number of
shares		 Occupational
title		 Name Relation
Chinese Culture
University
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 -
Assistant Vice
President, 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
University		 None None None None -
Manager,
Customer
Service Dept.		 Republic
of China		 Chien-Wen
Chen		 Male 2018/04/01 0 0% 0 0% 0 0% News Editing and
Coverage, Shih Hsin
University		 None None None None -
Manager, Fire
Insurance Dept.		 Republic
of China		 Tung-Ying
Wu		 Male 2020/07/08 15,000 0% 34,000 0.01% 0 0% Graduate Institute of Risk
Management and
Insurance, Ming Chuan
University		 None None None None -
Manager,
Information
Dept.		 Republic
of China		 Wei-Jen Tsai Male 2021/01/01 0 0% 0 0% 0 0% Department of Industrial
Engineering and
Management, St. John’s
University		 None None None None -
Vice President,
Taipei Region		 Republic
of China		 Te-Chun
Chiang		 Male 2019/01/01 850 0% 0 0% 0 0% Dept. of Business
Administration, Shih
Chien University		 None None None None -
Vice President,
Financial
Service Group		 Republic
of China		 S. Q. Chen Male 2014/09/05 41,963 0.01% 0 0% 0 0% Dept. of Chinese
Literature, National
Taiwan University		 None None None None -
New Taipei
City Branch
Office		 Republic
of China		 Neil Yen Male 2021/01/01 1,000 0% 0 0% 0 0% MBA, Tamkang
University		 None None None None -
Taoyuan-Hsinc
hu Branch
Office		 Republic
of China		 Tony J. Y.
Wang		 Male 2017/02/19 207,831 0.07% 0 0% 0 0% Dept. of Accounting and
Statistics, Chihlee
Universityof 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 0% Asia University
Dept. of International		 None None None None -
21
Shareholding by Shareholding in A spouse or kindred within the
Shareholding spouse or the name of a 2nd tier under the Civil Code to
Title
(Note 1)		 Name Sex Date of
(elected to)
office		 Number of
shares		 dependents third party Major career
(academic)
achievements
(Note 2)		 Holding positions in
other companies at
present		 Occupational
title		 a manager

Name		 Relation
Business Administration
Tainan Branch
Office
Republic
of China		 Chien-Sheng
Chen		 Male 2020/09/01 426 0% 0 0% 0
0%		 National Cheng Kung
University		 None None None None -
Dept. of Land
Kaohsiung
Branch Office
Republic
of China		 Wen-Tung
Yen		 Male 2008/05/30 50,608 0.01% 0 0% 0
0%		 Administration and
Development, Chang		 None None None None -
JungChristian University
Note 1: Profiles of the President, Executive Vice Presidents, Vice Presidents, heads of the departments and branches shall be included. In addition, personnel at the ranks relevant to the Presidents,
Executive Vice Presidents, Vice Presidents, shall also be included regardless of the occupational title.
Note 2: 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 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 the introduction of independent directors. Furthermore, disclose whether more than half of directors
are involved in concurrent duty as employees or managers.
22

  • (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 are 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 a 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 a particular Supervisor fell below the minimum requirements for more than 3 consecutive months in the most recent year, disclose the remuneration to such Supervisor [Note 2].

  • (III) If a 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 a concurrent role as an 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 the 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 are 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 a 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% on 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 number of shares under trust retained for balloting); the 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 number of shares under trust retained for balloting).

==> picture [204 x 469] intentionally omitted <==

23

==> picture [204 x 469] intentionally omitted <==

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

Unit: NTD thousands

Job title Name Remunerati on to Director on to Director on to Director The sum
C and
percenta
income (		 of A, B,
D as a
ge of net
Note 10)		 Remun eration for performan ce of wor ks as emp loyees. The sum
C, D, E, F,
proportio
income (		 of A, B,
and G in
n to net
Note 10)
Compensation
from parent
company or
business
investments
other than
subsidiaries
(Note 11)
Remu
(
(No		 neration
A)
te 2)		 Severan
and p		 ce payment
ension (B)		 Remuneration to
Directors (C)
(Note 3)		 F
perfo
work (		 ees for
rmance of
D) (Note 4)		 Salaries,
and sp
subsidy (
5		 bonus,
ecial
E) (Note
)		 Severance
and pens		 payment
ion (F)		 Remu neration t
(No		 o employe
te 6)		 es (G)
The Co mpany Comp
include
fina
state
(No		 anies
d in the
ncial
ments
te 7)		 The
Company
Amount
in cash		 Amount
in stock		 Amount
in cash		 Amount
in stock
Chairman Yi Chi Co.,
Ltd.		 6,552 - - - 966 - - - 4.92% - 1,995 - - - 7 - - - 6.23% - None
Representative:
C. H. Lee
Director Chien Yi
Industrial Co.,
Ltd.
Representative:
Cheng-Tsung
Lee
Director Cheng-Tu Lee
Director Shao-Ying Lee
Director Edward Y. C.
Lee
Director Chimax
Development
Company
Representative:
Chi-Chen Tu
Director David Huang
Director Cheng-Chin
Lee
Director Chien Cheng
Development
Co., Ltd.

24

Representative:
Tien-Ching
Yang
Director Da Feng
Construction
Engineering
Co., Ltd.
Representative:
Chien-Yi Hsu
Independent
Director		 Jui-Tung Lu 1,260 - - - 290 - - - 1.01% - - - - - - - - - 1.01% - None
Independent
Director		 Jui-Chou Lin
Independent
Director		 Hsiu-Mei Lin
1. Please expl
Policy:
The Compan
future risks, a
within the Co
System:
The link betw
and welfare p
Standards and
Independent
Association b
Linkage betw
profitable in a
after taking a
performance
also makes re
remuneration
operating con
2. Compensat
thousand.
* Informatio		 ain the policy, system, standards and structure by which independent director compensation is paid and the association between the amount paid and independent directors’ responsibilities, risks and time committed:
y 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
nd should not encourage independent directors to act outside of the Company’s risk appetite for additional compensation. The compensation system and performance should be reviewed regularly to ensure that decisions are made
mpany’s risk appetite.
een 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
ackage offered.
structure:
directors are compensated for the services rendered, and the package includes fixed compensations, travel allowances, remuneration and bonuses.
etween the amount paid and the responsibilities assumed, risks undertaken and time committed:
een 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
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
ccount 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
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
ference 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
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
ditions so as to strike a balance between the Company’s sustainable operation and risk control.
ion received by the 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
n of directors (i.e. non-independent directors) and independent directors shall be disclosed separately.

==> picture [204 x 469] intentionally omitted <==

25

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 compensations(A+B+C+D+E+F+G)
The Company (Note 8) Companies included
in the financial
statements (Note 9)
H
The Company (Note 8)		 Companies included
in the financial
statements (Note 9)
I
Below NT$ 1,000,000 David Huang, Chimax Development
Company’s Representatives: Chi-Chen
Tu, Cheng-Tu Lee, Shao-Ying Lee,
Cheng-Chin Lee, Da Feng
Construction Co., Ltd.’s
Representative: Chien-Yi Hsu, Chien
Cheng Development Co., Ltd.’s
Representative: Tien-Ching Yang,
Jui-Tung Lu, Edward Y.C. Lee,
Jui-Chou Lin,Hsiu-Mei Lin		 - David Huang, Chimax Development
Company’s Representatives: Chi-Chen
Tu, Cheng-Tu Lee, Shao-Ying Lee,
Cheng-Chin Lee, Da Feng
Construction Co., Ltd.’s
Representative: Chien-Yi Hsu, Chien
Cheng Development Co., Ltd.’s
Representative: Tien-Ching Yang,
Jui-Tung Lu, Jui-Chou Lin, Hsiu-Mei
Lin		 -
NT$1,000,000 (inclusive) ~ NT$2,000,000
(exclusive)		 Chien Yi Industrial Co., Ltd.
Representative: Cheng-TsungLee		 - Chien Yi Industrial Co., Ltd.
Representative: Cheng-TsungLee		 -
NT$2,000,000 (inclusive) ~ NT$3,500,000
(exclusive)		 - Edward Y. C. Lee -
NT$3,500,000 (inclusive) ~ NT$5,000,000
(exclusive)		 Yi Chi
Co., Ltd., Representative:
Cheng-Han Lee
-		 Yi Chi Co., Ltd., Representative:
Cheng-Han Lee
-
NT$5,000,000 (inclusive) ~ NT$10,000,000
(exclusive)		 - - - -
NT$10,000,000 (inclusive) ~ NT$15,000,000
(exclusive)		 - - - -
NT$15,000,000 (inclusive) ~ NT$30,000,000
(exclusive)		 - - - -
NT$30,000,000 (inclusive) ~ NT$50,000,000
(exclusive)		 - - - -
NT$50,000,000 (inclusive) ~ NT$100,000,000
(exclusive)		 - - - -
More than NT$100,000,000 - - - -
Total 13 - 13 -

Note 1: Directors’ names are presented separately (for corporate shareholders, the name of the corporate shareholder and its representative

==> picture [204 x 469] intentionally omitted <==

26

are presented separately) and distinguished between independent and non-independent directors. In contrast, the amounts of various payments 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). 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: 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 the 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

==> picture [204 x 469] intentionally omitted <==

27

==> picture [204 x 469] intentionally omitted <==

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 purposes only and not for taxation purposes.

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

Unit: NTD thousands Unit: NTD thousands Unit: NTD thousands Unit: NTD thousands Unit: NTD thousands Unit: NTD thousands Unit: NTD thousands Unit: NTD thousands Unit: NTD thousands
Job title Name Remuneration to Supervisor The sum of A, B, and
C in proportion to net
income.
(Note 8)		 Compensation
from parent
company or
business
investments
other than
subsidiaries
(Note 9)
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)
- - - - - - - - - - -

28

Payment scale

Remuneration to Supervisors in relevant
brackets along the payment scale		 Name of Supervisor Name of Supervisor
The sum of 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
(exclusive)		 - -
NT$2,000,000 (inclusive) ~ NT$3,500,000
(exclusive)		 - -
NT$3,500,000 (inclusive) ~ NT$5,000,000
(exclusive)		 - -
NT$5,000,000 (inclusive) ~ NT$10,000,000
(exclusive)		 - -
NT$10,000,000 (inclusive) ~ NT$15,000,000
(exclusive)		 - -
NT$15,000,000 (inclusive) ~ NT$30,000,000
(exclusive)		 - -
NT$30,000,000 (inclusive) ~ NT$50,000,000
(exclusive)		 - -
NT$50,000,000 (inclusive) ~ NT$100,000,000
(exclusive)		 - -
More thanNT$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

==> picture [204 x 469] intentionally omitted <==

29

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 total amount of itemized payment from all companies (including the Company) included in the consolidated financial statements to each Supervisor of the Company with the name disclosed in relevant brackets along the payment scale.

  • 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.

==> picture [204 x 469] intentionally omitted <==

30

==> picture [204 x 469] intentionally omitted <==

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

Unit: NTD thousands

Job 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)		 The sum of A, B, C and
D as a percentage of net
income (%) (Note 8)		 The 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
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
President Chu-Minn
Leu
(Note A)
16,551

 - 16,735 - - - 53 - - - 21.81% - None
President Jack Chen(Note A)
Executive
Vice
President		 C. S. Lin
Executive
Vice
President		 Ching Chang Chen
Executive
Vice
President		 Tom C. T. Chen
Executive
Vice
President		 Jen-Huai Liu
Executive
Vice
President		 H. C. Huang (Note
A)
Executive
Vice
President		 Stephen S. C. Shen
(Note A)
  • 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, the former President, retired on February 25, 2020 and was succeeded by Madam Chu-Minn Leu on February 26, 2020. Mr. Stephen S. C. Shen, former Vice President, was relieved from office on May 12, 2020. Mr. H.C. Huang was relieved from office on November 5, 2020.

31

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(exclusive) - -
NT$2,000,000 (inclusive) ~ NT$3,500,000 (exclusive) Cu-Minn Leu, C. S. Lin, Stephen S. C.
Shen, Jen-Huai Liu, Tom C. T. Chen,
Ching-ChangChen		 -
NT$3,500,000(inclusive)~ NT$5,000,000(exclusive) - -
NT$5,000,000 (inclusive) ~ NT$10,000,000
(exclusive)		 H. C. Huang -
NT$10,000,000 (inclusive) ~ NT$15,000,000
(exclusive)		 Jack Chen -
NT$15,000,000 (inclusive) ~ NT$30,000,000
(exclusive)		 - -
NT$30,000,000 (inclusive) ~ NT$50,000,000
(exclusive)		 - -
NT$50,000,000 (inclusive) ~ NT$100,000,000
(exclusive)		 - -
More than NT$100,000,000 - -
Total 8 -

  • Note 1: 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.

==> picture [204 x 469] intentionally omitted <==

32

==> picture [204 x 469] intentionally omitted <==

  • 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 or earnings after taxation refer to that of current period. If IFRSs has been adopted, net income will be the earnings after taxation as stated in the separate financial statements of the most recent year.

  • 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.

33

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

Job 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)		 The sum of A, B, C and
D as a percentage of net
income (Note 6)		 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.

==> picture [204 x 469] intentionally omitted <==

34

==> picture [191 x 618] intentionally omitted <==

  1. Names of managers who received employee remuneration and the final allocation - December 31, 2020
31, 2020
Unit: NTD thousands
Job title
(Note 1)		 Name
(Note 1)		 Amount in
stock		 Amount in cash Total Total as a
percentage
of net
income(%)
Manager President Chu-Minn Leu 137 137 0.09%
Executive Vice President C. S. Lin
Executive Vice President Tom C. T. Chen
Executive Vice President Ching Chang
Chen
Executive Vice President Jen-Huai Liu
Vice President Yeong-Rong
Hsiao
Vice President Chang-Hong
Chen
Vice President Emerson Chien
Vice President Edward Y. C. Lee
Vice President Chen-HsiungLin
Region Assistant Vice President TonyJ. Y. Wang
Region Assistant Vice President Hsu-Wei Chen
Region Assistant Vice President Wen-TungYen
Region Assistant Vice President S.Q. Chen
Region Assistant Vice President Te-Chun Chiang
Region Manager Chien-Sheng
Chen
Manager Chien-Wen Chen
Manager Ping-Change
Chou
Manager Tung-Sen Shih
Manager Tung-YingWu
Manager Chuan-Wei Hu
Assistant Vice President,
AccountingDept.		 Fei-Fen Hsiao

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 or earnings after taxation refer to that of current period. If IFRSs has been adopted, net income will be the earnings after taxation as stated in the separate financial statements of the most recent year.

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, 2020

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 Vice Presidents and in proportion to the net income in 2020 were NT$11,070 thousand (7.24%) and NT$ 33,339 thousand (21.81%), which indicated a decrease in proportion to net income from the same period of 2019 at NT$14,279 thousand (2.46%) and NT$20,191 thousand (3.48%). In contrast, net income in 2020 amounted to NT$152,882 thousand with a decrease of NT$428,086 thousand from NT$580,968 thousand in the same period of 2019. Directors’ compensation as a percentage of net income was higher in 2020 compared to 2019, whereas the President’s and Vice Presidents’ compensation as a percentage of net income was higher compared to 2019.

(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

35

==> picture [191 x 618] intentionally omitted <==

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.

36

III. The pursuit of corporate governance
(I)
The Information on the function of the Board
A total of 7 board meetings(A)were held in 2020;below are the attendance records:
ccupational
Title
Name (Note 1)
Attendance
in person
(B)
Attendance
by proxy
Percentage of
in-person
attendance
(%)[B/A]
(Note 2)
emark
Chairman
Yi Chih Co., Ltd.
Representative: C.
H. Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chien Yi Industrial
Co., Ltd.
Representative:
Cheng-Tsung Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Tu Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Edward Y. C. Lee
7
0
100%
Newly elected to
office; election of a
new Board on June
27,2019
Director
Shao-Ying Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chimax
Development
Company
Representative:
Chi-Chen Tu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
David Huang
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Chin Lee
6
1
86%
A second term of
office; election of a
new Board on June
27,2019
Director
Feng Construction
Engineering Co.,
Ltd.
Representative:
Chien-Yi Hsu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
ien Cheng
Development Co.,
Ltd.
Representative:
Tien-ChingYang
7
0
86%
A second term of
office; election of a
new Board on June
27, 2019
Independent
Director
Jui-Tung Lu
7
0
100%
A second term of
office; election of a
new Board on June		 III. The pursuit of corporate governance
(I)
The Information on the function of the Board
A total of 7 board meetings(A)were held in 2020;below are the attendance records:
ccupational
Title
Name (Note 1)
Attendance
in person
(B)
Attendance
by proxy
Percentage of
in-person
attendance
(%)[B/A]
(Note 2)
emark
Chairman
Yi Chih Co., Ltd.
Representative: C.
H. Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chien Yi Industrial
Co., Ltd.
Representative:
Cheng-Tsung Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Tu Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Edward Y. C. Lee
7
0
100%
Newly elected to
office; election of a
new Board on June
27,2019
Director
Shao-Ying Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chimax
Development
Company
Representative:
Chi-Chen Tu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
David Huang
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Chin Lee
6
1
86%
A second term of
office; election of a
new Board on June
27,2019
Director
Feng Construction
Engineering Co.,
Ltd.
Representative:
Chien-Yi Hsu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
ien Cheng
Development Co.,
Ltd.
Representative:
Tien-ChingYang
7
0
86%
A second term of
office; election of a
new Board on June
27, 2019
Independent
Director
Jui-Tung Lu
7
0
100%
A second term of
office; election of a
new Board on June		 III. The pursuit of corporate governance
(I)
The Information on the function of the Board
A total of 7 board meetings(A)were held in 2020;below are the attendance records:
ccupational
Title
Name (Note 1)
Attendance
in person
(B)
Attendance
by proxy
Percentage of
in-person
attendance
(%)[B/A]
(Note 2)
emark
Chairman
Yi Chih Co., Ltd.
Representative: C.
H. Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chien Yi Industrial
Co., Ltd.
Representative:
Cheng-Tsung Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Tu Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Edward Y. C. Lee
7
0
100%
Newly elected to
office; election of a
new Board on June
27,2019
Director
Shao-Ying Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chimax
Development
Company
Representative:
Chi-Chen Tu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
David Huang
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Chin Lee
6
1
86%
A second term of
office; election of a
new Board on June
27,2019
Director
Feng Construction
Engineering Co.,
Ltd.
Representative:
Chien-Yi Hsu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
ien Cheng
Development Co.,
Ltd.
Representative:
Tien-ChingYang
7
0
86%
A second term of
office; election of a
new Board on June
27, 2019
Independent
Director
Jui-Tung Lu
7
0
100%
A second term of
office; election of a
new Board on June		 III. The pursuit of corporate governance
(I)
The Information on the function of the Board
A total of 7 board meetings(A)were held in 2020;below are the attendance records:
ccupational
Title
Name (Note 1)
Attendance
in person
(B)
Attendance
by proxy
Percentage of
in-person
attendance
(%)[B/A]
(Note 2)
emark
Chairman
Yi Chih Co., Ltd.
Representative: C.
H. Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chien Yi Industrial
Co., Ltd.
Representative:
Cheng-Tsung Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Tu Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Edward Y. C. Lee
7
0
100%
Newly elected to
office; election of a
new Board on June
27,2019
Director
Shao-Ying Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chimax
Development
Company
Representative:
Chi-Chen Tu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
David Huang
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Chin Lee
6
1
86%
A second term of
office; election of a
new Board on June
27,2019
Director
Feng Construction
Engineering Co.,
Ltd.
Representative:
Chien-Yi Hsu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
ien Cheng
Development Co.,
Ltd.
Representative:
Tien-ChingYang
7
0
86%
A second term of
office; election of a
new Board on June
27, 2019
Independent
Director
Jui-Tung Lu
7
0
100%
A second term of
office; election of a
new Board on June		 III. The pursuit of corporate governance
(I)
The Information on the function of the Board
A total of 7 board meetings(A)were held in 2020;below are the attendance records:
ccupational
Title
Name (Note 1)
Attendance
in person
(B)
Attendance
by proxy
Percentage of
in-person
attendance
(%)[B/A]
(Note 2)
emark
Chairman
Yi Chih Co., Ltd.
Representative: C.
H. Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chien Yi Industrial
Co., Ltd.
Representative:
Cheng-Tsung Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Tu Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Edward Y. C. Lee
7
0
100%
Newly elected to
office; election of a
new Board on June
27,2019
Director
Shao-Ying Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chimax
Development
Company
Representative:
Chi-Chen Tu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
David Huang
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Chin Lee
6
1
86%
A second term of
office; election of a
new Board on June
27,2019
Director
Feng Construction
Engineering Co.,
Ltd.
Representative:
Chien-Yi Hsu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
ien Cheng
Development Co.,
Ltd.
Representative:
Tien-ChingYang
7
0
86%
A second term of
office; election of a
new Board on June
27, 2019
Independent
Director
Jui-Tung Lu
7
0
100%
A second term of
office; election of a
new Board on June		 III. The pursuit of corporate governance
(I)
The Information on the function of the Board
A total of 7 board meetings(A)were held in 2020;below are the attendance records:
ccupational
Title
Name (Note 1)
Attendance
in person
(B)
Attendance
by proxy
Percentage of
in-person
attendance
(%)[B/A]
(Note 2)
emark
Chairman
Yi Chih Co., Ltd.
Representative: C.
H. Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chien Yi Industrial
Co., Ltd.
Representative:
Cheng-Tsung Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Tu Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Edward Y. C. Lee
7
0
100%
Newly elected to
office; election of a
new Board on June
27,2019
Director
Shao-Ying Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chimax
Development
Company
Representative:
Chi-Chen Tu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
David Huang
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Chin Lee
6
1
86%
A second term of
office; election of a
new Board on June
27,2019
Director
Feng Construction
Engineering Co.,
Ltd.
Representative:
Chien-Yi Hsu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
ien Cheng
Development Co.,
Ltd.
Representative:
Tien-ChingYang
7
0
86%
A second term of
office; election of a
new Board on June
27, 2019
Independent
Director
Jui-Tung Lu
7
0
100%
A second term of
office; election of a
new Board on June		 III. The pursuit of corporate governance
(I)
The Information on the function of the Board
A total of 7 board meetings(A)were held in 2020;below are the attendance records:
ccupational
Title
Name (Note 1)
Attendance
in person
(B)
Attendance
by proxy
Percentage of
in-person
attendance
(%)[B/A]
(Note 2)
emark
Chairman
Yi Chih Co., Ltd.
Representative: C.
H. Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chien Yi Industrial
Co., Ltd.
Representative:
Cheng-Tsung Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Tu Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Edward Y. C. Lee
7
0
100%
Newly elected to
office; election of a
new Board on June
27,2019
Director
Shao-Ying Lee
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Chimax
Development
Company
Representative:
Chi-Chen Tu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
David Huang
7
0
100%
A second term of
office; election of a
new Board on June
27,2019
Director
Cheng-Chin Lee
6
1
86%
A second term of
office; election of a
new Board on June
27,2019
Director
Feng Construction
Engineering Co.,
Ltd.
Representative:
Chien-Yi Hsu
7
0
100%
A second term of
office; election of a
new Board on June
27, 2019
Director
ien Cheng
Development Co.,
Ltd.
Representative:
Tien-ChingYang
7
0
86%
A second term of
office; election of a
new Board on June
27, 2019
Independent
Director
Jui-Tung Lu
7
0
100%
A second term of
office; election of a
new Board on June
ccupational
Title		 Name (Note 1) Attendance
in person
(B)		 Attendance
by proxy
Percentage of
in-person
attendance
(%)[B/A]
(Note 2)
e		 mark
Chairman Yi Chih Co., Ltd.
Representative: C.
H. Lee		 7 0 100% A second term of
office; election of a
new Board on June
27,2019
Director Chien Yi Industrial
Co., Ltd.
Representative:
Cheng-Tsung Lee		 7 0 100% A second term of
office; election of a
new Board on June
27,2019
Director Cheng-Tu Lee 7 0 100% A second term of
office; election of a
new Board on June
27,2019
Director Edward Y. C. Lee 7 0 100% Newly elected to
office; election of a
new Board on June
27,2019
Director Shao-Ying Lee 7 0 100% A second term of
office; election of a
new Board on June
27,2019
Director Chimax
Development
Company
Representative:
Chi-Chen Tu		 7 0 100% A second term of
office; election of a
new Board on June
27, 2019
Director David Huang 7 0 100% A second term of
office; election of a
new Board on June
27,2019
Director Cheng-Chin Lee 6 1 86% A second term of
office; election of a
new Board on June
27,2019
Director Feng Construction
Engineering Co.,
Ltd.
Representative:
Chien-Yi Hsu		 7 0 100% A second term of
office; election of a
new Board on June
27, 2019
Director ien Cheng
Development Co.,
Ltd.
Representative:
Tien-ChingYang		 7 0 86% A second term of
office; election of a
new Board on June
27, 2019
Independent
Director		 Jui-Tung Lu 7 0 100% A second term of
office; election of a
new Board on June

==> picture [191 x 618] intentionally omitted <==

37

27, 2019 27, 2019
Independent
Director		 Jui-Chou Lin 7 0 100% Newly elected to
office; election of a
new Board on June
27,2019
Independent
Director		 Hsiu-Mei Lin 5 2 71% Newly elected to
office; election of a
new Board on June
27,2019
Independent directors’ attendance in 2020 board meetings
proxy;* No attendance		 : Attendance in person;☆: Attendance by
2020 2020/02/17 2020/03/10 2020/04/17 2020/06/23 2020/08/17 2020/12/21
Jui-TungLu
Jui-ChouLin
Hsiu-Mei
Lin
Other mandatory disclosures:
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:
(I) Particulars inscribed in Article 14-3 of the Securities and Exchange Act.
(II) Any other documented objections or qualified opinions raised by independent director
against board resolution in relation to matters other than those described above.
Board of
Directors
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
5th session of
the 20th
Board
2020/02/27
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.
6th session of
the 20th
Board
2020/03/26
1.The Company’s 2019
financial statements.
Yes
None
2.The audit fee for Deloitte
Taiwan in 2020.
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.
7th session of
the 20th
Board
2020/04/29
1.Amendment to the
internal control and
internal audit system of
the Company.
Yes
None
Board of
Directors		 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
5th session of
the 20th
Board
2020/02/27		 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.
6th session of
the 20th
Board
2020/03/26		 1.The Company’s 2019
financial statements.		 Yes None
2.The audit fee for Deloitte
Taiwan in 2020.		 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.
7th session of
the 20th
Board
2020/04/29		 1.Amendment to the
internal control and
internal audit system of
the Company.		 Yes None

==> picture [191 x 618] intentionally omitted <==

38

Independent directors’ opinions: None.
Company’s response to independent directors’ opinions: None.
Resolution:passed unanimouslybyall attendingdirectors.
8th session of
the 20th
Board
2020/07/08
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.
9th session of
the 20th
Board
2020/08/26
1. The Company’s Q2 2020
financial statements.
Yes
None
2. 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.
11th session
of the 20th
Board
2020/12/30
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.
II.
Disclosure regarding avoidance of interest-conflicting motions, including the names of
directors concerned, the motions, the nature of conflicting interests, and the voting process:
1. Director C.H. Lee and Director Cheng-Tsung Lee are Resident Directors, that the
motion of the change in the performance bonus is pertinent to their own personal
interests. They recused from the discussion and decision of the motion. Further,
Director Cheng-Tu Lee and Director Y. C. Lee, who satisfied the requirements under
Paragraph 2 of Article 16 of the Regulations Governing Procedure for Board of
Directors Meetings of Public Companies, were also involved in the conflict of interest
and recused themselves from the discussion and decision of the motion. Independent
Director Ming-Chieh Chen requested the opinions of other Directors in session. The
motion was passed as stated in the common consent of all the other Directors in session.
III. TWSE/TPEx listed companies are required to disclose the cycle, duration, scope, method
and detail of board performance self (or peer) evaluations performed, and complete
Attachment 2 section (2) Execution of Board Performance Evaluation.
IV. The assessment of the objectives for the fortifying of the function of the Board (such as the
establishment of the Audit Committee, and enhance the transparency of information) and
the attainment: The Company has instituted the parliamentary procedure of the Board. The
Directors duly follow the procedure in the sessions. The General Meeting of the
Shareholders elected a new Board of Directors in 2016 with the establishment of 3 seats of
Independent Directors, and has established the Audit Committee as required by law.		 Independent directors’ opinions: None. Independent directors’ opinions: None. Independent directors’ opinions: None. Independent directors’ opinions: None. Independent directors’ opinions: None.
Company’s response to independent directors’ opinions: None.
Resolution:passed unanimouslybyall attendingdirectors.
8th session of
the 20th
Board
2020/07/08		 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.
9th session of
the 20th
Board
2020/08/26		 1. The Company’s Q2 2020
financial statements.		 Yes None
2. 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.
11th session
of the 20th
Board
2020/12/30		 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.

==> picture [191 x 618] intentionally omitted <==

39

Executionof BoardPerformanceEvaluation Executionof BoardPerformanceEvaluation Executionof BoardPerformanceEvaluation Executionof BoardPerformanceEvaluation
Assessment
Assessment
Scope of
Assessment
Assessment
cycle duration
assessment
method
details
(Note 1)
(Note 2)
(Note 3)
(Note 4)
(Note 5)
The scope of
assessment covers
board meeting
attendance, meeting
preparation, motion
discussion, interaction
with the management
team, compliance with
laws and code of
The scope of
conduct, contribution
Once a year
Performance of the
board of directors
between January 1 and
December 31, 2020,
was assessed
assessment covers
performance of the
board as a whole, the
individual directors
and functional
Individual directors’
self-assessment and
functional committees’
self-assessment
to corporate
governance,
completion of
governance-related
courses, knowledge
committees.
toward the Company,
the management team
and the industry,
proceeding of board
meetings and
functional committee
meetings, and other
issues specified by the
authority or the board
of directors.
Note 1: Represents the frequency of board performance evaluation, e.g.: once a year.
Note 2: Represents the duration covered by performance evaluation, e.g.: performance of the board of directors
between January 1 and December 31, 2020, was assessed.
Note 3: The scope of assessment covers performance of the board as a whole, the individual directors and
functional committees.
Note 4: Assessment methods include: board internal self-assessment, director self-assessment, peer assessment,
assessment by external institution or expert, and other methods as deemed appropriate.
Note 5: Assessment details, by scope of assessment, include at least the following:
(1) Board performance assessment: board’s participation in the Company’s operations, the quality of board’s
decisions, the board’s composition and structure, 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.
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
1. 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.

==> picture [191 x 618] intentionally omitted <==

40

==> picture [191 x 618] intentionally omitted <==

  • (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.

  • Information on the operation of the Audit Committee:

  • A total of 6 Audit Committee meetings (A) were held in 2020; independent directors’ attendance records are summarized below:

Occupational
Title
Name		 Attendance in
person (B)		 Attendance
by proxy		 Percentage of
in-person
attendance
(%)(B/A)(Note)		 Remark
Independent
Director		 Jui-Tung Lu 6 0 100% Re-elected on
July11,2019
Independent
Director		 Jui-Chou Lin 6 0 100% Newly elected
on 2019/7/11
Independent
Director		 Hsiu-Mei Lin 6 0 100% Newly elected
on 2019/7/11
Other mandatory disclosures:
I.
If any of the following is applicable to the operation of the Audit Committee, specify the
date, the series of the session, the content of the motions, the resolutions of the Audit
Committee and the response of the Company to the opinions of the Audit Committee.
(I)
Particulars inscribed in Article 14-5 of the Securities and Exchange Act.
(II) Further to the aforementioned particulars, other motions not passed by the Audit
Committee but at the consent of more than two-thirds of the Directors.
Board of
Directors
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
two-third of the
Directors.

41

==> picture [191 x 618] intentionally omitted <==

5th session of
the 20th
Board
2020/02/27		 1. Amendment to the internal
control and internal audit
system of the Company.		 1. Amendment to the internal
control and internal audit
system of the Company.		 Yes Yes None
Resolution of the Audit Committee (2019/2/17): 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.
6th session of
the 20th
Board
2020/03/26		 1. The Company’s 2019
financial statements.		 Yes None
2. The audit fee for Deloitte
Taiwan in 2020.		 Yes None
3. Amendment to the internal
control and internal audit
system of the Company.		 Yes None
Resolution of the Audit Committee (2020/3/10): 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.
7th session of
the 20th
Board
2020/04/29		 1. Amendment to the internal
control and internal audit
system of the Company.		 Yes None
Resolution of the Audit Committee (2020/4/17): 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.
8th session of
the 20th
Board
2020/07/08		 1. Amendment to the internal
control and internal audit
system of the Company.		 Yes None
Resolution of the Audit Committee (2020/6/23): 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.
9th session of
the 20th
Board
2020/08/26		 1. The Company’s
Q2 2020 financial
statements.		 Yes None
2. Amendment to the
internal control
and internal audit
system of the
Company.		 Yes None
Resolution of the Audit Committee (2020/8/17): 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.
11th session
of the 20th
Board
2020/12/30		 1. Amendment to the
internal control
and internal audit
system of the
Company.		 Yes None
Resolution of the Audit Committee (2020/12/21): 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.

42

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.
1. 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.
2. The Audit Committee has appointed professional CPAs sot audit the financial statements of
the Company with the issuance of Auditor’s Report as reference for the reference of the
Audit Committee.
3. 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:
Date
Gravityof communication
2020/03/10
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
2020/08/17
1.
Conclusions of the audit of the semi-annual report for the
first half of 2020
2.
Auditplan for 2020
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.
2.
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.
43

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.

(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




(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.

==> picture [210 x 481] intentionally omitted <==

44

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
due to their positions, duties or functions
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 functional committee members
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 26,2020. The standard of

(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.

==> picture [210 x 481] intentionally omitted <==

45

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
assessment is specified below(Note 2)
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 Companywithproper response





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

==> picture [210 x 481] intentionally omitted <==

46

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
to the concerns of the stakeholders on issues
related to corporate social responsibility?
VI. Has the Company commissioned a
professional share registration and investor
service institution for providing services to
shareholders?		 Yes The Company has commissioned the Share Registrar
Service of Hua Nan Securities to handle share
registration and transaction services.		 Complying with the
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 16,
2020.
(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.

==> picture [210 x 481] intentionally omitted <==

47

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
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
management policies and risk measurements,
implementation of customer policy, and
insuring against liabilities of company
directors and supervisors)?
Yes
Yes
Yes
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
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.		 (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.

==> picture [210 x 481] intentionally omitted <==

48

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
Yes
Yes		 (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
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.		 (V)
Conforming to the
Corporate
Governance Best
Practice Principles.
(VI)
Conforming to the
Corporate
Governance Best
Practice Principles.
(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 established a designated body for performing corporate social responsibility. The board of directors now contains a female
member—annual task focus of the Audit Committee.
Areasprioritized for improvement: directors’ ongoingeducation,board diversity goals and implementation,appointment/dismissal of internal

==> picture [210 x 481] intentionally omitted <==

49

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
auditors,and disclosure of the assessment method on the Company’s website.

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 2years?		 No Yes
3.
Have the CPAs tolerated or felt the intimidation from the
Company?		 No Yes
4.
Have the CPAs provided non-auditing service to the Company
that mayaffect the status of impartiality?		 No Yes
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:

  • Proposition of the mission or vision of corporate social responsibility, making of corporate social responsibility policy or related management policies.

  • 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:

==> picture [210 x 481] intentionally omitted <==

50

The Board agrees to fully empower the The Board agrees to fully empower the The Board agrees to fully empower the The Board agrees to fully empower the committee to handle everything pertinent to corporate social responsibility unless otherwise committee to handle everything pertinent to corporate social responsibility unless otherwise committee to handle everything pertinent to corporate social responsibility unless otherwise committee to handle everything pertinent to corporate social responsibility unless otherwise committee to handle everything pertinent to corporate social responsibility unless otherwise committee to handle everything pertinent to corporate social responsibility unless otherwise committee to handle everything pertinent to corporate social responsibility unless otherwise committee to handle everything pertinent to corporate social responsibility unless otherwise committee to handle everything pertinent to corporate social responsibility unless otherwise committee to handle everything pertinent to corporate social responsibility unless otherwise committee to handle everything pertinent to corporate social responsibility unless otherwise specified by law 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
Condition 5 years of experience or more
and the following professional qualification		 Compliance of independence (Note 2)
As a lecturer Professional or Work
or higher expert through experience
position at a national in Number of
public or
private school
of higher
examinations with
issuance of
certificates such as
commerce,
law,
finance and		 other
companies
where the		 Remar
ks
Identity
(Note 1)		 education in
commerce,
law, finance		 court judge, public
prosecutor, lawyer,
accountants or

banking,
accounting
or		 1 2 3 4 5 6 7 8 9 10 member is
also a
member of
and banking, other necessary their
accounting, specialization for remuneration
or the required for company committees
disciplines company operation.
and subject operation.
Name required for
company
operation.
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
51

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.

==> picture [210 x 481] intentionally omitted <==

52

  1. Information on the operation of the Remuneration Committee

  2. (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 5 meetings (A) in 2020. The qualifications of and attendance of the meetings by the committee members are as follows:

Job title Name Attendance in
person (B)		 Attendance by
proxy		 Actual attendance (%)
(B/A)(Note)		 Remarks
Convener Hsiu-Mei Lin 5 0 100% Newly appointed on July 11, 2019
Member Jui-Tung Lu 5 0 100% Newly appointed on July 11, 2019
Member Chung-Mei Chen 5 0 100% Reelected as member on July11, 2019
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 re-elected 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:

==> picture [210 x 481] intentionally omitted <==

53

==> picture [210 x 481] intentionally omitted <==

  • 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 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 2020 and subsequent actions taken

Remuneration Committee Contents of Motion Resolution Company’s response to Remuneration
Committee’s opinions
2nd meeting of the 4th Remuneration
Committee (February 17, 2020)		 I.
Review of 2019 director and employee
(including managers) remuneration.
II. Review of appointment and compensation of the
managers of the Company
III. Amendment to the organization code of the
RemunerationCommittee 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 5th
session of the 20th Board of Directors
dated Feb. 27, 2020 and approved by all
directors present at the meeting.
3rd meeting of the 4th Remuneration
Committee (April 17, 2020)		 I. Distribution of 2019 director remuneration.
II.
Assessment of the changes in the performance
bonus of the Chairman, resident directors and
manager of theCompany		 The motions were approved by
all members of the committee
and submitted to the latest board
meetingfor resolution		 The motions were submitted to the 7th
session of the 20th Board of Directors
dated April 29, 2020 and approved by all
directorspresent at the meeting.
4th meeting of the 4th Remuneration
Committee (June 23, 2020)		 I.
Review of appointment and compensation of the
managers of the Company
II.
Approval of the pension for the managers of
the Company		 The motions were approved by
all members of the committee
and submitted to the latest board
meetingfor resolution		 The motions were submitted to the 8th
session of the 20th Board of Directors
dated July 8, 2020 and approved by all
directors present at themeeting.
5th meeting of the 4th Remuneration
Committee (August 17, 2020)		 I.
Review of appointment and compensation of the
managers of the Company
II. Approval of the pension for the managers of the
Company
III. Amendment to the organization code of the
RemunerationCommittee of theCompany.		 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 9th
session of the 20th Board of Directors
dated August 26, 2020 and approved by all
directors present at the meeting.
6th meeting of the 4th Remuneration
Committee (December 21, 2020)		 I.
Approval of the pension for the managers of the
Company
II. Review of appointment and compensation of the
managers of theCompany		 The motions were approved by
all members of the committee
and submitted to the latest board
meetingfor resolution		 The motions were submitted to the 11th
session of the 20th Board of Directors
dated December 30, 2020 and approved by
all directorspresent at the meeting.

54

(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.

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)
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.
2.
The Company conducted a risk assessment on
environmental, social and corporate governance
are relevant to its operations and implemented
risk management policies or strategies based on
principles of materiality. The related strategies
are stated as follows:










I.
Conforming to Corporate
Social Responsibility Best
Practice
Principles
for
Companies
Listed
on
TWSE /TPEx.
Important
issues		 Items for risk
assessment		 Risk management policies
or strategies
Environment Promote the sustainable
environmental
development
1. Promote papaerless
insurance policy and
practice
energy-conservation
strategies.
2. Digitalize operating
procedures and reduce
waste of resources.
3. Continue garbage
classification and reduce
the generation of waste.
4. Continue to procure
eco-friendly products
with energy-conservation

==> picture [210 x 481] intentionally omitted <==

55

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)
and environmental
protection marks.
Social care Continue to extend care
to society and
strengthen the
cooperative relationship
with customers.		 1. Help customers seek the
knowledge about damage
prevention to cut losses.
2. Uphold the fair treatment
policy to maintain
relations with customers.
3. Participate in charity
activities to give
feedback needed by the
local community.
Corporate
Governance		 Fulfill an enterprise
owner’s responsibility		 1. Strengthen corporate
governance.
2. Sustainability action.
3. Establish risk
management culture.
4. Stengthen institutional
investor’srole.
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 13 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.
III. Environmental issues
(I)
Has the Company developed an appropriate
environmental management system, given its		 Yes III. Environmental issues
(I)
The Company has educated its employees to
classifydumps and recyclingof materials,and
(I)
Conforming to Corporate
Social ResponsibilityBest

56

==> picture [210 x 481] intentionally omitted <==

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)
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		 has enhanced the efficient use of resources
(refer to pages 28~30 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 from
time to time to enforce energy conservation
among employees. Carbon emission (kgCO2e)
in 2020 was 35,091 (kgCO2e) less than 2019,
averaging 2,924 (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. Meanwhile,the Companywill
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.

==> picture [210 x 481] intentionally omitted <==

57

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)
continue to communicate the water-saving
measures to all colleagues.
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.50 of 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
system appropriately reflects corporate
performance and results in employees’
compensations (refer to pages 57~59 of the
CSR Report of the Company).
(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 YangPing		 (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.

==> picture [210 x 481] intentionally omitted <==

58

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
Yes
Yes		 No South Road location have been equipped with
the AED for first-aid (refer to pages 49~50 of
the CSR Report of the Company).
(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 pages 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
thepast. The contracts bindingthe 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 on
TWSE / TPEx.

==> picture [210 x 481] intentionally omitted <==

59

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)
suppliers’ performance on a regular basis? 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 could terminate or rescind the
clause of these contracts at anytime.
V.
Does the Company prepare corporate social
responsibility report or any report of non-financial
information based on international reporting
standards or guidelines? Are the abovementioned
reports supported by assurance or opinion of a
third-party certifier?




Yes		 The Company prepares its CSR report based on
GRI (Global Reporting Initiative) Standards, and
has opted for
Core
disclosure.
Stakeholder
inclusiveness, sustainability context, materiality and
completeness are the four defining principles
adopted in the preparation of CSR report.




V. Conforming to Corporate
Social Responsibility Best
Practice
Principles
for
Companies Listed on TWSE
/ TPEx.
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 regularly donate AED to charity
organizations since 2016. The recipients in 2016 were schools in Taipei City (Xiyuan Elementary School, Nanmen Elementary School, Jingxing
Junior High School,Daan Vocational High School,and Yongchun Senior High School). From 2017 onward,the recipients of donations shall be

==> picture [210 x 481] intentionally omitted <==

60

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)
governed by the Company’s regulations on Donations with adjustment of the quantity of the items for donation as needed. As of 2020, First
Insurance had donated 25 AEDs to 21 administrative areas of Taiwan, making the donated administrative areas become safe and healthy
workplaces.

governed by the Company’s regulations on Donations with adjustment of the quantity of the items for donation as needed. As of 2020, First Insurance had donated 25 AEDs to 21 administrative areas of Taiwan, making the donated administrative areas become safe and healthy workplaces.

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, the 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

==> picture [79 x 16] intentionally omitted <==

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

Chief Secretary/Deputy
Head
----- End of picture text -----

==> picture [210 x 481] intentionally omitted <==

61

==> picture [210 x 481] intentionally omitted <==

Members and function of the committee:

Members and function of the committee:
Committee functionalgroups Members Primaryfunction Operation in 2020
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.		 Already reported to the
Board of Directors on
March 26, 2021.

62

(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/TPEx Listed
Companies and 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 a 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”?
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. The Board of
Directors and senior management all
concluded the commitment to practice the
ethical corporate management policy.
(II)
The Company has established measures for
the prevention of unethical practices in March
2016 with proper operation procedures,
ethical code of conduct, penalty on violations,
and the system for filing complaints about
subsequent actions. The Company has
adopted measures to prevent acceptance and
offering of bribes and offering of illegal
political donations within the scope of		 (I)
Consistent with
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies.
(II)
Consistent with
Ethical Corporate
Management
Best-Practice
Principles for
TWSE/TPEx Listed
Companies.

==> picture [210 x 481] intentionally omitted <==

63

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/TPEx Listed
Companies and the reasons
Yes No Summary
(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 operation that entails higher risk for unethical
business practice.
(III) The Company has specified relevant details in
various preventions adopted against dishonest
conduct and made corresponding amendments
on July 11, 2019.

(III) Consistent with
Ethical Corporate
Management
Best-Practice
Principles for
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
counterparts it has business relationships with? Are
there any integrity clauses in the agreements it signs
with business partners?		 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
integrityin relevant business contracts.		 (I)
Consistent with
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed

==> picture [210 x 481] intentionally omitted <==

64

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/TPEx Listed
Companies and the reasons
Yes No Summary
(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 conduct) to the board of directors on a
regular basis (at least once a year)?		 Yes (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 annually.
1. The Company has established a Corporate
Governance Center under the Board of
Directors. The Corporate Governance Center
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 2020:
(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
2020, the Company organized 142 training
courses on the publicity of and training in
integrity policies).
(3) Plan the reporting systems to ensure the
effectiveness of the implementation
thereof.
(4) Declaration for Fulfillment of Ethical		 Companies.
(II)
Consistent with
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies.

==> picture [210 x 481] intentionally omitted <==

65

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/TPEx Listed
Companies and 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 an effective
accounting policy and internal control system to
maintain business integrity? Has an internal audit unit
been assigned to devise audit plans based on the
outcome of integrity risk assessment and 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
Yes
Yes		 Corporate Management Policy
3. The 2020 implementation of the reporting
systems were reported to the 13th session of
the 20th Board of Directors on March 26,
2021.
(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 a viable
accounting system, internal control system
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.
(III) Consistent with
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies.
(IV) Consistent with
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies.
(V)
Consistent with
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies.

==> picture [210 x 481] intentionally omitted <==

66

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/TPEx Listed
Companies and the reasons
Yes No Summary
III. The functioning of the informant system
(I)
Does the Company provide incentives and means for
employees to report misconduct? Does the Company
assign dedicated personnel to investigate the reported
misconducts?
(II)
Has the Company implemented any standard
procedures for handling reported misconduct 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 Company has established reporting
systems, procedures for processing reports,
grievance channels, and designated
appropriate employees who process reports
against those reported?
(II)
The Company has established a standard
operating 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
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies.
(II)
Consistent with
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies.
(III) Consistent with
Ethical Corporate
Management Best
Practice Principles for
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 Ethical
Corporate Management
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 currentpractices and anydeviations from the Best Practice Principles:

==> picture [210 x 481] intentionally omitted <==

67

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/TPEx Listed
Companies and the reasons
Yes No Summary
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 Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies.
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.

The Company has established the ethical corporate management best practice principles in 2016 and has disclosed the content at its official website and MOPS. These principles are congruent with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies. 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:

  • (1)Management goals:

According to the Company’s “Corporate Governance Best-Practice Principles”, the composition of Board members shall take diversification into account and adopt adequate diversified policy subject to the Company’s operations, business type, and development needs, including but not limited to the following two dimensional standards:

Basic qualification and value: Age and identity, etc.

Professional knowledge and skill: Professional background, professional skills and industry experience, etc.

For ideal corporate governance, the Board of Directors shall possess the following capacities overall:

Business administration (including operating judgment and business administration ability)

Leadership and decision-making (including leadership, decision-making, and crisis management)

  • Industry knowledge (including risk management knowledge and ability, professional knowledge about financial insurance, and international view of the

  • market).

Accounting and finance (including the ability in accounting and financial analysis).

  • (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 a 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. For the time being, by each director’s academic background and experience, the Board has the following professional human resources: 9 persons for business administration, 9 persons for leadership and decision making, 9 persons for industry knowledge and 6 persons for accounting and finance. 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

==> picture [210 x 481] intentionally omitted <==

68

==> picture [210 x 481] intentionally omitted <==

director during the 2019 re-election to promote gender equality. It will continue enhancing board function, diversity and independence in the future by adhering to its Best Practice Principles and Director Election Policy.

The roster of 13 members of the Company’s 20th Board of Directors includes the directors specialized in the Company’s main profession, insurance, and the others specialized in construction, electrical engineering industry and accounting firm, thus helpful for the Company’s diversified development.

(3) Management goals and achievement of the Company’s diversification policy:

Measurements of
diversity
Name of
Director		 Sex Range of Age Independent
Director’s
Seniority		 Corporate management Leadership and
decision-making		 industry knowledge finance and accounting
C. H. Lee Male 60~70 - V V V V
Cheng-TsungLee Male 60~70 - V V V
Cheng-Tu Lee Male 50~60 - V V V
Edward Y. C. Lee Male 30~40 - V V V
Shao-YingLee Male 70~80 - V V V
Chi-Chen Tu Male 60~70 - V V V
David Huang Male 60~70 - V V V V
Cheng-Chin Lee Male 60~70 - V V V
Chien-Yi Hsu Male 70~80 - V V V V
Tien-ChingYang Male 70~80 - V V V V
Jui-TungLu Male 70~80 4~6 V V V V
Jui-Chou Lin Male 70~80 1~3 V V V
Hsiu-Mei Lin Female 60~70 1~3 V V V V
  • 2.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.

  • 3.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 supervisor so as to protect shareholders’ interests and strengthen the functions of the Board of Directors.

  • (2) The main duties of the corporate governance supervisor 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 2020:

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

69

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 2020 refresher training courses related to corporate governance:

In accordance with 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 an 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
2020/06/12 Taiwan Corporate Governance
Association		 CGP - Ten Required Corporate Governance
Courses		 3
2020/09/04 Taiwan Corporate Governance
Association		 Practices About Operations of Board of
DirectorsandFunctionalCommittees		 3
2020/09/11 Taiwan Corporate Governance
Association		 Case Study on Corporate Governance 3
2020/09/18 Taiwan Corporate Governance
Association		 Role Played by Institutional Investors in
Enterprise’s Improvement of Corporate
Governance		 3
2020/09/24 Corporate Governance Professionals
Association		 2020 Beneficial Owner Legal System
Conference		 3
2020/09/30 Insurance Bureau of Financial
Supervisory Commission		 2020 Insurance Company Governance
Conference		 5.5
2020/10/16 Taiwan Stock Exchange Corporation Corporate Governance and Ethical
Management Announcement Meeting for
Board of Directors		 3
2020/10/23 Taiwan Insurance Institute TCFD - Challenge and Opportunity for
CorporateGovernance		 3

(IX) Disclosures relating to the execution of internal control system:

  1. Statement of Declaration of Internal Control (please see page 71).

  2. If the internal control system was reviewed by an external CPA, the result of such review must be disclosed (please refer to page 72).

==> picture [210 x 481] intentionally omitted <==

70

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, 2020, 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 2021.

To

Financial Supervisory Commission Declared By: The First Insurance Co., Ltd. Chairman: C. H. Lee

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, 2021

==> picture [193 x 624] intentionally omitted <==

71

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, 2021. We have audited the declarations, which was effective in design and enforcement as of December 31, 2020. 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 March 30, 2004, Financial Supervisory Commission Letter

Jin-Guan-Bao-Cai-Zi No. 10904930471 dated August 20, 2020, and Financial Supervisory Commission Letter Jin-Guan-Bao-Cai-Zi No. 10602506430 dated January 15, 2018, 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, 2020, in conformity to the “Regulations Governing the Implementation of the Internal Control System and Internal Audit System of Insurance Industry”, and the “Criteria for the Establishment of Internal Control System 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, 2021, 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.

Deloitte Taiwan

CPA: Alice Huang

CPA: Wan-Yi Liao

March 29, 2021

==> picture [193 x 624] intentionally omitted <==

72

(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 the annual report that may significantly impact shareholders’
interest or security price; describe details of the penalty, areas of weakness and any
corrective actions taken: None.
(XI) Major resolutions passed in shareholder meetings and board of directors meetings held
in the lastyear uptill thepublication date of this annual report.
Date of
session
Major resolutions of the General
Meetingof Shareholders and the Board
State of execution
2020/6/23
General Meeting of Shareholders - The
Company’s 2019 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.
2020/6/23
General Meeting of Shareholders- The
proposal of the distribution of
earnings of the Company in
2019.
The motion is passed as stated.
2020/6/23
General Meeting of Shareholders- the
proposal of the distribution of
dividends of the Company in
2019.
The motion is passed as stated.
Cash dividend at NT$0.96/share
was paid on August 21, 2020.
2020/6/23
Shareholders’ Meeting - Amendments to
certain provisions of the
Company’s Rules of Procedure
for Shareholders’ Meeting
The motion is passed as stated
and executed accordingly.
2020/7/8
Board of Directors – The cash dividend
day of the Company in 2019
with ex-dividend day, base day
and dividendpayment dayset.
The motion is passed as stated.
Cash dividend at NT$0.96/share
was paid on August 21, 2020.
2020/7/8
Board of Directors - Review of the
appointment and compensation
of the managers of the
Company.
The motion is passed as stated.
2020/7/8
Board of Directors – Approval of the
pension for the managers of the
Company.
The motion is passed as stated.
2020/7/8
Board of Directors – Amendment to the
regulations of the Company
governing transactions with
stakeholders beyond financing.
The motion is passed as stated
and executed accordingly.
2020/7/8
Board of Directors - Amendment to the
procedure of the Company
regulating transactions with
stakeholders beyond financing.
The motion is passed as stated
and executed accordingly.
2020/7/8
Board of Directors – Amendment to the The motion ispassed as stated		 (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 the annual report that may significantly impact shareholders’
interest or security price; describe details of the penalty, areas of weakness and any
corrective actions taken: None.
(XI) Major resolutions passed in shareholder meetings and board of directors meetings held
in the lastyear uptill thepublication date of this annual report.
Date of
session
Major resolutions of the General
Meetingof Shareholders and the Board
State of execution
2020/6/23
General Meeting of Shareholders - The
Company’s 2019 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.
2020/6/23
General Meeting of Shareholders- The
proposal of the distribution of
earnings of the Company in
2019.
The motion is passed as stated.
2020/6/23
General Meeting of Shareholders- the
proposal of the distribution of
dividends of the Company in
2019.
The motion is passed as stated.
Cash dividend at NT$0.96/share
was paid on August 21, 2020.
2020/6/23
Shareholders’ Meeting - Amendments to
certain provisions of the
Company’s Rules of Procedure
for Shareholders’ Meeting
The motion is passed as stated
and executed accordingly.
2020/7/8
Board of Directors – The cash dividend
day of the Company in 2019
with ex-dividend day, base day
and dividendpayment dayset.
The motion is passed as stated.
Cash dividend at NT$0.96/share
was paid on August 21, 2020.
2020/7/8
Board of Directors - Review of the
appointment and compensation
of the managers of the
Company.
The motion is passed as stated.
2020/7/8
Board of Directors – Approval of the
pension for the managers of the
Company.
The motion is passed as stated.
2020/7/8
Board of Directors – Amendment to the
regulations of the Company
governing transactions with
stakeholders beyond financing.
The motion is passed as stated
and executed accordingly.
2020/7/8
Board of Directors - Amendment to the
procedure of the Company
regulating transactions with
stakeholders beyond financing.
The motion is passed as stated
and executed accordingly.
2020/7/8
Board of Directors – Amendment to the The motion ispassed as stated		 (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 the annual report that may significantly impact shareholders’
interest or security price; describe details of the penalty, areas of weakness and any
corrective actions taken: None.
(XI) Major resolutions passed in shareholder meetings and board of directors meetings held
in the lastyear uptill thepublication date of this annual report.
Date of
session
Major resolutions of the General
Meetingof Shareholders and the Board
State of execution
2020/6/23
General Meeting of Shareholders - The
Company’s 2019 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.
2020/6/23
General Meeting of Shareholders- The
proposal of the distribution of
earnings of the Company in
2019.
The motion is passed as stated.
2020/6/23
General Meeting of Shareholders- the
proposal of the distribution of
dividends of the Company in
2019.
The motion is passed as stated.
Cash dividend at NT$0.96/share
was paid on August 21, 2020.
2020/6/23
Shareholders’ Meeting - Amendments to
certain provisions of the
Company’s Rules of Procedure
for Shareholders’ Meeting
The motion is passed as stated
and executed accordingly.
2020/7/8
Board of Directors – The cash dividend
day of the Company in 2019
with ex-dividend day, base day
and dividendpayment dayset.
The motion is passed as stated.
Cash dividend at NT$0.96/share
was paid on August 21, 2020.
2020/7/8
Board of Directors - Review of the
appointment and compensation
of the managers of the
Company.
The motion is passed as stated.
2020/7/8
Board of Directors – Approval of the
pension for the managers of the
Company.
The motion is passed as stated.
2020/7/8
Board of Directors – Amendment to the
regulations of the Company
governing transactions with
stakeholders beyond financing.
The motion is passed as stated
and executed accordingly.
2020/7/8
Board of Directors - Amendment to the
procedure of the Company
regulating transactions with
stakeholders beyond financing.
The motion is passed as stated
and executed accordingly.
2020/7/8
Board of Directors – Amendment to the The motion ispassed as stated
Date of
session		 Major resolutions of the General
Meetingof Shareholders and the Board		 State of execution
2020/6/23 General Meeting of Shareholders - The
Company’s 2019 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.
2020/6/23 General Meeting of Shareholders- The
proposal of the distribution of
earnings of the Company in
2019.		 The motion is passed as stated.
2020/6/23 General Meeting of Shareholders- the
proposal of the distribution of
dividends of the Company in
2019.		 The motion is passed as stated.
Cash dividend at NT$0.96/share
was paid on August 21, 2020.
2020/6/23 Shareholders’ Meeting - Amendments to
certain provisions of the
Company’s Rules of Procedure
for Shareholders’ Meeting		 The motion is passed as stated
and executed accordingly.
2020/7/8 Board of Directors – The cash dividend
day of the Company in 2019
with ex-dividend day, base day
and dividendpayment dayset.		 The motion is passed as stated.
Cash dividend at NT$0.96/share
was paid on August 21, 2020.
2020/7/8 Board of Directors - Review of the
appointment and compensation
of the managers of the
Company.		 The motion is passed as stated.
2020/7/8 Board of Directors – Approval of the
pension for the managers of the
Company.		 The motion is passed as stated.
2020/7/8 Board of Directors – Amendment to the
regulations of the Company
governing transactions with
stakeholders beyond financing.		 The motion is passed as stated
and executed accordingly.
2020/7/8 Board of Directors - Amendment to the
procedure of the Company
regulating transactions with
stakeholders beyond financing.		 The motion is passed as stated
and executed accordingly.
2020/7/8 Board of Directors – Amendment to the The motion ispassed as stated

==> picture [193 x 624] intentionally omitted <==

73

internal control system and
internal audit system of the
Company.		 and executed accordingly.
2020/8/26 Board of Directors - The Company’s Q2
2020 financial statements		 The motion is passed as stated
with declaration with and
disclosure at MOPS of Taiwan
Stock Exchange Corporation.
2020/8/26 Board of Directors – Dismissal of
managers of the Company.		 The motion is passed as stated.
2020/8/26 Board of Directors - Review of the
change of the responsible
person of the Company’s
branch office, and appointment
and compensation of the
managers of the Company.		 The motion is passed as stated.
2020/8/26 Board of Directors - the Company’s
107F137 Inspection Findings
Improvement.		 The motion is passed as stated.
2020/8/26 Board of Directors - The EI193-2019
Deficiencies in Internal Control
and Improvement of Abnormal
Events.		 The motion is passed as stated.
2020/8/26 Board of Directors - Implementation of
the internal audit business of
the Company from January to
July2020.		 The motion is passed as stated.
2020/8/26 Board of Directors - Report on Periodic
Self-audit by Various
Departments of the Company in
2020.
The motion is passed as stated.
2020/8/26 Board of Directors - Amendments to the
Company’s Consumer Dispute
Resolution System.		 The motion is passed as stated
and executed accordingly.
2020/8/26 Board of Directors – Amendments to the
Organization Code of Audit
Committee of the Company.
The motion is passed as stated
and executed accordingly.
2020/8/26 Board of Directors – Amendments to the
Organization Code of
Remuneration Committee of
the Company.
The motion is passed as stated
and executed accordingly.
2020/8/26 Board of Directors – Amendment to the
internal control system and
internal audit system of the
Company.		 The motion is passed as stated
and executed accordingly.
2020/11/11 Board of Directors – The 2nd report on
risk management in 2020.		 The motion is ratified as stated.
2020/11/11 Board of Directors - The Company’s
2020 Financial Consumers’
Protection Project Inspection
Report(No.: 109F110)		 The motion is passed as stated.

==> picture [193 x 624] intentionally omitted <==

74

improvement.
2020/11/11 Board of Directors - Restatement of the
Company’s overdue receivables
for premium, NT$288,842, into
bad debt.
The motion is passed as stated.
2020/12/30 Board of Directors – The business plan
of the Companyin 2021.		 The motion is passed as stated.
2020/12/30 Board of Directors – The Compliance
Plan of the Companyin 2021.		 The motion is passed as stated.
2020/12/30 Board of Directors – The audit plan of
the Companyin 2021.		 The motion is passed as stated.
2020/12/30 Board of Directors – The investment
policyof the Companyin 2021.		 The motion is passed as stated.
2020/12/30 Board of Directors – The AML/CFT
Training Plan of the Company
in 2021.		 The motion is passed as stated.
2020/12/30 Board of Directors - The Company’s
2020 F110 Inspection Findings
Improvement.(Table B)		 The motion is passed as stated.
2020/12/30 Board of Directors – Change of the
Company’s related
organization.		 The motion is passed as stated.
2020/12/30 Board of Directors – Approval of the
pension for the managers of the
Company.		 The motion is passed as stated.
2020/12/30 Board of Directors - Review of the name
change of the Company’s
Taipei Branch Office and
appointment and compensation
of the managers of the
Company.
The motion is passed as stated.
2020/12/30 Board of Directors – Amendments to
certain provisions of the
Articles of Association of the
Company.		 The motion is passed as stated
and executed accordingly.
2020/12/30 Board of Directors – Amendments to
certain provisions of the
regulations governing
donations of the Company.		 The motion is passed as stated
and executed accordingly.
2020/12/30 Board of Directors – Amendment to the
internal control system and
internal audit system of the
Company.		 The motion is passed as stated
and executed accordingly.
2021/2/26 Board of Directors - Review of the
regulations governing
performance evaluation of and
compensation and remuneration
to the Company’s directors.
The motion is passed as stated.
2021/2/26 Board of Directors - Review of the
regulationsgoverning		 The motion is passed as stated.

==> picture [193 x 624] intentionally omitted <==

75

performance evaluation of and
compensation and remuneration
to the Company’s managers.
2021/2/26 Board of Directors – Approval of the
pension for the managers of the
Company.		 The motion is passed as stated.
2021/2/26 Board of Directors - Review of the
compensation of the managers
of the Company.		 The motion is passed as stated.
2021/2/26 Board of Directors – Approval of the
remuneration to directors and
employees (including the
managers) of the Company in
2020.		 Passed as stated and presented to
the 2021 Annual General
Meeting.
2021/3/26 Board of Directors – The Business
Report of the Company in
2020.		 Passed as stated and presented to
the 2021 Annual General Meeting
for ratification.
2021/3/26 Board of Directors – Financial
Statements for 2020.		 Passed as stated and presented to
the 2021 Annual General Meeting
for ratification.
2021/3/26 Board of Directors – Distribution of
2020 earnings.		 Passed as stated and presented to
the 2021 Annual General Meeting
for discussion.
2021/3/26 Board of Directors – Distribution of
2020 dividends.		 Passed as stated and presented to
the 2021 Annual General Meeting
for discussion.
2021/3/26 Board of Directors - Statement
of Overall Implementation of
Information Security Systems
bythe Companyin 2020.		 The motion is passed as stated.
2021/3/26 Board of Directors – Statement of
Declaration of Internal Control
in 2020		 The motion is passed as stated.
2021/3/26 Board of Directors – Statement of
Declaration of Internal Control
in AML/CFT in 2020.		 The motion is passed as stated.
2021/3/26 Board of Directors - Report on the
Company’s 2020 F110 II-
Inspection Findings
Improvement(Chart B).		 The motion is passed as stated.
2021/3/26 Board of Directors– Announcement of
2021 Annual General Meeting.		 The motion is passed as stated.
2021/3/26 Board of Directors – Assessment report
on the independence of the
CPAs from Deloitte Taiwan, the
external auditor firm
commissioned by the Company
in 2020.
The motion is passed as stated.
2021/3/26 Board of Directors – Auditing fee
charged byDeloitte Taiwan in		 The motion is passed as stated.

==> picture [193 x 624] intentionally omitted <==

76

2021 for auditingservice.
2021/3/26 Board of Directors - Planning to adjust
time schedules related to
strategies, SOPs and internal
control in terms of products,
investment and risk control
under IFRS 17.		 The motion is passed as stated.
2021/3/26 Board of Directors – The Company’s
compliance with investment
regulations.		 The motion is passed as stated.
2021/3/26 Board of Directors – Amendments to
certain provisions of the
Company’s Rules of Procedure
for Shareholders’ Meeting.		 The motion is passed as stated
and executed accordingly.
2021/3/26 Board of Directors - Amendments to
certain provisions of the
Company’s Procedure for
Election of Directors.		 The motion is passed as stated
and executed accordingly.
2021/3/26 Board of Directors – Amendment to the
internal control system and
internal audit system of the
Company.		 The motion is passed as stated
and executed accordingly.
2021/4/29 Board of Directors - Distribution of
2020 director remuneration.		 The motion is passed as stated.
2021/4/29 Board of Directors - Assessment of the
changes in the performance
bonus of the Chairman, resident
directors and managers of the
Company.
The motion is passed as stated.
2021/4/29 Board of Directors – Dismissal of
managers of the Company.		 The motion is passed as stated.
2021/4/29 Board of Directors – The 1st report on
risk management in 2021.		 The motion is passed as stated.
2021/4/29 Board of Directors - “2021 Risk and
Solvency Assessment Report
(Regulatory Report),” “2021
Risk and Solvency Assessment
Report(Internal Report).”		 The motion is passed as stated.

(XII) Documented opinions or declarations made by Directors or Supervisors against board resolutions in the most recent year, up till the publication date of the 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:

==> picture [193 x 624] intentionally omitted <==

77

Resignation/dismissal of relevant personnel

April 30,2021
Job 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		 Non-auditing fee Non-auditing fee Non-auditing fee Non-auditing fee Non-auditing fee Examination
period		 Remarks
Examination
period
Deloitte
Taiwan		 Alice
Huang,
Wan-Yi
Liao		 3,200 - - - - - 2020 -

  • (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:

==> picture [193 x 624] intentionally omitted <==

78

==> picture [193 x 624] intentionally omitted <==

Assessment Report on Independence of CPA in 2020

The Company appointed Alice Huang, CPA, and Wan-Yi Liao, CPA, of Deloitte Taiwan for the audit and certification of the 2020 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”.

Assessed by: Kuei-Chu Lin Supervisor: Fei-Fen Hsiao

79

==> picture [193 x 624] intentionally omitted <==

V. Information on replacement of CPA: None. 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 2020 2020 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		 50,000 - - -
Director Cheng-Tu Lee - - - -
Director Edward Y. C. Lee - - - -
Director Shao-YingLee - - - -
Director Chimax
Development
Company
Representative:
Chi-Chen Tu		 - - - -
Director Cheng-Chin Lee - - - -
Director David Huang - - - -
Director Chien Cheng
Development Co.,
Ltd. Representative:
Tien-ChingYang
-		 - - -
Director Da Feng
Construction
Engineering Co.,
Ltd. Representative:
Chien-Yi Hsu
-		 - - -
Independent
Director		 Jui-Tung Lu - - - -
Independent
Director		 Jui-Chou Lin - - - -
Independent
Director		 Hsiu-Mei Lin - - - -
Manager Jack Chen
(relieved from
office on
2020/2/25)		 - - - -

80

==> picture [193 x 624] intentionally omitted <==

Manager ChingChangChen - - - -
Manager Jen-Huai Liu - - - -
Manager C. S. Lin
(Relieved from
office on February
1,2021)		 - - - -
Manager Tom C. T. Chen - - - -
Manager Stephen S.C. Shen
(Relieved from
office on May 12,
2020)		 - - - -
Manager Chu-Minn Leu - - - -
Manager Emerson Chien - - - -
Manager Jack Chu
(Relieved from
office on August 1,
2020)		 - - - -
Manager Edward Y. C. Lee - - - -
Manager Yeong-RongHsiao - - - -
Manager Chen-HsiungLin 2,000 - - -
Manager Beiru Lee
(Relieved from
office on May 1,
2020)		 - - - -
Manager Fei-Fen Hsiao - - - -
Manager Te-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 - - - -
Manager H. C. Huang
(Relieved from
office on November
5,2020)
-		 - - -
Manager Tung-Sen Shih - - - -
Manager Chuan-Wei Hu - - - -
Manager Tung-Ying Wu
(Onboard since July
8,2020)
-		 - - -
Manager Chien-Sheng Chen
(Onboard since
August 1,2020)		 - - - -
Manager Wei-Jen Tsai - - - -

81

==> picture [193 x 624] intentionally omitted <==

(Onboard since
January1,2021)
Manager
Neil Yen
(Onboard since - - - -
January1,2021)
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)		 Reasons for
transfer of
shares (Note 2)		 Date of
transaction		 Counterparties 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
the
changes in
pledge
(Note 2)

Date of
change		 Counterparties Counterparty’s
relationship
with the
Company,
directors,
supervisors,
managers and
shareholders
with more than
10%
ownership
interest		 Number
of shares		 Proportion
of
shareholding		 Proportion
of pledge
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.”

82

==> picture [193 x 624] intentionally omitted <==

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

Name
(Note 1)		 Shares held in own name Shares held in own name Shareholding by spouse
or dependents		 Shareholding by spouse
or dependents		 Shareholding
under the
title of a third
party		 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)

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)
Number of
shares		 Number of
shares		 Title
(or name)		 Relation
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
OSTA
TRADING
CO.,LTD.		 15,823,085 5.25% - - - - Tsai Cheng
Enterprise Co.,
Ltd.
With the
same
chairman.
Deputy Agent:
Cheng-Tu Lee
3,296,991		 1.09% 606,203 0.20% - - Cheng-Tsung
Lee
Pei-Chuen Lee		 Brothers
Elder sister
and
younger
brother
Sheng Ching
Investment
Co.,Ltd.		 15,159,289 5.03% - - - - - -
Deputy Agent:
Shu-Huei
Huang
-		 - - - - - - -
Tsai Cheng
Enterprise
Co., Ltd.		 11,373,501 3.70% - - - - Da Feng
Construction
Engineering
Co.,Ltd.		 With the
same
chairman.
Deputy Agent:
Cheng-Tu 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.

83

==> picture [193 x 624] intentionally omitted <==

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
Kanlin
Investment
Co.,Ltd.		 4,061,000 1.35% - - - - - -
Deputy Agent:
Jung-Yu
Kan-Lai
-		 - - - - - - -
Hsiu-Chuan
Lee-Yang		 3,719,751 1.23% - - - - Yi Chih 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.

84

IX. The quantity of shares of the same investee held by the business under direct or indirect IX. The quantity of shares of the same investee held by the business under direct or indirect IX. The quantity of shares of the same investee held by the business under direct or indirect IX. The quantity of shares of the same investee held by the business under direct or indirect IX. The quantity of shares of the same investee held by the business under direct or indirect 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; %
Investment of the Directors,
Investment of the Supervisors, managers and Comprehensive
Direct investment Company business under direct or investment
(Note) indirect control.
Number of Shareholding
Number of
Shareholding		 Number Shareholding
shares percentage shares
percentage		 of shares percentage
Note: Long-term investment of the Company accounted for under the equity method.
85
**Four. ** **Four. ** **Four. ** Funding Status Funding Status Funding Status Funding Status
I.
I.		 Source of capital
Capital, shares, corporate bonds, preferred shares, global depositary receipt, employee stock options and M&A (including merger, acquisition and divestment)
Authorized capital Paid-up capital Remarks
Year /
month		 Issued
price
(NTD)		 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-Z
heng-(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-Z
heng-(I) No.
32388 dated
July 22, 1994
Approved
under Letter
1995/07 10 61,000 610,000 61,000 610,000 Cash issue
119,950		 None (84)-Tai-Cai-Z
heng-(I) No.
38516 dated
July5,1995
Cash issue
137,800 Approved
Capitalization of under Letter
1996.07 10 76,000 760,000 76,000 760,000 capital reserves
6,100		 None (85)-Tai-Cai-Z
heng-(I) No.
Capitalization of 41412 dated
special reserves July 9, 1996
6,100
Cash issue
1997/07 10 94,000 940,000 94,000 940,000 96,400
Capitalization of
retained
earnings
76,000
Capitalization of
special reserves

None		 Approved
under Letter
(86)-Tai-Cai-Z
heng-(I) No.
52271 dated
July 7, 1997
7,600
Cash issue
97,200
Capitalization of
retained Approved
earnings under Letter
1998/07 10 115,000 1,150,000 115,000 1,150,000 103,400
Capitalization of
None		 (87)-Tai-Cai-Z
heng-(I) No.
special 59513 dated
reserves4,700 July 14, 1998
Capitalization of
capital reserves
4,700
86
Cash issue
169,500
Capitalization of
retained Approved
earnings under Letter
1999/07 10 140,000 1,400,000 140,000 1,400,000 69,000
Capitalization of
None		 (88)-Tai-Cai-Z
heng-(I) No.
special reserves 62487 dated
5,750 July 7, 1999
Capitalization of
capital reserves
5,750
Cash issue Approved
206,200 under Letter
2000/08 10 170,000 1,700,000 170,000 1,700,000 Capitalization of
retained
None		 (89)-Tai-Cai-Z
heng-(I) No.
earnings 56269 dated
93,800 June 29,2000
Cash issue Approved
204,000 under Letter
2001/07 10 200,000 2,000,000 200,000 2,000,000 Capitalization of
retained
None		 (90)-Tai-Cai-Z
heng-(I) No.
earnings 141707 dated
96,000 July6,2001
Approved
2003/06 10 210,230 2,102,300 210,230 2,102,300 Capitalization of
retained
earnings
102,300
None		 under Letter
(92)-Tai-Cai-Z
heng-I No.
0920128642
dated June 30,
2003
Approved
2004/07 10 234,977 2,349,776 234,977 2,349,776 Capitalization of
retained
earnings
247,476
None		 under Letter
(93)-Zheng-Qi-
I-Zi No.
0930129931
dated July 7,
2004
2005/07 10 258,075 2,580,753 258,075 2,580,753 Capitalization of
retained
earnings
230,977
None		 Jin-Guan-Zhen
g-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-Zhen
g-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-Zhen
g-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.
87

==> picture [193 x 624] intentionally omitted <==

April 30,2021
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 specified.

Information relevant to the aggregate reporting policy Information relevant to the aggregate reporting policy Information relevant to the aggregate reporting policy Information relevant to the aggregate reporting policy Information relevant to the aggregate reporting policy Information relevant to the aggregate reporting policy
Type of
securities		 Planned amount of
issuance		 Issued quantity Purpose and
expected
benefits of
issued securities		 Scheduled date
of issuance for
unissued
securities

Remarks
Total
shares		 Amount
approved		 Number
of shares		 Price

II.II. Shareholder structureProgress on planned use of capital

II.
Shareholder structure		 II.
Shareholder structure		 II.
Shareholder structure		 II.
Shareholder structure		 II.
Shareholder structure		 II.
Shareholder structure		 II.
Shareholder structure
April 30,2021
Shareholder
structure
Count		 Government
agencies		 Financial
institutions		 Other
corporate
entities		 Natural
persons		 Foreign
institutions and
foreigners		 Total
count 0 3 145 21,371 75 21,594
Shares held
(shares)		 0 4,123,000 114,388,303 172,018,626 10,633,855 301,163,784
Shareholding
percentage(%)		 0% 1.37% 37.98% 57.12% 3.53% 100%

Note: All TWSE/TPEx and Emerging Stock Market companies listing for the first time are required to disclose Chinese investors’ holding interests. A Chinese 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.

88

III. Diversity of ownership

III. Diversity of ownership III. Diversity of ownership III. Diversity of ownership III. Diversity of ownership
Shareholding range Number of
shareholders		 Shares held Shareholding
percentage
1 to 999 14,180 543,024 0.18%
1,000 to 5,000 4,491 10,155,284 3.37%
5,001 to 10,000 1,110 9,047,477 3.00%
10,001 to 15,000 435 5,541,617 1.84%
15,001 to 20,000 313 5,817,383 1.93%
20,001 to 30,000 255 6,536,453 2.17%
30,001 to 40,000 146 5,205,010 1.73%
40,001 to 50,000 115 5,323,385 1.77%
50,001 to 100,000 215 15,305,010 5.08%
100,001 to 200,000 153 21,633,623 7.18%
200,001 to 400,000 86 23,809,124 7.91%
400,001 to 600,000 19 9,349,315 3.10%
600,001 to 800,000 15 10,277,750 3.41%
800,001 to 1,000,000 18 15,897,736 5.28%
1,000,001 and above -
Range to be determined as
deemed appropriate		 43 156,721,593 52.04%
Total 21,594 301,163,784 100.00%
Preferred shares
Shareholding range Number of
shareholders		 Shares held Shareholding
percentage
Range to be determined as
deemed appropriate
Total

==> picture [193 x 624] intentionally omitted <==

89

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

Item Year Year 2019 2020 Year-to-date
March 31,
2021
Market
price per
share(Note
1)		 High 15.70 14.80 13.85
Low 14.00 10.25 12.70
Average 14.64 13.43 13.10
Net worth
per share
(Note 2)		 Before dividend 22.62 22.45 22.94
After dividend 21.66 Note 8 -
Earnings
per share		 Weighted average outstanding
shares		 301,164 301,164 301,164
EPS(Note 3) 1.93 0.51 0.23
Dividends
per share		 Cash dividends 0.96 Note 8 -
Stock
dividends		 From earnings - - -
From capital reserves - - -
Cumulative undistributed
dividends(Note 4)		 - - -
Analysis of
investment
returns
P/E ratio(Note 5)		 7.59 26.33 -

Price to dividends ratio(Note 6)		 15.25 Note 8 -
Cash dividend yield (Note 7) 0.07 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 each year; the 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; the 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 a 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 2020 amounts are yet to be resolved during a shareholders’ meeting.

==> picture [193 x 624] intentionally omitted <==

90

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, 2021, the board resolved to pay out NT$105,407,324 from cumulative undistributed earnings as cash dividends. Based on the 301,163,784 shares outstanding, the payout is equivalent to NT$0.35 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$2,092 thousand and director remuneration: NT$1,255 thousand.

==> picture [193 x 624] intentionally omitted <==

91

X. (I)
Shares repurchased by the Company: (completed)		 X. (I)
Shares repurchased by the Company: (completed)		 X. (I)
Shares repurchased by the Company: (completed)		 X. (I)
Shares repurchased by the Company: (completed)		 X. (I)
Shares repurchased by the Company: (completed)		 X. (I)
Shares repurchased by the Company: (completed)		 Uptill April Uptill April
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 shares
bought back		 64,619,006 19,310,673 20,533,572 38,038,310 30,769,227 22,221,815
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.
Shares repurchased by the Company: (ongoing)		 Uptill April
Buyback attempt(Note) First(attempt) Second(attempt)
Purpose ofbuyback - -
Buybackperiod - -
Buybackpricerange - -
Types and number of shares bought back - -
Value of shares bought back - -
Quantity bought back as a percentage of planned
buyback(%)
-		 -
Number of shares retired and transferred - -
Cumulativeholding ofownshares - -
Cumulative holding of own shares as a percentage
to total outstandingshares(%)
-		 -
92

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

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

==> picture [193 x 624] intentionally omitted <==

  • 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 the 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 the 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 until the quarter before the publication date of the 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:

    1. 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.

    2. Where capital is intended to invest into another company, explain impacts to the operations of the invested business and the Company’s investment gains: Not applicable.

    3. 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.

93

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, D. House All-Risk 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. Agricultural Machinery All-Risk 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 & Officers Liability Insurance

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

      • (7) Credit Insurance

      • (8) Aviation Insurance

      • (9) Others: A. Money Insurance, B. Burglary & Theft Insurance, C. Bankers’ All Risk Insurance, D. Commercial Property Floater 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, F. Micro-Group Casualty 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, I. Group Health Insurance, J. Group Cancer Insurance, K. Group Daily Hospitalization Insurance

==> picture [193 x 624] intentionally omitted <==

94

(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:
2020 Premiums Revenues by Insurance Category
Unit: NTD thousands
Insurance category
Fire
Marine
Automobile
Others		 Total
Premium revenues
1,049,319
303,401
4,916,677
793,487		 7,062,884
Reinsurance
Premium
87,339
6,243
256,074
54,009		 403,665
Total
1,136,658
309,644
5,172,751
847,496		 7,466,549
(II) Industry overview:
1. The global insurance industry has suffered the losses in claims caused by the
COVID-19, US$21 billion, until the end of July, primarily applied to indemnify
against the losses for cancellation of travels or activities, business shutdown, and
trading credit insurance.
2. The new house fire insurance has been implemented since this year (2020). Upon
addition of the underwriting for new compensation for typhoon and flood and
raising of the compensation, the insurance company’s business for house fire
insurance will be affected, especially such impact factor as natural calamity.
3. Certain legal actions have arisen from the dispute over whether the business
losses caused by lockdown fall in business interruption coverage. Given this, the
giant in the insurance industry, Lloyd’s, proposed the “Black Swan Re”, hoping to
protect enterprises from the impact posed by systematic disasters, such as a
pandemic, multinational cyber attack, or global supply chain interruption through
the reinsurance for non-tangible loss business interruption insurance.
4. In order to help the insurance industry practice asset and liability management
comprehensively and reflect the insurance industry’s business risk more
reasonably, protect policy holders’ interest and maintain financial stability, and
improve the competitiveness of Taiwan’s insurance industry, Financial
Supervisory Commission (“FSC”) has announced that the insurance industry is
allowed to implement IFRS 17 and ICS’s new system as of 2026. FSC will
carefully evaluate the impact posed by IFRS 17 and ICS to the insurance industry,
and continue to supervise Taiwan Insurance Institute’s promotion of the relevant
matters subject to the current condition.
5. Through the competent authority’s powerful integration work, the “Claim
Consortium Blockchain” established by the Life Insurance Association of the
Republic of China allying with related units has been launched officially. At the
first stage, 9 life insurance companies and 2 property insurance companies joined
the Blockchain. Policyholders can file an application for change of contract or
claims with either of the participating insurance companies and agree the
insurance company to inform its peer companies to accept the application for
claim or security services via the shared platform set up by the Life Insurance
Association of the Republic of China, thus significantly improving the
convenience in the processing of the application for change of contract or claims.
(III) Technological research and development:
The Company allocates budget to train professional talents and develop new products
95

on a yearly basis.

  • (IV) Long and short-term business plans:

    1. 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) Provide direct customers with complete product planning suggestions and care throughout the claim procedure in order to solidify direct customers’ satisfaction and loyalty to the Company.

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

Market analysis:
1.
Sale of main products and market share:		 (5)
Enhance and enforce enterprise risk management (ERM); apply stringent
risk control that contributes toward corporate sustainability.
arket and sales overview

Market analysis:
1.
Sale of main products and market share:		 (5)
Enhance and enforce enterprise risk management (ERM); apply stringent
risk control that contributes toward corporate sustainability.
arket and sales overview

Market analysis:
1.
Sale of main products and market share:		 (5)
Enhance and enforce enterprise risk management (ERM); apply stringent
risk control that contributes toward corporate sustainability.
arket and sales overview

Market analysis:
1.
Sale of main products and market share:		 (5)
Enhance and enforce enterprise risk management (ERM); apply stringent
risk control that contributes toward corporate sustainability.
arket and sales overview

Market analysis:
1.
Sale of main products and market share:		 (5)
Enhance and enforce enterprise risk management (ERM); apply stringent
risk control that contributes toward corporate sustainability.
arket and sales overview

Market analysis:
1.
Sale of main products and market share:
Unit: NTD thousands
Insurance category
2020 direct written
premium
2020 Domestic
non-life insurance
market written
premium
Market share
Fire Insurance
1,049,319
28,297,430
3.71%
Marine insurance
303,401
7,784,130
3.90%
Automobile Insurance
4,916,677
100,824,848
4.88%
Others
793,487
50,483,879
1.57%
Total
7,062,884
187,390,287
3.77%
2.
Product locations:
Unit: NTD thousands
Location
Amount
%
Head Office
2,244,916
31.79%
Taipei Branch Office
1,026,356
14.53%
Taoyuan-Hsinchu Branch Office
991,081
14.03%
TaichungBranch Office
820,674
11.62%
Tainan Branch Office
910,192
12.89%
Insurance category 2020 direct written
premium		 2020 Domestic
non-life insurance
market written
premium		 Market share
Fire Insurance 1,049,319
28,297,430
3.71%
Marine insurance 303,401
7,784,130
3.90%
Automobile Insurance 4,916,677
100,824,848
4.88%
Others 793,487
50,483,879
1.57%
Total 7,062,884
187,390,287
3.77%
2.
Product locations:
Location Amount %
Head Office 2,244,916 31.79%
Taipei Branch Office 1,026,356 14.53%
Taoyuan-Hsinchu Branch Office 991,081 14.03%
TaichungBranch Office 820,674 11.62%
Tainan Branch Office 910,192 12.89%

==> picture [193 x 624] intentionally omitted <==

96

KaohsiungBranch Office
1,069,665
15.14%		 KaohsiungBranch Office
1,069,665
15.14%		 KaohsiungBranch Office
1,069,665
15.14%
Total
7,062,884
100.00%
3. 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 a 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. A rising number of companies are starting to acquire group insurance
coverage for their employees, which may stimulate the growth of
certain insurance categories.
D. The outbreak of COVID-19 has driven the demand for serious disease,
medical treatment, accident and life insurance products.
E. The increasing public health risk awareness will help the product
innovation and protection-type business development permanently.
F. With the impact of network, technologies, and human-induced
environmental damage, cyber-attacks, artificial intelligence, and risk of
extreme weather has become the focus of prevention.
4. Opportunities and threats:
(1) Opportunities:
A. The border control drives the continuing private consumption growth in
Taiwan.
B. Launch of packaged and customized products may address the market’s
different needs.
C. The Company has the flexibility to adjust its strategies and business
activities in line with market competition.
D. Tightened supervision by the authority is conducive to market discipline
and restoration of reasonable premium rate.
E. The public is increasingly aware of corporate governance and
directors’/supervisors’ responsibility, which gives rise to demands for
directors’/supervisors’ liability insurance.
F. Rapid advancement of electronics and technology has enabled the
Company to reduce operating costs via the use of e-commerce and
high-tech platforms.
G. Customers’ rising risk awareness and availability of damage prevention
measures help control the severity and frequency of accidents.
H. Successive launch of new consumable electronic products under various

==> picture [193 x 624] intentionally omitted <==

97

brands, and the continuing business opportunity for work from home, help Taiwan’s export and manufacturing industry’s growth.

  • I. 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.

  • J. Digital transformation becomes an important strategy adopted by various industries. Upon the outbreak of COVID-19, “Home Entertainment” and “Work from Home” emerged. Various industries have successively promoted digital transformation to drive their business growth in response to the epidemic.

  • (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 dispute between China and the USA is still pending. The global economic uncertainty stays high. The concern about the severity of the COVID-19 epidemic still remains.

  • G. The epidemic prevention measures posed a significant impact to domestic retail, transportation, restaurant and travel industries. The other industries might also cut their budget for the indirect impact.

  • (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

  • C. Work with external companies to speed up the platform development and re-build the sales and service procedures.

  • 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

==> picture [193 x 624] intentionally omitted <==

98

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
1.
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 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 the contract prohibits the
Company from disclosing customers’ names or if the counterpart 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 Fire Insurance
Marine insurance
Automobile Insurance
Others
Total		 (Note)
No. of
Premium
No. of
Premium
No. of
Premium
No. of
Premium
No. of		 Premium
Year cases
cases
cases
cases
cases
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
2020 418,340 1,049,319
77,012
303,401
1,398,151
4,916,677
451,709
793,487
2,345,212		 7,062,884
Note: Premium revenue does not include reinsurance.
99

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

Year 2019 2020 Year-to-date 2021
April 30,2018
Employee
count		 Head Office 339 337
332
Branches 513 517 524
Total 852 854 856
Average age 43.5 43.7 43.7
Averageyears of service 15.1
15.1		 15.1
Academic
background		 Doctoral Degree 0 0 0
Masters Degree 47 46 42
Bachelor Degree 682 692 700
Senior high school 121 115 113
Below senior high school 2 1 1

  • IV. Contribution to environmental protection: None.

  • V. Labor-management agreement:

  • (I) Current major labor-management agreements and execution

    1. 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.

  1. 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 1,367 internal and external training sessions in 2020 for a total of 4,103.5 hours. Enrollment count totaled 18,531, and NT$1,503 thousand in training expenses were incurred.

  1. 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.

==> picture [193 x 624] intentionally omitted <==

100

==> picture [193 x 624] intentionally omitted <==

  1. Other material agreements: None.

  2. (II) Losses suffered in the last 3 years as a result of employment dispute: None.

VI. Major contracts

Contract nature Principals Contract
start/end date		 Main contents Restrictive
clauses
General agency
agreement		 A group of 98 including
Kai Hsing Insurance
AgencyCo.,Ltd.		 January 1, 2020
to December 31,
2020		 Agency of non-life
insurance service		 None
Reinsurance
contract		 All reinsurance
participants; the lead
reinsurers were CRC and
Toa Re		 January 1, 2020
to December 31,
2020		 Reinsurance of the
Company’s direct
underwritten
coverage		 None, except
for exclusions
stated in the
contract

101

Six. Financial Status

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

Unit: N TD thousands
Year
Item		 Financial information for the last 5years Year-to-date
March 31,
2021
2020 2019 2018 2017 2016
Cash 1,775,324 1,860,014 1,626,898 1,157,174 1,231,822 1.822.508
Receivables 380,972 463,385 728,303 593,893 584,878 605,815
Financial assets and loans 10,297,861 9,023,322 8,288,023 8,568,649 8,208,131 10,320,919
Reinsurance Contracts
Assets		 2,150,899 2,269,819 2,907,356 2,473,583 2,758,745 2,247,961
Property, Plant and
Equipment		 661,560 620,038 624,243 626,390 622,106 660,946
Right-of-useasset 4,400 4,320 - - - 4,804
IntangibleAssets 44,106 7,203 10,955 12,611 15,747 49,306
Other assets 710,865 1,608,713 1,541,694 1,557,269 1,555,229 666,913
Total assets 16,025,987 15,856,814 15,727,472 14,989,569 14,976,658 16,379,172
Payables 677,616 725,268 769,330 764,602 682,912 646,113
Lease liabilities 4,445 4,139 - - - 4,855
Liabilityreserves 8,379,938 8,081,929 8,764,982 8,317,402 8,711,701 8,619,207
Other liabilities 201,904 234,217 224,250 209,087 208,183 200,884
Total liabilities Before
dividend		 9,263,903 9,045,553 9,758,562 9,291,091 9,602,796 9,471,059
After
dividend		 Note 2 9,334,670 9,906,132 9,471,789 9,798,552 -
Share capital 3,011,638 3,011,638 3,011,638 3,011,638 3,011,638 3,011,638
Retained
Earnings		 Before
dividend		 3,458,120 3,392,600 2,929,970 2,660,677 2,402,882 3,558,713
After
dividend		 Note 2 3,103,483 2,782,400 2,479,979 2,207,126 -
Other equityitems 292,326 407,023 27,302 26,163 (
40,658)		 337,762
Total equity Before
dividend		 6,762,084 6,811,261 5,968,910 5,698,478 5,373,862 6,908,113
After
dividend		 Note 2 6,522,144 5,821,340 5,517,780 5,178,106 -

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

Note 2: Distribution of 2020 earnings has yet to be resolved in a shareholder meeting. (II) Summary statement of comprehensive income

Unit: NTD thousands,e Unit: NTD thousands,e Unit: NTD thousands,e Unit: NTD thousands,e xcept EPS which is in dollars
Year-to-date
March 31,
2021
2016
5,613,575
1,553,567
3,844,794
1,116,078
1,203,086
345,283
(
1,440)
(35)
564,255
92,171
479,755
70,024
(
11,404)
76,005
1.59
0.23		 xcept EPS which is in dollars
Year-to-date
March 31,
2021
2016
5,613,575
1,553,567
3,844,794
1,116,078
1,203,086
345,283
(
1,440)
(35)
564,255
92,171
479,755
70,024
(
11,404)
76,005
1.59
0.23
Financial information for the last 5years Year-to-date
March 31,
2021
2020 2019 2018 2017 2016
5,854,672 6,049,197 6,129,389 5,881,343 5,613,575 1,553,567
4,246,729 4,045,100 4,251,229 4,122,629 3,844,794 1,116,078
1,399,892 1,339,907 1,314,345 1,242,794 1,203,086 345,283
(
2,106)		 (
565)		 (
647)		 (
386)		 (
1,440)		 (35)
205,945 663,625 563,168 515,534 564,255 92,171
152,882 580,968 491,309 460,310 479,755 70,024
87,058 408,953 (
33,636)		 60,062 (
11,404)		 76,005
0.51 1.93 1.63 1.53 1.59 0.23

==> picture [193 x 624] intentionally omitted <==

102

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 independent auditors in the last 5 years and audit opinions

Year of audit Independent auditor Audit 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
2020 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,
2021
2020 2019 2018 2017 2016
Business
performance
indicators		 Variation of written
premiums revenue		 2.73 (
1.99)		 0.21 5.47 6.80 3.62
Variation of lossespaid (
10.34)		 1.92 (
7.50)		 13.76 13.03 (4.40)
Variation of retained
premium		 6.28 (
0.70)		 0.39 6.14 5.86 5.22
Net worth ratio 42.19 42.95 37.95 38.02 35.88 42.18
Profit
indicators		 Return on Asset 0.96 3.68 3.20 3.07 3.30 1.73
Return on Equity 2.25 9.09 8.42 8.31 9.33 4.10
Net Investment Income
Ratio		 1 2 2.04 2.37 2.20 2.11
Return on Investment 1.84 2.70 1.88 2.18 2.04 1.98
Combined Ratio 96.10 95.47 97.80 96.23 100.06 94.85
Retained Expense Ratio 39.51 40.18 39.03 37.23 38.42 36.82
Retained Earned Loss
Ratio		 56.59 55.29 58.77 59.00 61.64 58.03
Operational
indicators		 Retained premium to
equityratio		 84.15 78.61 90.33 94.25 94.17 88.11
Gross premium to
equityratio		 110.42 106.88 123.95 129.51 130.31 113.99
Net reinsurance
commission to equity
ratio		 2.86 2.94 3.75 3.70 4.02 2.95
Insurance liabilities to
equityratio		 1 1 143.86 142.34 158.11 122.84
Percentage of equity
variation		 (
0.72)		 14.11 4.75 6.04 9.55 2.16
Expense ratio 33.96 33.51 32.49 31.01 31.84 32.46
Explanation to
1. Increase in
insurance.
2. Decrease in
marine insu
3. Increase in
insurance a
4. Decrease in
5. Decrease in
income.		 significance changes in the last two years:
the rate of changes in direct premium: Mainly due to the increase in direct premium of motor insurance and other
the rate of changes in directly paid claims: Mainly due to the decrease in current claims under fire insurance and
rance.
retained rate of changes in premium: Mainly due to the decrease in current reinsurance premium of marine
nd health insurance for injury.
ROE, ROA, and equity growth: This is mainly due to the decrease in current net income.
net investment income ratio and return on investment: Mainly due to the increase in current net investment

  • Explanation to significance changes in the last two years: 1. Increase in the rate of changes in direct premium: Mainly due to the increase in direct premium of motor insurance and other insurance.

    1. Decrease in the rate of changes in directly paid claims: Mainly due to the decrease in current claims under fire insurance and marine insurance.
    1. Increase in retained rate of changes in premium: Mainly due to the decrease in current reinsurance premium of marine insurance and health insurance for injury.
    1. Decrease in ROE, ROA, and equity growth: This is mainly due to the decrease in current net income. 5. Decrease in net investment income ratio and return on investment: Mainly due to the increase in current net investment income.

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

Note 2: Formulas for calculation of various analyses:

  1. Business performance indicators

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

==> picture [193 x 624] intentionally omitted <==

103

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

    • [Average total assets = (opening assets + closing assets) / 2]

  • (2) Return on equity = profit before or after tax / average equity [Average equity = (current 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]

==> picture [193 x 624] intentionally omitted <==

104 

  - (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]

  1. 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]

  2. III. Other information material to understanding the company’s financial position, financial performance, cash flow, and changes: None.

==> picture [193 x 624] intentionally omitted <==

105

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 2020 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 opinions.

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

2021 Annual General Meeting of The First Insurance Co., Ltd.

Audit Committee convener:

March 26, 2021

==> picture [193 x 624] intentionally omitted <==

106

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, 2020 and 2019, the comprehensive income statement, statement of changes in equity, and cash flow statement for the periods January 1 to December 31, 2020 and 2019, and the accompanying footnotes (including a summary of major accounting policies).

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

Basis of audit opinion

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

Key audit issues

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

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

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

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

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

==> picture [193 x 624] intentionally omitted <==

107

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

Responsibilities of the management and governing body to the financial statements

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

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

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

Responsibilities of the auditor when auditing financial statements

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

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

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

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

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

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

==> picture [193 x 624] intentionally omitted <==

108

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

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

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

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

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

Deloitte Taiwan CPA: Alice Huang CPA: Wan-Yi Liao

Approval reference of the Securities and Approval reference of the Financial Futures Bureau Supervisory Commission Tai-Cai-Zheng-VI-Zi No. 0920131587 Jin-Guan-Zheng-Shen-Zi No. 1010028123

March 26, 2021

==> picture [193 x 624] intentionally omitted <==

109

The First Insurance Co., Ltd. Balance Sheet As at December 31, 2020 and 2019

Unit: NTD thousands

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

==> picture [148 x 675] intentionally omitted <==

110

111
The First Insurance Co., Ltd.
Comprehensive Income Statement
For periods from January 1 to December 31, 2020
Unit: NTD thousand, except
2020
Code
Amount
%
Operating revenues (Note 4)
41110
Written premiums (Notes 31 and
38)
$ 7,062,884
120
41120
Reinsurance premiums (Note 38)
403,665
7
41100
Premium revenues
7,466,549
127
51100
Less: Reinsurance expenses (Note
38)
(
1,776,313 )
(
30 )
51310
Less: Net change in unearned
premium reserve
(
239,129)
(
4)
41130
Retained earned premiums (Note
38)
5,451,107
93
41300
Reinsurance commissions
received (Note 38)
287,853
5
41400
Service fee
24,561
-
Net investment gains
41510
Interest income (Note 25)
87,428
2
41521
Gains on financial assets or
liabilities at fair value
through profit and loss
(
122,296 )
(
2 )
41527
Realized gains/losses on
financial assets at fair
value through other
comprehensive income
(Note 8(1))
100,807
2
41550
Gain (loss) on exchange
(Note 25)
(
30,059 )
(
1 )
41570
Gains (losses) on investment
property (Note 25)
53,245
1
41585
Expected credit impairment
loss and reversal gain on
investment
954
-
41500
Total net investment
gains
90,079
2
Other operating revenues
41890
Other operating revenues -
Others
1,072
-
41000
Total operating revenues
5,854,672
100
Operating Cost
Retained claims and benefits
(Notes 31 and 38)
51200
Insurance claim and benefit
payments
3,930,294
67
41200
Less: Claims recovered from
reinsurers
(
957,899)
(
16)
51260
Total retained claims
and benefits paid
2,972,395
51
(Continued next page)		 111
The First Insurance Co., Ltd.
Comprehensive Income Statement
For periods from January 1 to December 31, 2020
Unit: NTD thousand, except
2020
Code
Amount
%
Operating revenues (Note 4)
41110
Written premiums (Notes 31 and
38)
$ 7,062,884
120
41120
Reinsurance premiums (Note 38)
403,665
7
41100
Premium revenues
7,466,549
127
51100
Less: Reinsurance expenses (Note
38)
(
1,776,313 )
(
30 )
51310
Less: Net change in unearned
premium reserve
(
239,129)
(
4)
41130
Retained earned premiums (Note
38)
5,451,107
93
41300
Reinsurance commissions
received (Note 38)
287,853
5
41400
Service fee
24,561
-
Net investment gains
41510
Interest income (Note 25)
87,428
2
41521
Gains on financial assets or
liabilities at fair value
through profit and loss
(
122,296 )
(
2 )
41527
Realized gains/losses on
financial assets at fair
value through other
comprehensive income
(Note 8(1))
100,807
2
41550
Gain (loss) on exchange
(Note 25)
(
30,059 )
(
1 )
41570
Gains (losses) on investment
property (Note 25)
53,245
1
41585
Expected credit impairment
loss and reversal gain on
investment
954
-
41500
Total net investment
gains
90,079
2
Other operating revenues
41890
Other operating revenues -
Others
1,072
-
41000
Total operating revenues
5,854,672
100
Operating Cost
Retained claims and benefits
(Notes 31 and 38)
51200
Insurance claim and benefit
payments
3,930,294
67
41200
Less: Claims recovered from
reinsurers
(
957,899)
(
16)
51260
Total retained claims
and benefits paid
2,972,395
51
(Continued next page)		 111
The First Insurance Co., Ltd.
Comprehensive Income Statement
For periods from January 1 to December 31, 2020
Unit: NTD thousand, except
2020
Code
Amount
%
Operating revenues (Note 4)
41110
Written premiums (Notes 31 and
38)
$ 7,062,884
120
41120
Reinsurance premiums (Note 38)
403,665
7
41100
Premium revenues
7,466,549
127
51100
Less: Reinsurance expenses (Note
38)
(
1,776,313 )
(
30 )
51310
Less: Net change in unearned
premium reserve
(
239,129)
(
4)
41130
Retained earned premiums (Note
38)
5,451,107
93
41300
Reinsurance commissions
received (Note 38)
287,853
5
41400
Service fee
24,561
-
Net investment gains
41510
Interest income (Note 25)
87,428
2
41521
Gains on financial assets or
liabilities at fair value
through profit and loss
(
122,296 )
(
2 )
41527
Realized gains/losses on
financial assets at fair
value through other
comprehensive income
(Note 8(1))
100,807
2
41550
Gain (loss) on exchange
(Note 25)
(
30,059 )
(
1 )
41570
Gains (losses) on investment
property (Note 25)
53,245
1
41585
Expected credit impairment
loss and reversal gain on
investment
954
-
41500
Total net investment
gains
90,079
2
Other operating revenues
41890
Other operating revenues -
Others
1,072
-
41000
Total operating revenues
5,854,672
100
Operating Cost
Retained claims and benefits
(Notes 31 and 38)
51200
Insurance claim and benefit
payments
3,930,294
67
41200
Less: Claims recovered from
reinsurers
(
957,899)
(
16)
51260
Total retained claims
and benefits paid
2,972,395
51
(Continued next page)		 111
The First Insurance Co., Ltd.
Comprehensive Income Statement
For periods from January 1 to December 31, 2020
Unit: NTD thousand, except
2020
Code
Amount
%
Operating revenues (Note 4)
41110
Written premiums (Notes 31 and
38)
$ 7,062,884
120
41120
Reinsurance premiums (Note 38)
403,665
7
41100
Premium revenues
7,466,549
127
51100
Less: Reinsurance expenses (Note
38)
(
1,776,313 )
(
30 )
51310
Less: Net change in unearned
premium reserve
(
239,129)
(
4)
41130
Retained earned premiums (Note
38)
5,451,107
93
41300
Reinsurance commissions
received (Note 38)
287,853
5
41400
Service fee
24,561
-
Net investment gains
41510
Interest income (Note 25)
87,428
2
41521
Gains on financial assets or
liabilities at fair value
through profit and loss
(
122,296 )
(
2 )
41527
Realized gains/losses on
financial assets at fair
value through other
comprehensive income
(Note 8(1))
100,807
2
41550
Gain (loss) on exchange
(Note 25)
(
30,059 )
(
1 )
41570
Gains (losses) on investment
property (Note 25)
53,245
1
41585
Expected credit impairment
loss and reversal gain on
investment
954
-
41500
Total net investment
gains
90,079
2
Other operating revenues
41890
Other operating revenues -
Others
1,072
-
41000
Total operating revenues
5,854,672
100
Operating Cost
Retained claims and benefits
(Notes 31 and 38)
51200
Insurance claim and benefit
payments
3,930,294
67
41200
Less: Claims recovered from
reinsurers
(
957,899)
(
16)
51260
Total retained claims
and benefits paid
2,972,395
51
(Continued next page)		 and 2019
for earnings per share, which is
2019		 and 2019
for earnings per share, which is
2019		 and 2019
for earnings per share, which is
2019
Amount % Amount %
111
$ 7,062,884
403,665
7,466,549
(
1,776,313 )
(
239,129)
5,451,107
287,853
24,561
87,428
(
122,296 )
100,807
(
30,059 )
53,245
954
90,079
1,072
5,854,672
3,930,294
(
957,899)
2,972,395		 120
7
127
(
30 )
(
4)
93
5
-
2
(
2 )
2
(
1 )
1
-
2
-
100
67
(
16)
51		 $ 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		 113
7
120
(
32 )
-
88
5
-
2
3
1
-
1
-
7
-
100
73
(
22)
51
(Continued from previous page)
Code
Net change in other liabilities
(Note 38)
51320
Net change in claim reserves
51340
Net change in special claim
reserves
51350
Net change in premium
deficiency reserves
51300
Total net change in other
liabilities
51510
Commission expenses (Note 38)
51600
Service charges (Note 38)
Other operating costs
51810
Contribution to insurance
stabilization fund (Note 38)
51830
Interest expenses
51850
Loss on exchange -
non-investment (Note 25)
51890
Other operating costs - Others
51800
Total other operating
costs
51000
Total operating costs
60000
Gross profit
Operating expenses (Notes 25 and 31)
58100
Selling expenses
58200
Administrative expenses
58300
Staff training expenses
58000
Total operating expenses
61000
Operating profit
Non-operating income and expenses
59400
Asset retirement loss
59500
Recovery of bad and overdue debts
59920
Sundry income
59990
Sundry expenses (Note 16)
59000
Total non-operating income
and expenses
62000
Pre-tax profit from continuing
operations
63000
Income tax expenses (Notes 4 and 26)
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)
(Continued next page)		 2020 2019
Amount % Amount %
112
$ 112,637
27,094
(
10,017)
129,714
982,117
139,699
14,142
36
8,124
502
22,804
4,246,729
1,607,943
1,304,170
93,042
2,680
1,399,892
208,051
(
2,710 )
20
697
(
113)
(
2,106)
205,945
53,063
152,882
1,288		 2
-
-
2
17
2
-
-
-
-
-
72
28
22
2
-
24
4
-
-
-
-
-
4
1
3
-		 ( $ 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
580,968
(
1,799 )		 (
2 )
-
-
(
2)
16
2
-
-
-
-
-
67
33
20
2
-
22
11
-
-
-
-
-
11
2
9
-

(Continued from previous page)

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

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

Chairman: C. H. Lee Manager: Chu-Minn Leu Head of Accounting: Fei-Fen Hsiao

==> picture [193 x 624] intentionally omitted <==

113

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

Unit: NTD thousands

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

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

Chairman: C. H. Lee

Manager: Chu-Minn Leu

Head of Accounting: Fei-Fen Hsiao

==> picture [158 x 512] intentionally omitted <==

114

The First Insurance Co., Ltd. Cash Flow Statement For periods from January 1 to December 31, 2020 and 2019

Unit: NTD thousands

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

(Continued next page)

==> picture [193 x 624] intentionally omitted <==

115

(Continued from previous page)

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

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

Chairman: C. H. Lee Manager: Chu-Minn Leu Head of Accounting: Fei-Fen Hsiao

==> picture [193 x 624] intentionally omitted <==

116

The First Insurance Co., Ltd. Notes to financial statements

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

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

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

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

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

    1. Financial statement approval date and procedures

This financial report was passed during the Board of Directors meeting dated March 26, 2021. 3. Adoption of new and amended standards and interpretations (1) The first-time adoption of International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), and interpretations (IFRIC) and announcements (SIC) thereof approved by the Financial Supervisory Commission (“FSC”) (collectively referred to as “IFRSs” below)

  • Adoption of FSC-approved amended IFRSs did not result in any material

  • change to the Company’s accounting policies.

  • (2) FSC-approved IFRSs adopted in 2021 New/Amended/Modified Standards and Effective date of IASB Interpretations announcement

  • Amendments to IFRS 4 regarding “Extension of the Effective from the Temporary Exemption from Applying IFRS 9” announcement date

  • Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, Effective during the annual and IFRS 16 - “Interest Rate Benchmark reporting periods Reform – Phase II” beginning on or after January 1, 2021

Amendments to IFRS 16 “Leases Regarding Effective during the annual COVID-19-related Rent Concessions” reporting periods beginning on or after Monday, June 1, 2020

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

Effective date of IASB announcement (Note 1) Saturday, January 1, 2022 (Note 2) Saturday, January 1, 2022 (Note 3) Undetermined

  • “Improvements for years 2018-2020”

Amendments to IFRS 3 regarding “Updating a Saturday, January 1, 2022 Reference to the Conceptual Framework” (Note 3) Amendments to IFRS 10 and IAS 28 - “Sale or Undetermined Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17 - “Insurance Contracts” Sunday, January 1, 2023 Amendments to IFRS 17 Sunday, January 1, 2023

==> picture [193 x 624] intentionally omitted <==

117

New/Amended/Modified Standards and Effective date of IASB Interpretations announcement (Note 1) Amendments to IAS 1 - “Classification of Liabilities Sunday, January 1, 2023 as Current or Non-current” Amendments to IAS 16 - “Property, Plant and Saturday, January 1, 2022 Equipment: Proceeds before Intended Use” (Note 4) Amendments to IAS 37 - “Onerous Contracts - Cost Saturday, January 1, 2022 of Fulfilling a Contract” (Note 5) Amendments to IAS 1 “Disclosure of Accounting Sunday, January 1, 2023 Policies” (Note 6) Amendments to IAS 8 - “Definition of an Accounting Sunday, January 1, 2023 Estimate” (Note 7)

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

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

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

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

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

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

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

IFRS 17 - “Insurance Contracts” and amendments

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

Level of aggregation for insurance contracts

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

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

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

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

==> picture [193 x 624] intentionally omitted <==

118

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

Recognition

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

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

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

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

Measurement at initial recognition

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

  • (a) Initial recognition of FCF;

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

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

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

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

Subsequent measurement

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

Onerous contracts

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

Premium allocation approach

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

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

==> picture [193 x 624] intentionally omitted <==

119

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

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

  • (a) Premiums collected at initial recognition;

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

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

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

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

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

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

Modification and derecognition

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

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

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

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

4. Summary of significant accounting policies

(1) Statement of compliance

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

(2) Basis of preparation

==> picture [193 x 624] intentionally omitted <==

120

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

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

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

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

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

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

Due to the distinctive nature of its business activities, the Company does not classify assets and liabilities into current or non-current categories, but instead presents its accounts in the order of relative liquidity.

  • (4) Foreign currencies

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

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

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

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

  • presented at cost after accumulated depreciation and impairment.

Each significant part of the property, plants, and equipment is separately depreciated on the straight-line basis over its useful life, except no depreciation is provied for own land. 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.

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

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

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

==> picture [193 x 624] intentionally omitted <==

121

(8)

(9)

==> picture [193 x 624] intentionally omitted <==

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

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

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

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

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

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

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.

  1. Financial assets

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

  • (1) Measurement categories

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

A. Financial assets at fair value through profit and loss

Financial assets at fair value through profit and loss mainly comprise financial assets that are mandatory to be measured at fair value with fair value changes recognized through profit and loss. Financial assets that are mandatory to be measured at fair value with

122

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

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

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

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

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

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

Except for the two circumstances explained below, interest income is calculated by multiplying the book value of the 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:

==> picture [193 x 624] intentionally omitted <==

123

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

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

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

D. Equity instruments at fair value through other comprehensive income

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

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

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

(2) Impairment of financial assets

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

==> picture [193 x 624] intentionally omitted <==

124

financial instrument is likely to incur due to all possible default events for the remaining duration.

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

(3) Removal of financial assets

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

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

2. 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.

(10) Ceded reinsurance

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

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

==> picture [193 x 624] intentionally omitted <==

125

doubtful debt are provided for balances of claims recoverable from reinsurers and reinsurance accounts receivable that are no longer deemed recoverable.

  • (11) Acceptance of residual assets and right of subrogation

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

(12) Insurance liabilities

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

  1. Unearned premium reserve

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

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

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

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

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

  1. Special claim reserves

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

  • (1) Special claim reserves for major incidents

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

Any occurrence of government-announced major incident that causes individual insurance companies to pay retained claims amounting

==> picture [193 x 624] intentionally omitted <==

126

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.

  1. 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.

  1. Liabilities adequacy reserve

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

  • (13) Liability adequacy test

On each balance sheet date, the Company follows the practical actuarial principles published by Actuarial Institute of Chinese Taipei to estimate future cash flows of individual insurance contracts. Any shortfall in the book value of recognized insurance liabilities identified from the above is recognized as current expense/loss. (14) Revenue recognition

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

Revenue and acquisition cost of insurance coverage:

For direct written coverage, premium revenues are recognized on all underwritten and modified coverage approved in the current period. For assumed reinsurance coverage, reinsurance premium revenues are recognized based on

==> picture [193 x 624] intentionally omitted <==

127

(15)

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.

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 the claims department does not yet ascertain are estimated on a case-by-case basis for each insurance category and recognized as the net change in reported but unpaid claim reserves.

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

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

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

The Company does not apply discounting when calculating claim reserves.

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

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

==> picture [193 x 624] intentionally omitted <==

128

==> picture [193 x 624] intentionally omitted <==

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

(16) Leases

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

  1. Where the Company is the lessor

All other lease arrangements are classified as operating lease.

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

  1. Where the Company is the lessee

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

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

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

Lease liabilities are carried at the present value of lease payments. Lease payments are discounted at the implicit interest rate if it can be determined easily. If the interest rate cannot be determined easily, the lessee’s incremental borrowing rate is used instead.

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

  • (17) Employee benefits

  • Short-term employee benefit

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

129

2. Retirement benefits

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

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

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

(18) Income tax

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

  1. Current income tax

The current income tax payable is calculated based on 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.

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

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

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

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

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

==> picture [193 x 624] intentionally omitted <==

130

Deferred income tax assets and liabilities are estimated using the 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 the balance sheet date. Deferred income tax liabilities and assets represent tax impacts of the method by which the Company expects to recover/settle the book value of its assets and liabilities as of the balance sheet date.

  1. Current and deferred income tax for the year

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

(19) Coinsurance organization, coinsurance and guarantee fund arrangements 1. Coinsurance contract for mandatory automobile liabilities insurance

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

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

==> picture [193 x 624] intentionally omitted <==

131

assumed coverage remaining in the current year will be undertaken by surviving companies.

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

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

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

Insurance liabilities from insurance contracts

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

Cash

6.

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

Foreign currency deposits are placed with domestic banks. As at December 31, 2020 and 2019, the Company held NT$2,751,824 thousand and NT$2,663,153 thousand of time deposit, respectively, that had initial maturity date of more than 3 months (refer to Note 11).

7. Financial assets at fair value through profit and loss

to Note 11).
Financial assets at fair value through profit and loss		 to Note 11).
Financial assets at fair value through profit and loss
December 31,2020
Mandatory
at
fair
value
throughout profit and loss
Non-derivative
financial
assets
- TWSE/TPEx listed
shares
$ 304,872
- Beneficiary certificates
1,442,491
- Securitized beneficiary
certificates
192,914
- Bank debentures
-
Subtotal
$ 1,940,277
Financial assets at fair value through other comprehensive income		 December 31,2019
$ 735,535
434,142
424,851
50,565
$ 1,645,093
December 31,2019

Investment in equity instruments
Investment in debt instruments
December 31,2020
$ 2,457,881
491,070
$ 2,948,951
$ 2,676,438
509,305
$ 3,185,743

8.

==> picture [193 x 624] intentionally omitted <==

132

(1)

Investment in equity instruments

Investment in equity instruments
Domestic investments
TWSE/TPEx listed shares
Unlisted shares		 December 31,2020
$ 1,569,283
888,598
$ 2,457,881		 December 31,2019
$ 1,730,675
945,763
$ 2,676,438

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

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

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

(2) Investment in debt instruments

dividends, respectively.
Investment in debt instruments
December 31,2020 December 31,2019
Domestic investments
Government bonds $ 1,075,242 $ 1,027,166
Less: Amount placed as
guarantee deposit (
584,172)		 (
517,861)
$ 491,070 $ 509,305
Information on government bond investments as at the balance sheet date:
December 31,2020 December 31,2019
Face value of investment $ 909,000 $ 909,000
Coupon interest rate 1.125%~5.000% 1.125%~5.000%
Average maturity 7.09 years 8.09 years

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

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

Financial assets carried at cost after amortization

Domestic investments
Bank debenture (1)
Corporate bond (2)
Subtotal
Less: loss provisions		 December 31,2020
$ 1,444,470
330,000
1,774,470
(
15,870)
$ 1,758,600		 December 31,2019 December 31,2019
( ( $ 1,516,154
30,000
1,546,154

16,821)
$ 1,529,333

==> picture [193 x 624] intentionally omitted <==

133

(I) Information on bank debenture investments as of the balance sheet date:
December 31,2020
December 31,2019
Domestic investments
Face value of investment
$ 1,440,000
$ 1,510,000
Effective interest rate
1.250%~2.600%
1.550%~3.000%
Average maturity
3.34 years
3.82 years		 Information on bank debenture investments as of the balance sheet date:
December 31,2020
December 31,2019
Domestic investments
Face value of investment
$ 1,440,000
$ 1,510,000
Effective interest rate
1.250%~2.600%
1.550%~3.000%
Average maturity
3.34 years
3.82 years
$ 1,510,000
1.550%~3.000%
3.82 years

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

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

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

    1. 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, 2020

December 31, 2020
Cost
Loss provisions
Cost after amortization
Fair value adjustment
December 31, 2019
Cost
Loss provisions
Cost after amortization
Fair value adjustment		 At fair value
through other
comprehensive
income
$ 985,017
(
255)
984,762
90,480
$ 1,075,242
At fair value
through other
comprehensive
income
$ 988,541
(
258)
988,283
38,883
$ 1,027,166		 At cost after
amortization
$ 1,774,470

15,870)
$ 1,758,600
At cost after
amortization
$ 1,546,154

16,821)
$ 1,529,333		 Total
( ( $ 2,759,487

16,125)
2,743,362
90,480
$ 2,833,842
Total
( ( ( $ 2,534,695

17,079)
2,517,616
38,883
$ 2,556,499

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

==> picture [193 x 624] intentionally omitted <==

134

11.
12.
(1)		 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
activities
Arising from non-business
activities
Less: loss provisions
Premiums receivable-net
At cost after amortization
Total book value
Less: loss provisions
Other receivables
At cost after amortization
Securities
settlement
receivable
Interest
and
security
dividends receivable
Rent receivable
Commission
receivable
from canceled coverage
Less: loss provisions		 December 31,2020
$ 2,074,000
677,824
$ 2,751,824
0.070%~1.035%
0.600%~2.100%
December 31,2020
$ 147,155
12
(
3,682)
$ 143,485
$ 212,770
(
39,979)
$ 172,791
$ 30,708
30,823
2,063
3,661
(
2,559)
$ 64,696		 December 31,2019 December 31,2019
$ 2,084,000
579,153
$ 2,663,153
0.130%~1.040%
2.100%~3.200%
December 31,2019
(
(
(		 (
(
(		 $ 140,767
2,057

3,573)
$ 139,251
$ 318,833

40,306)
$ 278,527
$ -
39,395
2,176
4,265

229)
$ 45,607

(Continued next page)

==> picture [193 x 624] intentionally omitted <==

135

(Continued from previous page)

Claims
recoverable
from
reinsurers
At cost after amortization
Total book value
Less: loss provisions
Reinsurance
accounts
receivable
At cost after amortization
Total book value
Less: loss provisions		 December 31,2020
$ 131,740
(
706)
$ 131,034
$ 176,833
(
1,493)
$ 175,340		 December 31,2019 December 31,2019
(
(		 (
(		 $ 167,092

1,010)
$ 166,082
$ 219,176

3,589)
$ 215,587

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

(2) Notes, premiums and other receivables 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 counterpart’s previous payment records, financial position, aging analysis and estimation of the unrecoverable amount. Recoverability of receivables and loans is assessed regularly on an item-by-item basis according to “Regulation on Asset Valuation, Overdue Collection and Loan Loss Provisioning by Insurance Companies” and rules concerning expected credit loss stated in IFRS 9;

the higher of the two amounts derived above is determined as loss provision.

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

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

==> picture [193 x 624] intentionally omitted <==

136

Notes receivable

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

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

Other receivables

effective date.
Other receivables		 effective date.
Other receivables
December 31,2020
December 31,2019
0~90 days
$ 64,247
$ 45,836
91 days and above
3,008
-
Total
$ 67,255
$ 45,836
Aging analysis for other receivables was prepared based on bookkeeping date.
Claims recoverable from reinsurers and reinsurance accounts receivable
December 31,2020
December 31,2019
0~270 days
$ 299,705
$ 385,319
271 days and above
8,868
949
Total
$ 308,573
$ 386,268		 December 31,2019
0~270 days
271 days and above
Total		 December 31,2020
$ 299,705
8,868
$ 308,573
$ 385,319
949
$ 386,268

Aging analysis for reinsurance accounts receivable was prepared based on bookkeeping date. (3) Change in loss provisions: December 31, 2020

Notes receivable

bookkeeping date.
Change in loss provisions:
December 31, 2020
Notes receivable
Loss rate
Total book value
Loss provisions
Cost after amortization		 Not yet
matured/redeem
ed/collected
0.5%~50%
$ 147,167
(
3,682)
$ 143,485		 Returned notes
100%
$ -
-
$ -		 Total
( ( -
$ 147,167

3,682)
$ 143,485

==> picture [193 x 624] intentionally omitted <==

137

Premiums receivable

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

39,979)
$ 172,791
Total
Loss ratio
Total book value
Loss provisions
Cost after amortization
December 31, 2019
Notes receivable
Loss ratio
Total book value
Loss provisions
Cost after amortization
Premiums receivable
Loss ratio
Total book value
Loss provisions
Cost after amortization		 271 days and
above
2%~100%
$ 8,868
(
777)
$ 8,091
Returned notes
100%
$ 6
(
6)
$ -
91 days and
above
2%~100%
$ 62,769
(
39,026)
$ 23,743
( -
$ 308,573

2,199)
$ 306,374
Total
( ( ( $ 142,824

3,573)
$ 139,251
Total
( ( ( $ 318,833

40,306)
$ 278,527

==> picture [193 x 624] intentionally omitted <==

138

Other receivables

Other receivables Other receivables Other receivables 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		 Total
Loss ratio
Total book value
Loss provisions
Cost after amortization		 0~270 days 271 days and
above
2%~100%
$ 949
(
114)
$ 835
( 0.5%~1.5%
$ 385,319

4,485)
$ 380,834		 ( ( $ 386,268

4,599)
$ 381,669

Change in loss provisions by account category:

Opening balance
Plus:
Losses/expenses
provided
in
the
current year
Less:
Losses/expenses
reversed
in
the
current year
Year-end balance
Opening balance
Plus:
Losses/expenses
provided
in
the
current year
Less:
Losses/expenses
reversed
in
the
current year
Year-end balance		 2020 2020
Notes
receivable		 Premiums
receivable		 Other
receivables		 Claims
recoverable
from
reinsurers		 Reinsurance
accounts
receivable
( $ 3,573
115

6)
$ 3,682		 ( $ 40,306
505

832)
$ 39,979		 $ 229
2,330
-
$ 2,559
2019		 ( $ 1,010
-

304)
$ 706		 ( $ 3,589
663

2,759)
$ 1,493
Notes
receivable		 Premiums
receivable		 Other
receivables		 Claims
recoverable
from
reinsurers		 Reinsurance
accounts
receivable
( $ 4,186
-

613)
$ 3,573		 ( $ 40,516
628

838)
$ 40,306		 ( $ 853
-

624)
$ 229		 ( $ 1,803
-

793)
$ 1,010		 ( $ 1,349
2,528

288)
$ 3,589

Explanation to overdue receivables and loss provisions:

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

==> picture [193 x 624] intentionally omitted <==

139

  1. Balances of notes receivable and premiums receivable as of December 31, 2019 included NT$6?? thousand and NT$62,769 thousand that were overdue, for which the Company had made loss provisions totaling NT$6 thousand and NT$39,026 thousand, respectively. Reinsurance accounts receivable has been assessed for impairment and unrecoverable amounts. The balance includes NT$949,000 of overdue receivables, for which a loss provision of NT$114,000 has been made.

[PTSGI2]: 123

  1. Investment property
has been made.
Investment property
Cost
Balance as of January 1, 2020
Decrease - current period
Reclassified to Property, Plant
and Equipment
Balance as of December 31,
2020
Increase from revaluation
Balance as of January 1, 2020
Balance as of December 31,
2020
Accumulated depreciation
Balance as of January 1, 2020
Depreciation
Decrease - current period
Reclassified to Property, Plant
and Equipment
Balance as of December 31,
2020
Cumulative impairment
Balance as of January 1, 2020
Balance as of December 31,
2020
Net amount on December 31,
2020		 2020
Land
$ 609,119
-

22,659)
586,460
163,480
163,480
-
-
-
-
-
15,526
15,526
$ 734,414		 Buildings
$ 364,598
(
5,254)
(
22,660)
336,684
-
-
172,251
6,393
(
5,049)
(
6,878)
166,717
6,172
6,172
$ 163,795		 Total
( $ 973,717
(
5,254)
(
45,319)
923,144
163,480
163,480
172,251
6,393
(
5,049)
(
6,878)
166,717
21,698
21,698
$ 898,209

140

Cost
Balance as of January 1, 2019
Balance as at December 31,
2019
Increase from revaluation
Balance as of January 1, 2019
Balance as at December 31,
2019
Accumulated depreciation
Balance as of January 1, 2019
Depreciation
Balance as at December 31,
2019
Cumulative impairment
Balance as of January 1, 2019
Balance as at December 31,
2019
Net amount on December 31,
2019		 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		 Total
$973,717
973,717
163,480
163,480
165,313
6,938
172,251
21,698
21,698
$943,248

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

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

The Company’s investment property as of December 31, 2020 and 2019, amounted to NT$2,672,453 thousand and NT2,747,898 thousand, respectively. Fair value was determined by the Company’s management based on actual transaction prices of properties near the investment in the one year dating back from the financial reporting date, as published on the website of the Department of Land Administration, Ministry of the Interior. The management had decided to use level 3 fair value input, and take the lowest or a range of prices transacted near the invested properties.

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

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

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

==> picture [193 x 624] intentionally omitted <==

141

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

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

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

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

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

For the sum of commercial fire insurance ceded to ASIA CAPITAL REINSURANCE GROUP PTE LTD, a reinsurer that did not conform with the credit grading requirements stated in Article 8 of “Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms,” the

==> picture [193 x 624] intentionally omitted <==

142

Company was required to disclose substandard reinsurance premium expenses totaling NT$694,000.

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

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

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

  • (3) 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		 December 31,2020
$ 931,371
913,154
-
$ 1,844,525		 December 31,2019
$ 1,077,452
803,134
7,564
$ 1,888,150

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

15. Property, plant, and equipment

Cost
Balance as of January 1,
2020
Increase - current period
Decrease
-
current
period
Reclassification
from
investment property
Balance as of December
31, 2020		 2020 2020
Proprietary
land
$ 308,401
-
-
22,659
331,060		 Buildings
$ 337,281
649
(
159 )
22,660
360,431		 Sundry
equipment
$ 52,309
21,858
(
31,530 )
-
42,637		 Total
$ 697,991
22,507
(
31,689 )
45,319
734,128

(Continued next page)

==> picture [193 x 624] intentionally omitted <==

143

(Continued from previous page)

Increase
from
revaluation
Balance as of January 1,
2020
Balance as of December
31, 2020
Accumulated
depreciation
Balance as of January 1,
2020
Depreciation
Decrease - current
period
Reclassification from
investment property
Balance as of December
31, 2020
Cumulative impairment
Balance as of January 1,
2020
Balance as of December
31, 2020
Net amount on
December 31, 2020		 2020
Proprietary
land
123,786
123,786
-
-
$ -
-
-
4,774
4,774
$ 450,072		 Total
123,786
123,786
195,067
16,921
( $ 29,184 )
6,878
189,682
6,672
6,672
$ 661,560

==> picture [193 x 624] intentionally omitted <==

144

Cost
Balance as of January 1,
2019
Increase - current period
Decrease - current
period
Balance as at December
31, 2019
Increase from
revaluation
Balance as of January 1,
2019
Balance as at December
31, 2019
Accumulated
depreciation
Balance as of January 1,
2019
Depreciation
Decrease - current
period
Balance as at December
31, 2019
Cumulative impairment
Balance as of January 1,
2019
Balance as at December
31, 2019
Net amount on
December 31, 2019		 2019 2019 2019
Proprietary
land
$ 308,401
-
-
308,401
123,786
123,786
-
-
-
-
4,774
4,774
$ 427,413		 Buildings
$ 337,142
139
-
337,281
-
-
154,126
6,662
160,788
1,898
1,898
$ 174,595		 Sundry
equipment
$ 47,133
8,450

3,274)
52,309
-
-
31,421
5,656

2,798)
34,279
-
-
$ 18,030		 Total
(
(		 (
(		 $ 692,676
8,589

3,274)
697,991
123,786
123,786
185,547
12,318

2,798)
195,067
6,672
6,672
$ 620,038

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

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

Property, plant, and equipment in 2020 and 2019 exclude capitalized interest. The Company’s property, plant, and equipment showed no sign of impairment as of December 31, 2020 and 2019.

==> picture [193 x 624] intentionally omitted <==

145

16.
(1)		 Lease arrangements
Right-of-use asset
Book value of right-of-use
assets
Buildings
Transportation equipment
Additional right-of-use asset
Depreciation expense on
right-of-use assets
Buildings
Transportation equipment		 December 31,2020
$ 1,389
3,011
$ 4,400
2020
$ 3,168
$ 1,769
1,025
$ 2,794		 December 31,2019 December 31,2019
$ 3,452
868
$ 4,320
2019
$ 3,285
$ 1,034
638
$ 1,672

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

(2) Lease liability

miscellaneous revenue.
(2)
Lease liability
December 31,2020
Book value of lease liabilities
$ 4,445
Discount rate range for lease liabilities:
December 31,2020
Buildings
2.65%
Transportation equipment
2.55%~2.65%
2020
Interest expense on lease
liabilities
Buildings
$ 70
Transportation equipment
44
$ 114
(3)
Other lease information
2020
Short-term rent expense
$ 3,581
Total cash (outflow) from lease
($ 6,259)		 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.

==> picture [193 x 624] intentionally omitted <==

146

==> picture [193 x 624] intentionally omitted <==

17. Intangible assets

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

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

18. Guarantee deposits paid

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

According to Articles 141 and 142 of the Insurance Act, insurance enterprises are required to place guarantee deposits amounting to 15% of paid-up capital with the treasury. This guarantee deposit will not be refunded unless the insurance enterprise ceases business operations and completes liquidation. The Company had placed the guarantee deposit in the form of government bonds.

Other assets - others

19.

Other assets-others
Prepayment
Prepaid equipment purchase
Others
Other payables
Salary and bonus payable
Share settlements payable
Leave encashment payable
Pension payable
Others		 December 31,2020
$ 8,027
5,033
14,369
$ 27,429
December 31,2020
$ 82,261
44,643
124
1,680
80,974
$ 209,682		 December 31,2019
$ 6,371
29,073
14,581
$ 50,025
December 31,2019
$ 84,563
16,147
415
1,670
63,707
$ 166,502

147

21. Insurance liabilities

Insurance liabilities Insurance liabilities Insurance liabilities
December 31,2020
December 31,2019
Unearned premium reserve $ 3,819,705 $ 3,726,659
Claim reserve 2,713,890 2,491,233
Special reserve 1,696,659 1,669,565
Deficiency reserve 6,712 24,293
$ 8,236,966 $ 7,911,750

Please refer to Items (2) to (5) in Note 38 - Disclosure of insurance contract-related information for more details on insurance liabilities presented above.

22. Retirement benefit plan

(1) Defined contribution plan

The Company is subject to the pension scheme introduced under the “Labor Pension Act.” It is a government-managed defined contribution plan. 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(2) for details on pension costs recognized in 2020 and 2019. (2) 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 the 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 no later than the end of March next year. The account is managed by Bureau of Labor Funds, Ministry of Labor. The Company has no influence whatsoever over the investment strategy.

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

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

Present value of defined benefit
obligations
Fair value of plan assets
Net defined benefit liabilities		 December 31,2020
$ 535,292
(
392,320)
$ 142,972		 December 31,2019 December 31,2019
$ 568,358
(
398,179)
$ 170,179

==> picture [193 x 624] intentionally omitted <==

148

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

(Continued next page)

==> picture [193 x 624] intentionally omitted <==

149

(Continued from previous page)

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

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

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

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

==> picture [193 x 624] intentionally omitted <==

150

23.

24.

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

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

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

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

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

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

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

==> picture [193 x 624] intentionally omitted <==

151

(1) Share capital
Common shares
Authorized shares (thousands)
Authorized capital
Shares issued and fully paid up
(thousands)
Issued share capital		 December 31,2020
301,163.8
$ 3,011,638
301,163.8
$ 3,011,638		 December 31,2019 December 31,2019
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. (2) Retained earnings and dividend policy

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

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

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

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

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

==> picture [193 x 624] intentionally omitted <==

152

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

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

Note 2: Represents net special reserve provided (reversed) for FinTech development according to Letter Jin-Guan-Bao-Cai-Zi No. 10502066461 and Letter Jin-Guan-Bao-Cai-Zi No. 10804932431 issued by the authority. Earnings appropriation plan for 2020 was approved under Board of Directors resolution dated March 26, 2021, as follows:

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

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

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

  1. Details of special reserve made for first-time adoption of IFRSs:
Special reserve December 31,2020
$ 51,849		 December 31,2019 December 31,2019
$ 51,849

Because the amount of increase in retained earnings after first-time adoption of IFRSs was relatively low, the Company only provided for special reserve on the NT$51,849,000 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

==> picture [193 x 624] intentionally omitted <==

153

the Company makes earnings in subsequent years at a time when the initial reason for providing special reserves no longer exists, the Company shall make up for the required amount of special reserve before distributing earnings.

In order to support the development of financial technologies and protect the interests of employees, the Company is required to make provisions totaling 0.5% to 1% of after-tax net income to special 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.

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

2020
Opening balance
Provisions in the
current year
Reversed in the
current year
Year-end balance
2019
Opening balance
Provisions in the
current year
Year-end balance		 Special reserve Special reserve ( Financial
technology		 Provision for
first-time
adoption of
IFRSs		 Total
$ 1,681,701
178,228
-
$ 1,859,929
$ 1,474,249
207,452
$ 1,681,701		 $ 6,567
-

1,843)
$ 4,724
$ 4,407
2,160
$ 6,567		 $ 51,849
-
-
$ 51,849
$ 51,849
-
$ 51,849		 ( $ 1,740,117
178,228

1,843)
$ 1,916,502
$ 1,530,505
209,612
$ 1,740,117

(4) Other equity items

Unrealized gains/losses on financial assets at fair value through other comprehensive income

income
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		 2020
$ 407,023
51,592
34,436

200,725)
$ 292,326		 2019
( ( $ 27,302
22,498
387,894

30,671)
$ 407,023

==> picture [193 x 624] intentionally omitted <==

154

25.
(1)		 Net income from continuing operations
Interest income
Bank deposit
Financial Assets at Fair Value
through Profit or Loss
Debt instruments at fair value
through other comprehensive
income
Financial assets carried at cost
after amortization
Others		 2020
$ 25,996
13,387
12,180
31,973
3,892
$ 87,428		 2019
$ 32,384
13,520
10,539
33,889
4,878
$ 95,210

(2) Employee benefit expenses

Employee benefit expenses expenses
2020
Presented as
operatingcost
Presented as
operating
expense
Employee welfare
expenses
Salary
$ 328,860
$ 550,621
Labor/health
insurance
premium
-
58,167
Pension expense
-
29,891
Remuneration to
Director
-
9,068
Other employee
welfare expenses
-
16,074
$ 328,860
$ 663,821
Retirement benefits
Defined contribution plan
Defined benefit plan (Note 22)		 2020 2019
Presented as
operatingcost		 Presented as
operating
expense		 Total Presented as
operating
expense		 Total
$ 550,621
58,167
29,891
9,068
16,074		 $
$ 663,821 $

As of December 31, 2020 and 2019, the Company employed a total of 866 and 864 employees, respectively. (3) Employee and director remuneration

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

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

==> picture [193 x 624] intentionally omitted <==

155

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

Percentage

Details follows:
Percentage		 Details follows:
Percentage
2020
Employee remuneration
1%
Director remuneration
0.6%
Amount
2020
Cash
Shares
Employee
remuneratio
n
$ 2,093
$ -
Director
remuneratio
n
1,256
-		 2020 2019
1%
0.6%
2019
Cash Shares
$ -
-		 Cash Shares
$ -
-
$ 2,093
1,256		 $ 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 2020 and 2019 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 2021 and 2020.

(4)

Depreciation and amortization

meetings in 2021 and 2020.
(4)
Depreciation and amortization
Property, Plant and Equipment
Right-of-use asset
Investment Property
Intangible Assets
Depreciation and amortization
expenses by function
Depreciation (classified as
operating expenses)
Depreciation (classified as
operating costs)
Amortization (classified as
operating expenses)
(5)
Gain/loss on investment property
Rental income
Direct expenses associated with
rental income		 2020
$ 16,921
2,794
6,393
10,512
$ 36,620
$ 19,715
6,393
10,512
$ 36,620
2020
$ 66,544

13,299)
$ 53,245		 2019
$ 12,318
1,672
6,938
6,771
$ 27,699
$ 13,990
6,938
6,771
$ 27,699
2019
( ( $ 70,015

14,035)
$ 55,980

==> picture [193 x 624] intentionally omitted <==

156

(6) Gain/loss on foreign exchange
2020 2019
Total gain on foreign exchange $ 27,295 $ 30,016
Total (loss) on foreign
exchange ( 65,478) ( 48,096)
Net gain (loss) ($ 38,183) ($ 18,080)
Total gain/loss on foreign
exchange
Gain (loss) on exchange -
investment (Note) ($ 30,059) ($ 16,063)
Gain (loss) on exchange -
non-investment ( 8,124) ( 2,017)
($ 38,183) ($ 18,080)
26.
(1)		 Note: Derived from foreign currency time deposits.
Income tax expense for continuing operations
Main composition of income tax expense recognized in profit and loss
2020
2019
Current income tax
Incurred in the current
year
$ 45,040
$ 86,462
Additional tax on
undistributed earnings
-
59
Adjustment of previous
year figures
(
57)
(
179 )
Price difference in basic
tax payable
7,374
-
Deferred income tax
Incurred in the current
year
706
(
3,685)
Income tax expense recognized
in profit and loss
$ 53,063
$ 82,657
Reconciliation of accounting income and income tax expense:
2020
2019
Pre-tax profit from continuing
operations
$ 205,945
$ 663,625
Income tax expense calculated
by applying statutory tax
rate to pre-tax profit
$ 41,189
$ 132,725
Tax impact of non-deductible
expenses and losses
30
780
Price difference in basic tax
payable
7,374
-
Unrealized tax-exemption
losses (gains)
33,202
(
12,295)		 Note: Derived from foreign currency time deposits.
Income tax expense for continuing operations
Main composition of income tax expense recognized in profit and loss
2020
2019
Current income tax
Incurred in the current
year
$ 45,040
$ 86,462
Additional tax on
undistributed earnings
-
59
Adjustment of previous
year figures
(
57)
(
179 )
Price difference in basic
tax payable
7,374
-
Deferred income tax
Incurred in the current
year
706
(
3,685)
Income tax expense recognized
in profit and loss
$ 53,063
$ 82,657
Reconciliation of accounting income and income tax expense:
2020
2019
Pre-tax profit from continuing
operations
$ 205,945
$ 663,625
Income tax expense calculated
by applying statutory tax
rate to pre-tax profit
$ 41,189
$ 132,725
Tax impact of non-deductible
expenses and losses
30
780
Price difference in basic tax
payable
7,374
-
Unrealized tax-exemption
losses (gains)
33,202
(
12,295)
$ 663,625
$ 132,725
780
-
(
12,295)

(Continued next page)

==> picture [193 x 624] intentionally omitted <==

157

(Continued from previous page)

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

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

(2) Income tax recognized under other comprehensive income

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

(3) Deferred income tax assets and liabilities

Below are changes in deferred income tax assets and liabilities:

2020

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

==> picture [193 x 624] intentionally omitted <==

158

2019

==> picture [193 x 624] intentionally omitted <==

2019
Deferred Income Tax Assets Opening
balance		 Recognized
through profit
and loss		 Recognized in
other
comprehensive
income		 Year-end
balance
$ 5,674
37,414
102
-
7,609
$ 50,799
$ 92,934
2,262
$ 95,196		 $ -
(
1,900 )
(
19 )
2,901
441
$ 1,423
$ -
(
2,262)
($ 2,262)		 $ -
360
-
-
-
$ 360
$ -
-
$ -		 $ 5,674
35,874
83
2,901
8,050
$ 52,582
$ 92,934
-
$ 92,934
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

(4) Assessment of income tax return

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

27. Earnings per share

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

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

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

159

==> picture [193 x 624] intentionally omitted <==

28. Cash flow information

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

January1,2020
Lease
liabilities
$ 4,139
January 1 to December 31,		 January1,2020 January1,2020 Cash flow Changes without cash effect Changes without cash effect Changes without cash effect December 31,
2020
New leases Lease
modification
($ 2,564)
2019
Cash flow		 $ 4,445
December 31,
2019

Lease
liabilities
January1,2019
New leases Lease
modification
$ 2,707 ( $ 1,853) $ 3,285 $ - $ 4,139
  1. Capital risk management

Please refer to Note 37(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, 2020, the Company had maintained its capital above the percentage stated in the Insurance Act and was not subject to the above treatments. 30. Financial instruments

  • (1) 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.

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

  • Fair value hierarchy December 31, 2020

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

(Continued next page)

160

(Continued from previous page)

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

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

==> picture [193 x 624] intentionally omitted <==

161

==> picture [193 x 624] intentionally omitted <==

  1. Reconciliation of level 3 fair value assessment on financial instruments 2020
2020
Financial assets Measured at
fair value
through profit
and loss		 Financial assets
at fair value
through other
comprehensive
income		 Total
Debt
instrument		 Equity
instrument
Opening balance
Decrease - current period
Recognized through profit
and loss (gain/loss on
financial assets or
liabilities at fair value
through profit and loss)
Recognized through other
comprehensive income
(gain/loss on valuation of
equity instruments at fair
value through other
comprehensive income)
Closing balance
Unrealized gains and losses
at the end of period
2019
Financial assets		 $ 50,565
(
50,000)
(
565)
-
$ -
$ -
Measured at
fair value
through profit
and loss		 $ 945,763
-
-
(
57,165)
$ 888,598
$ 198,792
Financial assets
at fair value
through other
comprehensive
income		 $ 996,328
(
50,000)
(
565)
(
57,165)
$ 888,598
$ 198,792
Total
Debt
instrument		 Equity
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
Unrealized gains and losses
at the end of period		 $ 50,565
9
-
$ 50,565
$ 565		 $ 700,464
-
245,299
$ 945,763
$ 255,957		 $ 751,020
9
245,299
$ 996,328
$ 256,522

162

  1. 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.

  2. (3) 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)
Financial liabilities
Carried at cost after
amortization (Note 4)		 December 31,2020
$ 1,940,277
306,374
6,714,366
2,457,881
1,075,242
608,081		 December 31,2019
$ 1,645,093
381,669
6,560,882
2,676,438
1,027,166
653,734

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

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

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

  • Note 4: Balance includes notes payable, insurance claims and benefits payable, commissions payable, reinsurance account payable, other payables (excluding salary, bonus and leave encashment payable and pension

==> picture [193 x 624] intentionally omitted <==

163

payable), guarantee deposits received, and financial liabilities carried at cost after amortization.

(4) Purpose and policy of financial risk management

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

  1. Market risk

Market risk refers to changes in market risk factors such as exchange rate, product price, interest rate, share price etc that may reduce the Company’s profitability or portfolio value. The Company continues to adopt Value at Risk (VaR), stress test and market risk management tools to effectively measure, monitor and manage market risks.

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

(1) Exchange rate risk

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

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

Unit: in thousands of foreign currency or NTD

Financial assets
Monetary items
Bank deposit and
notes receivable
USD
EUR
CNY (RMB)
GBP
HKD
Other financial assets
USD		 December 31,2020 December 31,2020 December 31,2020
Foreign
currency
$ 2,111
55
27
56
314
23,800		 Exchange
rate
28.480
35.020
4.377
38.900
3.673
28.480		 TWD(NTD)
$ 60,124
1,919
120
2,162
1,154
677,824

==> picture [193 x 624] intentionally omitted <==

164

Financial assets
Monetary items
Bank deposit and
notes receivable
USD
EUR
CNY (RMB)
GBP
HKD
Other financial assets
USD
CNY (RMB)		 December 31,2019 December 31,2019 December 31,2019
Foreign
currency		 Exchange
rate
29.980
33.590
4.305
39.360
3.849
29.980
4.305		 TWD(NTD)
$ 3,376
17
29
6
524
18,600
5,000		 $ 101,211
558
126
247
2,018
557,628
21,525

Unrealized foreign currency gain/loss of material impact:

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

Sensitivity analysis

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

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

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

==> picture [193 x 624] intentionally omitted <==

165

(2) Interest rate risk

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

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

Sensitivity analysis

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

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

B. Risk of fair value changes due to interest rate

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

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

(3) Other price risks

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

Sensitivity analysis

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

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

==> picture [193 x 624] intentionally omitted <==

166

shareholders’ equity for 2020 and 2019 would increase/decrease by NT$24,579 thousand and NT$26,764 thousand, respectively, due to changes in the fair value of equity instruments measured at fair value through other comprehensive income.

(4) Value at risk (VaR)

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

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

(5) Stress-testing

In addition to the VaR model, the Company conducts stress tests regularly to assess potential risks should an extreme event occur. Stress-testing is intended to measure potential impacts on the value of investment portfolio given extreme changes in a series of financial variables.

Date: December 31, 2020

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

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

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

==> picture [193 x 624] intentionally omitted <==

167

  • (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, 2020

Unit: NTD thousands

Financial assets Taiwan Asia America Europe Others Total
Cash
and
cash
equivalents
$ 1,775,324		 $ - $ - $ - $ - $ 1,775,324
Financial assets at fair
value through profit
and loss (securitized
beneficiary
certificates and debt
instruments)



192,914		 - - - - 192,914
Financial assets (debt
instrument)
at
fair
value through other
comprehensive
income(Note)


1,075,242		 - - - - 1,075,242
Financial assets carried
at
cost
after
amortization

1,758,600		 - - - - 1,758,600
Other financial assets
(time deposit)
2,751,824		 - - - - 2,751,824
Total 7,553,904 - - - - 7,553,904
Regional weight 100.00% 0.00% 0.00% 0.00% 0.00% 100.00%

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

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

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

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

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

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

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

==> picture [193 x 624] intentionally omitted <==

168

  • 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

2020:

2020:
Investment in
debt
instruments
Opening balance
Variation
Closing balance
Receivables
Opening balance
Variation
Closing balance		 12-month
expected credit
loss		 E xpected credit
loss over the
remaining
duration		 Expected credit
loss over the
remaining
duration		 Impairment
provided
in accordance
with IFRS 9
(Subtotal)


P		 Difference with
impairments
provided in
accordance
with
“Regulation on
Asset
Valuation,
Overdue
Collection and
Loan Loss
rovisioning by
Insurance
Companies”		 Total
(
(		 $ 17,079

954)
$ 16,125
$ 5,706

601)
$ 5,105		 $ -
-
$ -
$ -
-
$ -		 $ -
-
$ -
$ -
-
$ -		 (
(		 $ 17,079

954)
$ 16,125
$ 5,706

601)
$ 5,105		 $ -
-
$ -
$ 43,001
313
$ 43,314		 (
(		 $ 17,079

954)
$ 16,125
$ 48,707

288)
$ 48,419

  1. Liquidity risk

  2. (1) Definition of liquidity risk

    • For each financial instrument, liquidity risk is distinguished between

    • “capital liquidity risk” and “market liquidity risk.”

==> picture [193 x 624] intentionally omitted <==

169

“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 the pre-arranged repayment date. The analysis has been prepared based on the earliest date by which the Company may be required to repay, using undiscounted cash flow. December 31, 2020

Repayable
upon
demand or
within 1
month
Non-derivative
financial liabilities
Non-interest
bearing liabilities
$ 301,272
Lease liabilities
-
$ 301,272
December 31, 2019
Repayable
upon
demand or
within 1
month
Non-derivative
financial liabilities
Non-interest
bearing liabilities
$ 261,262
Lease liabilities
-
$ 261,262		 Repayable
upon
demand or
within 1
month		 1 to 3
months		 3 months to
1year		 3 months to
1year		 1 to 5years 5 years and
above
$ 46,055
673
$ 46,728
1 to 3
months		 $ 246,224
1,599
$ 247,823
3 months to
1year		 $ 14,530
2,303
$ 16,833
1 to 5years		 $ -
-
$ -
5 years and
above

Non-derivative
financial liabilities
Non-interest
bearing liabilities
Lease liabilities
$ 261,262
-
$ 261,262		 $ 54,168
510
$ 54,678		 $ 323,190
1,790
$ 324,980		 $ 15,114
1,961
$ 17,075		 $ -
-
$ -

==> picture [193 x 624] intentionally omitted <==

170

31.
(1)		 Related party transactions
Name and relationship of related parties
Name of relatedparty
Yi Chih Co., Ltd.
OSTA TRADING CO., LTD.
Zong Cheng Enterprise Co., Ltd.
Du Ho Enterprise Co., Ltd.
Chien Yi Industrial Co., Ltd.
Chien Cheng Development Co., Ltd.
Hua Wang Manufacturer Co., Ltd.
Hai Hwa Construction Co., Ltd.
Tsai Cheng Enterprise Co., Ltd.
Tai Jing Apartment Building Management
and Maintenance Co., Ltd.
Taiwan Fuji Die Co., Ltd.
Yongji Enterprise Co., Ltd.
Chimax Development Company
Pao Shan Construction Co., Ltd.
Yiguang Enterprise Development Co., Ltd.
Chien Chi Co., Ltd.
Taiwan Real Estate Management Co., Ltd.
Jiatai Construction Co., Ltd.
Jinshi Construction Co., Ltd.
Jui San Co., Ltd.
Fu Bi Shi Construction Co., Ltd.
Yuanhu Construction Company
Other related parties		 Relationshipwith the Company
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Second degree relatives or closer to
the company’s director, Chairman,
President, Manager, or spouse
thereof
thereof
(2)
Major transactions with related parties
1. Premium revenues
Type of relatedparty
2020
2019
Other related parties
$ 3,341
$ 3,353
2. Insurance claims paid
Type of relatedparty
2020
2019
Other related parties
$ 2,814
$ 157
The above insurance coverage to other related parties were underwritten with
the same terms and claim criteria as non-related parties.
3. Rental expense
Type of relatedparty
2020
2019
Other related parties
$ 4
$ 6
Rental of conference room from the above related parties were undertaken at
terms that were not materially different from ordinary transactions.
4. Premiums receivable
Type of relatedparty
December 31,2020
December 31,2019
Other related parties
$ 384
$ 464		 2019
$ 3,353
2019
$ 157
ere underwritten with
2019
$ 464

==> picture [193 x 624] intentionally omitted <==

171

==> picture [193 x 624] intentionally omitted <==

(3) Remuneration to the executive management

Short-term employee benefits
Retirement benefits		 2020
$ 43,078
4,092
$ 47,170		 2019
$ 48,571
2,654
$ 51,225

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

  1. Major contingent liabilities and unrecognized contractual commitments

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

(1) Major unrecognized contractual commitments As of December 31, 2020 and 2019, the Company had the following expenses that were contracted but unpaid:

Types of unrecognized

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

(2) Contingent liabilities

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

33. Losses from major disasters: None. 34. Other matters

Please see Note 13 for impacts of COVID-19.

  1. Major post-balance sheet events: None. 36. Information on foreign currency-denominated financial assets and liabilities and exchange rate:

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

  1. Risk management goals, policies, procedures and methods

  2. (1) Risk management policies and goals

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

(2) Risk management framework, organization and responsibilities

  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

172

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

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

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

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

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

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

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

Risk Management Committee

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

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

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

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

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

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

  • (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.

==> picture [193 x 624] intentionally omitted <==

173

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

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

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

  • (6) The department assists in stress testing.

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

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

  • (9) Other risk management-related affairs. Business units

  • (1) Identify risk and report risk exposure

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

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

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

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

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

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

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

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

Internal audit

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

  • (3) Control and disclosure of key risks

The Company has systems and practices in place to manage key risk categories that arise in relation to its business activities, such as market risk, credit risk, liquidity risk, assets and liabilities matching risk, insurance risk and operational risk. These systems and practices are constantly reviewed (including assessment on the effectiveness of risk management system and appropriateness of risk factors) to accommodate the Company’s goals, risk exposures and changes in the external environment. The board of directors is reported regularly on the Company’s risk management progress, and advised on possible improvements whenever deemed necessary.

  • (4) Control of insurance contract risks

==> picture [193 x 624] intentionally omitted <==

174

(5)

(6)

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

1. Insurance risks

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

2. 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.

3. Underwriting risks

Underwriting risk refers to the risk of unexpected losses and expenses arising from business solicitation and underwriting review. 4. Reinsurance risks

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

5. Disaster risks

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

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

    1. Reserve-related risks

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

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

Control of insurance risk exposure and avoidance of risk concentration

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

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

==> picture [193 x 624] intentionally omitted <==

175

asset allocation if necessary. If liquidity deteriorates to the Critical level, an emergency response meeting must be convened immediately to discuss possible solutions.

  1. Disclosure of insurance contract-related information

  2. (1) Insurance contract receivables and payables: Receivables

Receivables
Insurance category
Fire Insurance
Marine insurance
Automobile Insurance
Engineering insurance
Other insurance
Less: loss provisions
Net amount
Insurance category
Fire Insurance
Marine insurance
Automobile Insurance
Engineering insurance
Others
Less: loss provisions
Net amount
Commission payable
Insurance category		 December 31,2020
Notes receivable
$ 8,232
29,368
99,915
1,621
8,019
147,155
(
3,682)
$ 143,473		 Premiums
receivable		 Total
( $ 65,959
30,188
38,551
13,217
64,855
212,770
(
39,979)
$ 172,791
108
12
31		 ( $ 74,191
59,556
138,466
14,838
72,874
359,925

43,661)
$ 316,264
Notes receivable
Premiums
receivable
$ 8,908
$ 106,686
29,028
35,254
97,810
56,820
409
19,388
4,612
100,685
140,767
318,833
(
3,573)
(
40,306)
$ 137,194
$ 278,527
December 31,2020
$ 12,885
7,115
75,070
1,384
19,171
$ 115,625		 Premiums
receivable		 Total
$ 115,594
64,282
154,630
19,797
105,297
459,600
(
43,879)
$ 415,721
December 31,2019		 Total
(
Fire Insurance
Marine insurance
Automobile Insurance
Engineering insurance
Other insurance
Total		 $ 12,148
6,992
68,042
1,158
21,822
$ 110,162

==> picture [193 x 624] intentionally omitted <==

176

Reinsurance accounts receivable (payable) - retained reinsurance

MAT
CMP
CRC
Others
Less: loss provisions
Net amount
MAT
CRC
CMP
WIL
FPH
Others
Less: loss provisions
Net amount
(2)
Unearned premium reserve
1.
Details of unearned premium re
Insurance category
One-year commercial fire
insurance
General automobile hull
insurance for private
vehicle
General automobile
liabilities insurance for
private vehicle
Mandatory automobile
liabilities insurance for
private vehicle
Accident insurance
Other insurance		 December 31,2020 December 31,2020 December 31,2020
Reinsurance
accounts receivable
Reinsurance
accountspayable
$ 86,329
$ 7,159
32,725
65,333
10,275
106,346
47,504
164,663
(
1,493)
-
$ 175,340
$ 343,501
December 31,2019		 Reinsurance
accountspayable
(
Reinsurance
accounts receivable
$ 74,186
30,048
28,954
27,288
8,198
50,502
(
3,589)
$ 215,587
serve:
109
12
31
$ 187,909
1,044,123
934,617
258,704
299,148
1,095,204
$ 3,819,705		 Reinsurance
accountspayable
$ 80,288
98,455
59,612
29,817
3,324
164,922
-
$ 436,418
108
12
31
$ 193,492
914,858
836,070
255,166
397,695
1,129,378
$ 3,726,659

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

==> picture [193 x 624] intentionally omitted <==

177

2. Details of retained unearned premium reserve:

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

Note: Presented as reinsurance contract assets.

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

1,077,452)
$ 931,371

==> picture [193 x 624] intentionally omitted <==

178

Item
Amount at the beginning
of year
Provisions made in
current year
Recoveries made in
current year
Amount at the end of
year
(3)
Claim reserve
1.
Details of claim reserve:
Insurance category
One-year commercial fire
insurance
General automobile hull
insurance for private
vehicle
General automobile
liabilities insurance for
private vehicle
Mandatory automobile
liabilities insurance for
private vehicle
Mandatory motorcycle
liabilities insurance
General liabilities
insurance
Accident insurance
Other insurance		 2019 2019 2019
Unearned premium
reserve
$ 4,032,127
3,726,659
(
4,032,127)
$ 3,726,659
December 31,2020
$ 479,668
257,188
632,876
422,205
153,490
250,125
128,714
389,624
$ 2,713,890		 Ceded unearned
premium reserve
$ 1,391,535
1,077,452
(
1,391,535)
$ 1,077,452
December 31,2019
$ 303,266
215,473
605,136
481,165
150,177
204,552
13,577
517,887
$ 2,491,233

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

==> picture [193 x 624] intentionally omitted <==

179

2. Details of retained claim reserve:

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

==> picture [193 x 624] intentionally omitted <==

180

Reported but not
paid
Fire Insurance
Marine insurance
Automobile
Insurance
Engineering/
liability insurance
Accident/ health
insurance
Other insurance
Not reported
Fire Insurance
Marine insurance
Automobile
Insurance
Engineering/
liability insurance
Accident/ health
insurance
Other insurance		 December 31,2019 December 31,2019 December 31,2019
Claim res erve Ceded claim
reserve		 Retained
insurance
(4)=(1)+(2)-(3)
Direct
underwritten
insurance
(1)		 Assumed
reinsurance
(2)		 Ceded
reinsurance
(Note)(3)
$ 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		 $ 815
806
40,565
12,244
-
3,413
57,843
277
-
149,708
4,756
-
1,382
156,123
$ 213,966		 $ 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		 $ 170,965
32,516
624,443
136,536
8,690
34,146
1,007,296
3,007
7,804
570,813
32,015
56,108
11,056
680,803
$ 1,688,099

Note: Presented as reinsurance contract assets.

  1. Net change in claim reserves and net change in ceded claim reserves
Reported but not
paid
Fire Insurance
Marine insurance
Automobile
Insurance
Engineering/
liability insurance
Accident/ health
insurance
Others
Not reported
Fire Insurance
Marine insurance
Automobile
Insurance
Engineering/
liability insurance
Accident/ health
insurance
Others		 20 20
Direct underwrit ten 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)
$ 509,980
32,974
761,274
245,790
32,063
44,098
1,626,179
2,608
6,569
637,273
64,311
97,701
32,270
840,732
$ 2,466,911		 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		 $ 2,900
3,000
42,516
3,453
-
41,901
93,770
1,041
-
150,802
1,277
-
89
153,209
$ 246,979		 $ 815
806
40,565
12,244
-
3,413
57,843
277
-
149,708
4,756
-
1,382
156,123
$ 213,966		 $ 169,810
(
4,151)
69,490
(
11,832)
15,473
35,147
273,937
619
(
14,261)
(
53,144)
15,078
(
13,619)
14,047
(
51,280)
$ 222,657		 $ 320,931
11,845
110,594
113,622
17,112
16,538
590,642
-
2,072
237,465
26,758
42,146
14,071
322,512
$ 913,154		 $ 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		 $ 148,826
4,236
737
(
10,917)
9,212
(
168)
151,926
(
23)
(
10,954)
(
32,941)
8,263
(
13,066)
6,815
(
41,906)
$ 110,020

==> picture [193 x 624] intentionally omitted <==

181

==> picture [193 x 624] intentionally omitted <==

Reported but not
paid
Fire Insurance
Marine insurance
Automobile
Insurance
Engineering/
liability insurance
Accident/ health
insurance
Others
Not reported
Fire Insurance
Marine insurance
Automobile
Insurance
Engineering/
liability insurance
Accident/ health
insurance
Others		 20 19
Direct underw ritt en insurance Assumed r ein surance
c		 Net change in
laim reserves
(5)=(1)-(2)
+(3)-(4)		 Ceded rein surance Net change in
ceded claim
reserve
(8)=(6)-(7)
Provisions(1) Recoveries(2) Provisions(3) Recoveries(4) Provisions(6)
$ 172,105
7,609
109,857
124,539
7,900
16,706
438,716
23
13,026
270,406
18,495
55,212
7,256
364,418
$ 803,134		 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		 (
(
(
(
(
(
(
(		 $ 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)		 $ 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)

Changes in claim reserves and ceded claim reserves:

Changes in claim reserves and ceded claim reserves: Changes in claim reserves and ceded claim reserves: Changes in claim reserves and ceded claim reserves: Changes in claim reserves and ceded claim reserves: Changes in claim reserves and ceded claim reserves:
2020
Item
Claim reserve
Ceded claim
reserve
Amount at the beginning of
year
$ 2,491,233
$ 803,134
Provisions made in current year
2,713,890
913,154
Recoveries made in current
year
(
2,491,233)
(
803,134)
Amount at the end of year
$ 2,713,890
$ 913,154
2019
Item
Claim reserve
Ceded claim
reserve
Amount at the beginning of
year
$ 2,850,200
$ 1,048,997
Provisions made in current year
2,491,233
803,134
Recoveries made in current
year
(
2,850,200)
(
1,048,997)
Amount at the end of year
$ 2,491,233
$ 803,134
ial claim reserve
Details of special claim reserve:
Nature
Insurance category
December 31,
2020
December 31,
2019
Major incident
Commercial
earthquake
insurance
$ 86,814
$ 90,760
Typhoon and flood
insurance
60,795
63,558
147,609
154,318
Ceded claim
reserve
$ 803,134
913,154

803,134)
$ 913,154
Ceded claim
reserve
$ 1,048,997
803,134
(
1,048,997)
$ 803,134
December 31,
2019
$ 90,760
63,558
154,318

Major incident Commercial
earthquake
insurance
Typhoon and flood
insurance

(4) Special claim reserve 1. Details of special claim reserve:

(Continued next page)

182

(Continued from previous page)

December 31, December 31, December 31, December 31, December 31,
Nature Insurance category 2020 2019
Change of
Mandatory automobile
$		 85,159 $ 35,881
risk liabilities insurance
for private vehicle
Mandatory ( 94,832) ( 102,353)
commercial
automobile
liabilities insurance
Mandatory motorcycle 515,011 538,007
liabilities insurance
Nuclear risks 74,686 74,687
insurance
Commercial 587,411 587,411
earthquake
insurance
Typhoon
and		 flood 184,083 184,083
insurance
Government-regulated 197,532 197,531
earthquake
insurance
1,549,050 1,515,247
$ 1,696,659 $ 1,669,565
2. Details of special claim reserve - mandatory automobile/motorcycle liabilities
insurance:
Item 2020 2019
Amount at the beginning
of year $ 471,535 $ 470,860
Provisions made in
current year 56,799 23,501
Recoveries made in
current year ( 22,996) ( 22,826)
Amount at the end of
year $ 505,338 $ 471,535
  1. Special claim reserve - voluntary automobile/motorcycle liabilities insurance
Item 202 0
Spec ial claim reserveliab ilit y Special reserve
Major incident Change of risk Total Major incident Change of risk Total
Amount at the
beginning of
year
Provisions made
in current
year
Recoveries made
in current year
Amount at the
end of year		 ( $ 154,318
-

6,709)
$ 147,609		 $ 1,043,712
-
-
$ 1,043,712		 ( $ 1,198,030
-

6,709)
$ 1,191,321		 $ 569,792
66,863
-
$ 636,655		 ( $ 1,111,909
143,350

31,985)
$ 1,223,274		 ( $ 1,681,701
210,213

31,985)
$ 1,859,929

==> picture [193 x 624] intentionally omitted <==

183

Item 20 19
Speci al claim reserve lia bil ity
Total
$ 1,204,740
-

6,710)
$ 1,198,030		 Special reserve
Major incident
$ 161,028
-

6,710)
$ 154,318		 Change of risk Major incident Change of risk Total
Amount at the
beginning of
year
Provisions
made in
current year
Recoveries
made in
current year
Amount at the
end of year		 ( $ 1,043,712
-
-
$ 1,043,712		 ( $ 504,170
65,622
-
$ 569,792		 ( $ 970,079
163,547

21,717)
$ 1,111,909		 ( $ 1,474,249
229,169

21,717)
$ 1,681,701

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

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

(5) Deficiency reserve

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

==> picture [193 x 624] intentionally omitted <==

184

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

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

(6) 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 2020:

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

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

==> picture [193 x 624] intentionally omitted <==

185

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

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

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

==> picture [193 x 624] intentionally omitted <==

186

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

(7) Retained claims

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

31, 2020:
Insurance category I nsurance claims
(including
claim-related
expenses)
(1)		 Claims paid for
reinsurance
(2)		 Claims
recovered from
reinsurers
(3)		 Retained claims
(4)=(1)+(2)-(3)
Mandatory automobile
liabilities insurance
Voluntary automobile
liabilities insurance		 $ 544,928
3,098,081
$ 3,643,009		 $ 255,387
31,898
$ 287,285		 $ 327,753
630,146
$ 957,899		 $ 472,562
2,499,833
$ 2,972,395

==> picture [193 x 624] intentionally omitted <==

187

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:
Insurance category I nsurance claims
(including
claim-related
expenses)
(1)		 Claims paid for
reinsurance
(2)		 Claims
recovered from
reinsurers
(3)		 Retained claims
(4)=(1)+(2)-(3)
Mandatory automobile
liabilities insurance
Voluntary automobile
liabilities insurance		 $ 650,040
3,405,106
$ 4,055,146		 $ 261,884
70,748
$ 332,632		 $ 379,257
939,748
$ 1,319,005		 $ 532,667
2,536,106
$ 3,068,773
(8)
Policyholders’ reported claims liability
Policyholders’ reported and paid/unpaid and unreported claims
December 31,2020
Insurance
claimspayable
Claim reserves
Reported and
paid
Reported but
notpaid
Not reported
Fire
Insurance
$ -
$ 512,880
$ 3,649
Marine
insurance
-
35,974
6,569
Automobile
Insurance
2,045
803,790
788,075
Engineering/
liability
insurance
-
249,243
65,588
Accident/
health
insurance
-
32,063
97,701
Other
insurance
941
85,999
32,359
$ 2,986
$ 1,719,949
$ 993,941		 (8)
Policyholders’ reported claims liability
Policyholders’ reported and paid/unpaid and unreported claims
December 31,2020
Insurance
claimspayable
Claim reserves
Reported and
paid
Reported but
notpaid
Not reported
Fire
Insurance
$ -
$ 512,880
$ 3,649
Marine
insurance
-
35,974
6,569
Automobile
Insurance
2,045
803,790
788,075
Engineering/
liability
insurance
-
249,243
65,588
Accident/
health
insurance
-
32,063
97,701
Other
insurance
941
85,999
32,359
$ 2,986
$ 1,719,949
$ 993,941		 (8)
Policyholders’ reported claims liability
Policyholders’ reported and paid/unpaid and unreported claims
December 31,2020
Insurance
claimspayable
Claim reserves
Reported and
paid
Reported but
notpaid
Not reported
Fire
Insurance
$ -
$ 512,880
$ 3,649
Marine
insurance
-
35,974
6,569
Automobile
Insurance
2,045
803,790
788,075
Engineering/
liability
insurance
-
249,243
65,588
Accident/
health
insurance
-
32,063
97,701
Other
insurance
941
85,999
32,359
$ 2,986
$ 1,719,949
$ 993,941		 (8)
Policyholders’ reported claims liability
Policyholders’ reported and paid/unpaid and unreported claims
December 31,2020
Insurance
claimspayable
Claim reserves
Reported and
paid
Reported but
notpaid
Not reported
Fire
Insurance
$ -
$ 512,880
$ 3,649
Marine
insurance
-
35,974
6,569
Automobile
Insurance
2,045
803,790
788,075
Engineering/
liability
insurance
-
249,243
65,588
Accident/
health
insurance
-
32,063
97,701
Other
insurance
941
85,999
32,359
$ 2,986
$ 1,719,949
$ 993,941		 (8)
Policyholders’ reported claims liability
Policyholders’ reported and paid/unpaid and unreported claims
December 31,2020
Insurance
claimspayable
Claim reserves
Reported and
paid
Reported but
notpaid
Not reported
Fire
Insurance
$ -
$ 512,880
$ 3,649
Marine
insurance
-
35,974
6,569
Automobile
Insurance
2,045
803,790
788,075
Engineering/
liability
insurance
-
249,243
65,588
Accident/
health
insurance
-
32,063
97,701
Other
insurance
941
85,999
32,359
$ 2,986
$ 1,719,949
$ 993,941		 (8)
Policyholders’ reported claims liability
Policyholders’ reported and paid/unpaid and unreported claims
December 31,2020
Insurance
claimspayable
Claim reserves
Reported and
paid
Reported but
notpaid
Not reported
Fire
Insurance
$ -
$ 512,880
$ 3,649
Marine
insurance
-
35,974
6,569
Automobile
Insurance
2,045
803,790
788,075
Engineering/
liability
insurance
-
249,243
65,588
Accident/
health
insurance
-
32,063
97,701
Other
insurance
941
85,999
32,359
$ 2,986
$ 1,719,949
$ 993,941		 (8)
Policyholders’ reported claims liability
Policyholders’ reported and paid/unpaid and unreported claims
December 31,2020
Insurance
claimspayable
Claim reserves
Reported and
paid
Reported but
notpaid
Not reported
Fire
Insurance
$ -
$ 512,880
$ 3,649
Marine
insurance
-
35,974
6,569
Automobile
Insurance
2,045
803,790
788,075
Engineering/
liability
insurance
-
249,243
65,588
Accident/
health
insurance
-
32,063
97,701
Other
insurance
941
85,999
32,359
$ 2,986
$ 1,719,949
$ 993,941		 liability: liability:
Insurance
claimspayable		 Claim reserves
Reported and
paid		 Reported but
notpaid		 Not reported Total
$ -
-
2,045
-
-
941
$ 2,986		 $ 512,880
35,974
803,790
249,243
32,063
85,999
$ 1,719,949		 $ 3,649
6,569
788,075
65,588
97,701
32,359
$ 993,941		 $ 516,529
42,543
1,591,865
314,831
129,764
118,358
$ 2,713,890

==> picture [193 x 624] intentionally omitted <==

188

Fire
Insurance
Marine
insurance
Automobile
Insurance
Engineering/
liability
insurance
Accident/
health
insurance
Other
insurance		 December 31,2019 December 31,2019 December 31,2019
Insurance
claimspayable		 Claim reserves
Reported and
paid		 Reported but
notpaid		 Not reported Total
$ -
-
-
-
-
-
$ -		 $ 343,070
40,125
734,300
261,075
16,590
50,852
$ 1,446,012		 $ 3,030
20,830
841,219
50,510
111,320
18,312
$ 1,045,221		 $ 346,100
60,955
1,575,519
311,585
127,910
69,164
$ 2,491,233

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

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

1,010)
$ 166,082

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

==> picture [193 x 624] intentionally omitted <==

189

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

(10) Acquisition costs for insurance contracts

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

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

==> picture [193 x 624] intentionally omitted <==

190

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

Fire Insurance
Marine insurance
Automobile
Insurance
Engineering/
liability
insurance
Accident/ health
insurance
Other insurance
Fire Insurance
Marine insurance
Automobile
Insurance
Engineering/
liability
insurance
Accident/ health
insurance
Other insurance		 20 20
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)		 P rofit (loss) on
insurance
(6)=(1)-(2)-
(3)-(4)-(5)
$ 922,647
303,401
4,732,154
333,986
521,952
248,744
$ 7,062,884		 ( $ 33,886)
(
3,925)
231,371
(
4,912)
(
106,316)
8,384
$ 90,716		 $ 84,579
31,945
807,715
45,758
110,128
23,312
$ 1,103,437
20		 19 $ 159,429
120,166
2,801,841
140,416
362,575
58,582
$ 3,643,009
 $ 167,580
(
20,606 )
13,301
15,516
1,854
11,999
$ 189,644		 $ 544,945
175,821
877,926
137,208
153,711
146,467
$ 2,036,078
Premium
revenues
(1)		 Net change in
unearned
premium
reserve
(2)		 Acquisition
costs for
insurance
contracts
(3)		 Insurance
claims
(including
claim-related
expenses)
(4)
c		 Net change in
laim reserves
(5)		 P rofit (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

Profitability analysis for assumed reinsurance:

Fire Insurance
Marine insurance
Automobile
Insurance
Engineering/
liability
insurance
Accident/ health
insurance
Other insurance		 20 20
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)
$ 71,739
5,850
256,074
45,276
4,364
20,362
$ 403,665		 $ 4,374
(
243)
(
1,450)
611
371
(
1,331)
$ 2,332		 $ 4,880
583
-
10,600
140
2,176
$ 18,379		 $ 4,678
6,489
255,387
16,069
702
3,960
$ 287,285		 $ 2,849
2,194
3,045
(
12,270 )
-
37,195
$ 33,013		 $ 54,958
(
3,173)
(
908)
30,266
3,151
(
21,638)
$ 62,656

==> picture [193 x 624] intentionally omitted <==

191

Fire Insurance
Marine insurance
Automobile
Insurance
Engineering/
liability
insurance
Accident/ health
insurance
Other insurance		 20 1 9
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		 $ 4,789
1,012
-
10,853
128
2,299
$ 19,081		 $ 7,260
11,196
261,884
50,495
374
1,423
$ 332,632		 ( $ 2,472)
489
6,626
(
1,953)
-
63
$ 2,753		 $ 51,283
(
518)
(
13,095)
(
12,838)
3,069
14,007
$ 41,908

Current profit/loss recognized on ceded insurance contracts:

2020

Fire Insurance
Marine insurance
Automobile
Insurance
Engineering/
liability
insurance
Accident/ health
insurance
Other insurance
Fire Insurance
Marine insurance
Automobile
Insurance
Engineering/
liability
insurance
Accident/ health
insurance
Other insurance		 Reinsurance
premiums
expense
(1)		 Net change in
ceded
unearned
premium
reserve
(2)		 Net change in
ceded
unearned
premium
reserve
(2)		 Reinsurance
commission
revenues
(3)		 Claims
recovered
from
reinsurers
(4)		 Net change in
ceded claim
reserve
(5)		 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)
$ 498,026
99,750
709,080
154,832
187,600
127,025
$ 1,776,313		 ( $ 36,907 )
(
1,475)
24,327
(
4,878)
(
131,854)
4,706
($ 146,081)		 $ 25,772
11,204
145,168
38,850
54,891
11,968
$ 287,853
20		 19 $ 72,016
10,519
550,866
61,580
241,647
21,271
$ 957,899
 $ 148,803
(
6,718)
(
32,204)
(
2,654)
(
3,854)
6,647
$ 110,020		 $ 288,342
86,220
20,923
61,934
26,770
82,433
$ 566,622
Reinsurance
premiums
expense
(1)		 Net change in
ceded
unearned
premium
reserve
(2)		 Reinsurance
commission
revenues
(3)		 Claims
recovered
from
reinsurers
(4)		 Net change in
ceded claim
reserve
(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

(12) Information on insurance risks

1. Sensitivity analysis for insurance risks

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

==> picture [193 x 624] intentionally omitted <==

192

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

Average cost of
claim		 December 31,20 20
Single-varia
ble
Variation		 Effect on gross
claimsreserve		 Effect on net
claimsreserve		 Effect on
pre-tax profit
(beforetax)
Increase
(decrease)
( $ 71,932 )		 Pre-tax effect
on owners’
equity
Increase
(decrease)		 Increase
(decrease)		 Increase
(decrease)
5% $ 104,787 $ 71,932 ( $ 71,932 )

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

  1. Explanation to concentration of insurance risks

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

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

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

Claims trends

Trend analysis for claims on direct insurance is as follows:

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

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

==> picture [193 x 624] intentionally omitted <==

193

  • (13) 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.”

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

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

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

With regards to ceded insurance as of December 31, 2019, the Company was required to disclose claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months totaling NT$59,000 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

==> picture [193 x 624] intentionally omitted <==

194

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. Liquidity risk of insurance contracts

2.

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, 2020 was considered to be at the Normal level, which posed no concern of liquidity risk.

  1. Market risk of insurance contracts

None of the insurance contracts and reinsurance contracts issued or held by the Company involved any significant market risk. (14) Assets, liabilities, revenues and costs of mandatory automobile liabilities insurance 1. Assets and liabilities of mandatory automobile liabilities insurance

Un Un it: NTD thousand
Item Am ount Item Am ount
Assets December 31,
2020		 December 31,
2019		 Liabilities December 31,
2020		 December 31,
2019
Cash and bank deposits
(Note)
Notes receivable
Premiums receivable
Claims recoverable from
reinsurers
Reinsurance accounts
receivable
Other receivables
Financial assets at fair
value through other
comprehensive income
Ceded unearned premium
reserve
Ceded claim reserve
Payments in suspense and
pending settlement
Other assets		 $ 1,094,147
21,525
13,020
20,922
54,074
-
-
185,782
256,068
-
-		 $ 1,089,353
8,511
16,055
23,744
50,416
-
-
185,437
296,837
-
-		 Notes payable
Claims payable
Claims
payable
to
reinsurers
Reinsurance
accounts
payable
Unearned
premium
reserve
Claim reserve
Special reserve
Receipts in suspense and
pending settlement
Other liabilities		 $ 1,044
727

-

65,333

454,958
618,000
505,338

121
17		 $ -
-
-
59,612
455,847
683,359
471,535
-
-
Total assets $ 1,645,538 $ 1,670,353 Total liabilities $ 1,645,538 $ 1,670,353

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

==> picture [193 x 624] intentionally omitted <==

195

  1. Revenues and costs of mandatory automobile liabilities insurance

Unit: NTD thousands

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

  1. Other disclosures

  2. (1) Major transactions:

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

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

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

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

    5. Trading of derivatives: None.

    6. Others: None.

  3. (2) Information on invested businesses: None.

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

==> picture [193 x 624] intentionally omitted <==

196

(4) Information of dominant shareholders:

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

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

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

40. Segment information

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

==> picture [193 x 624] intentionally omitted <==

197

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

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

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

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

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

==> picture [193 x 624] intentionally omitted <==

198

II. Analysis of financial performance

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

Explanation to significant variations of 10% or above:

The decrease in operating profit and net income for 2020 was primarily a result of the increase in net changes in insurance liability provisions in 2020.

The increase in non-operating income and expenses in 2020 from 2019 was primarily a result of the increase in property obsolescence loss in 2020.

The increase in income tax in 202 from 2019 was primarily a result of the decrease in pre-tax profit in 2020.

III. Cash flow variation analysis:

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

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

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

==> picture [193 x 624] intentionally omitted <==

199

  • Five. Auditor’s information: 1. Audit fee information

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

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

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

  • Change of CPA: None.

  • 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 until the publication date of the annual report: None.

==> picture [193 x 624] intentionally omitted <==

200

==> picture [193 x 624] intentionally omitted <==

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

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

Explanation to significant variations amounting to NT$10 million or 20% or above: The increase in intangible assets in 2020 from 2019 was primarily a result of the increase in computer software cost in 2020.

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

II. Analysis of financial performance

comprehensive income in 2020.
sis of financial performance		 comprehensive income in 2020.
sis of financial performance		 comprehensive income in 2020.
sis of financial performance		 comprehensive income in 2020.
sis of financial performance		 comprehensive income in 2020.
sis of financial performance
Unit: NTD thousands
Item 2020 2019 Variation Variation
ratio
%
Revenue
Operating Cost
Operating Expense
Operating profit
Non-operating income
and expenses		 $ 5,854,672
4,246,729
1,399,892
208,051
(
2106)		 $ 6,049,197
4,045,100
1,339,907
664,190
(
565)		 ($ 194,525)
201,629
59,985
(
456,139 )
(1,541 )		 (
3.22)
4.98
4.48
( 68.68 )
272.74
Pre-tax profit from
continuing operations		 205,945 663,625 ( 457,680 ) (68.97)

201

==> picture [193 x 624] intentionally omitted <==

ncome tax
Current net income from
continuingoperations		 53,063

$ 152,882		 82,657
$ 580,968		 ( 29,594 )
(428,086 )		 (35.80)
(73.68)

(I) Explanation to significant variations of 10% or above: The decrease in operating profit and net income for 2020 was primarily a result of the increase in net changes in insurance liability provisions in 2020.

The increase in non-operating income and expenses in 2020 from 2019 was primarily a result of the increase in property obsolescence loss in 2020. The increase in income tax in 202 from 2019 was primarily a result of the decrease in pre-tax profit in 2020.

  • (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

ow variation analysis ow variation analysis ow variation analysis ow variation analysis
Unit: NTD thousands
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
1,860,014 251,496 (336,186) 1,775,324 - -
1.
Analysis of cash flow for the year:
(1)
Operating activities: Net cash inflow of NT$251,496 thousand was mainly
attributed to disposal of financial assets at fair value through profit and loss
and a decrease in reinsurance contract assets.
(2) Investing activities: Net cash outflow of NT$40,849 thousand was mainly due to
acquisition of property, plants and equipment and intangible assets.
(3) Financing activities: Net cash outflow of NT$291,681 thousand was mainly due
to cash dividend payment.
2.
Responsive measures and liquidity analysis for cash flow deficit: None.
3.
Liquidity analysis for the next year:
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
Investment
plans		 Financing
plans
1,775,324 307,800 (265,800) 1,817,324 - -

202

  • 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:

    1. Interest rate: In terms of the domestic base rate in recent years, the main economies continue to adopt the QE policy and expansionary fiscal policy in consideration of the impact posed by the epidemic. International institutions forecast that the global economy was supposed to recover and grow this year; however, popularization and effectiveness of vaccines, tightened financial condition potentially caused by the drastic increase in the main economies’ long-term loan yield rate, financial vulnerability caused by the tremendous global debt scale, relations between China and the USA, and climate change risk still remain the uncertain factors critical to the global economic outlook. It was resolved at the joint executive and supervisory board meeting of the Central Bank dated March 18, 2021 that in light of domestic and international economic and financial situations, after considering the global economic recovery remaining with uncertainty, the main economies all maintained the QE policy and continued to promote the large-scale economy incentive policy; domestically, the commodity price and inflation outlook were considered mild, and domestic economy was expected to grow stably. Therefore, the Bank’s board considered that maintenance of the policy-based interest rate and continued QE policy should help stabilize commodity price and finance, and also support economic growth. The Central Bank’s decision to maintain rediscount rate, the rate on accommodations with collateral, and the rate on accommodations without collateral unchanged at 1.125%, 1.5% and 3.375%, respectively, may have somewhat adverse effects on the Company’s use of capital. As a result, the Company will continue to increase the holding position of low-risk, high-yield fixed income assets such as government bonds and real estate instruments for higher investment gains.

    2. 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.

    3. 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:

    1. The Company did not engage in any high-risk or highly leveraged investment or transactions such as endorsement, guarantee, or trading of derivatives.

    2. 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 loans as a form of stable income but currently has no

==> picture [193 x 624] intentionally omitted <==

203

outstanding balance.

(III) Future research and development plans and projected expenses:

  1. Future R&D plans: 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.

  2. 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.

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

In order to help the insurance industry practice asset and liability management comprehensively and reflect the insurance industry’s business risk more reasonably, protect policy holders’ interest and maintain financial stability, and improve the competitiveness of Taiwan’s insurance industry, Financial Supervisory Commission (“FSC”) has announced that the insurance industry is allowed to implement IFRS 17 and ICS’s new system as of 2026. FSC will carefully evaluate the impact posed by IFRS 17 and ICS on the insurance industry.

In response to the competent authority’s policy, the Company has planned the adjusted time schedules related to strategies, SOPs and internal control in terms of products, investment, and risk control under IFRS 17 to satisfy related laws and regulations.

  • (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 this annual report: None.

==> picture [193 x 624] intentionally omitted <==

204

(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, 2021, 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 period from January 1, 2020 to December 31, 2020 to the Board of Directors and has taken improvement measures against the matters to be improved (such as adjustment of the authority of the system account, and control of the accounts of transferred and resigned personnel).

VII. Other important disclosures: None.

==> picture [193 x 624] intentionally omitted <==

205

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.

==> picture [193 x 624] intentionally omitted <==

206

The First Insurance Co., Ltd.

Chairman C. H. Lee

==> picture [193 x 624] intentionally omitted <==

207

More from FIRST INS

Annual Report 2026
May 29
Annual Report 2026
May 29
Governance Information 2026
May 29
Declaration of Voting Results & Voting Rights Announcements 2026
May 28
Regulatory Filings 2026
May 15
Regulatory Filings 2026
May 15
Regulatory Filings 2026
May 15
Regulatory Filings 2026
May 15
Regulatory Filings 2026
May 14
Regulatory Filings 2026
May 14
View all filings →