FIRST INS - Interim / Quarterly Report 2020

Stock ID: 2852

The First Insurance Co., Ltd.

Financial Statements and Independent Auditor's Review Report For the First Quarter of 2020 and 2019

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

§TABLE OF CONTENTS§

§TABLE OF CONTENTS§
ITEM PAGE 1. Cover page 1 2. Table of contents 2 3. Independent auditor's review report 3 4. Balance Sheet 4 5. Statement of comprehensive income 5~7 6. Statement of changes in equity 8 7. Cash flow statement 9~10 8. Notes to financial statements (1) Corporate history 11 (2) Financial statement approval date and procedures 11 (3) Application of new and amended standards and interpretations 11~13 (4) Summary of significant accounting policies 13~16 (5) Sources of uncertainty to significant accounting judgments, estimates, and assumptions 16 (6) Notes to major accounts 16~49, 51~77 (7) Related party transactions 49~51 (8) Pledged assets - (9) Major contingent liabilities and unrecognized contractual commitments 51 (10) Losses from major disasters 51 (11) Major post-balance sheet events 51 (12) Information on foreign currency-denominated financial assets and liabilities and exchange rate 51 (13) Other disclosures 1. Information related to significant transactions 78 2. Information related to invested businesses 78 3. Information relating to investments and business activities in the Mainland China 78 4. Dominant shareholders 78 (14) Segment information 78	SERIAL NUMBER OF NOTES TO FINANCIAL STATEMENTS	SERIAL NUMBER OF
	- - - - - - - 1 2 3 4 5 6~36 30 - 31 32 33 34 37 37 37 37 38

Independent Auditor's Review Report

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

Foreword

We have reviewed the balance sheet of The First Insurance Co., Ltd. as of March 31, 2020 and 2019, the statement of comprehensive income, statement of changes in equity and cash flow statement for periods from January 1 to March 31, 2020 and 2019, and the accompanying footnotes (including summary of major accounting policies). It is the responsibility of the management to prepare and ensure fair presentation of financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Insurance Enterprises, and the version of IAS 34 - "Interim Financial Reporting" approved and published by the Financial Supervisory Commission. Our responsibility as auditor is to form a conclusion based on our review.

Scope

We, the auditors, have performed the review in accordance with Statement on Auditing Standards No. 65 - "Financial Statement Review." The procedures executed in our review of financial statements include inquiry (mainly with employees responsible for financial and accounting affairs), analysis and other review-related processes. The scope of financial statement review is significantly smaller than a financial statement audit, therefore we may not be able to detect all material issues through the steps we have taken, and are unable to provide an opinion. Conclusion

In our opinion, none of the material disclosures of the financial statements mentioned above exhibited any misstatement that did not conform with Regulations Governing the Preparation of Financial Reports by Insurance Enterprises or the version of IAS 34 - "Interim Financial Reporting" approved by the Financial Supervisory Commission, or compromised the fair view of the financial position of The First Insurance Co., Ltd. as of March 31, 2020 and 2019, and business performance and cash flow for periods from January 1 to March 31, 2020 and 2019.

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

April 29, 2020

The First Insurance Co., Ltd. Balance Sheet

As of March 31, 2020, December 31, 2019 and March 31, 2019

(in NT$ 1,000)

Code	Assets	March 31, 202 (Reviewed)	0	December 31, 20 (Audited)	19	March 31, 201 (Reviewed)	9
		Amount	%	Amount	%	Amount	%
11000 12100 12200 12500 14110 14145 14180 14190 14200 15000 16000 16700 17300 17800 18300 18700 1XXXX Code	Cash (Note 6) Notes receivable - Net (Note 12) Premiums receivable - Net (Notes 12, and 30) Other receivables (Note 12) Financial assets at fair value through profit and loss (Note 7) Financial assets carried at cost after amortization (Notes 9 and 10) Other financial assets (Notes 6 and 11) Financial assets at fair value through other comprehensive income (Notes 8 and 10) Investment properties (Note 13) Reinsurance contract assets (Notes 12, 14 and 36) Property, plant, and equipment (Note 15) Right-of-use asset (Note 16) Intangible assets (Note 17) Deferred income tax assets (Note 4) Guarantee deposits paid (Notes 8 and 18) Other assets - Others (Note 19) TOTAL ASSETS Liabilities and equity	$ 1,592,874 144,802 285,877 43,496 1,875,067 1,528,947 2,621,073 2,614,124 903,133 2,323,876 666,821 3,713 9,183 47,828 573,895 56,261 $ 15,290,970 $ 2,550 113,494 480,699 121,040 65,237 3,753 7,989,035 159,400 93,821 14,529 74,790 9,118,348 3,011,638 1,246,749 1,740,117 286,641 3,273,507 ( 112,523) 6,172,622 $ 15,290,970	11 1 2 - 12 10 17 17 6 15 4 - - - 4 1 100 - 1 3 1 - - 52 1 1 - 1 60 20 8 11 2 21 ( 1) 40 100	$ 1,860,014 139,251 278,527 45,607 1,645,093 1,529,333 2,663,153 3,185,743 943,248 2,269,819 620,038 4,320 7,203 52,582 562,858 50,025 $ 15,856,814 $ - 110,162 436,418 178,688 49,329 4,139 7,911,750 170,179 92,934 15,114 76,840 9,045,553 3,011,638 1,246,749 1,740,117 405,734 3,392,600 407,023 6,811,261 $ 15,856,814	12 1 2 - 10 10 17 20 6 14 4 - - - 4 - 100 - 1 3 1 - - 50 1 1 - - 57 19 8 11 2 21 3 43 100	$ 1,644,191 159,914 276,693 47,835 3,585,061 1,882,771 2,600,324 1,185,213 948,451 2,823,426 622,640 2,398 9,100 50,359 518,847 17,405 $ 16,374,628 $ 11,689 108,506 624,266 111,548 41,655 2,406 8,614,360 172,633 93,620 15,114 107,915 9,903,712 3,011,638 1,156,391 1,530,505 618,287 3,305,183 154,095 6,470,916 $ 16,374,628	10 1 2 - 22 12 16 7 6 17 4 - - - 3 - 100 - 1 4 1 - - 52 1 - - 1 60 19 7 9 4 20 1 40 100
21200 21400 21500 21600 21700 23800 24000 27100 28000 25300 25900 2XXXX 31000 33100 33200 33300 33000 34900 3XXXX	Insurance claims and benefits payable (Note 36) Commission payable (Note 36) Reinsurance accounts payable (Note 36) Other payables (Note 20) Current income tax liabilities (Note 4) Lease liabilities (Note 16) Insurance liabilities (Notes 21 and 36) Provision for employee benefits (Notes 4 and 22) Deferred income tax liabilities (Note 4) Guarantee deposits received Other liabilities - Others (Note 23) Total liabilities Share capital (Note 24) Retained earnings (Note 24) Legal reserve Special reserve Undistributed earnings Total retained earnings Other equity items (Note 24) Total equity Total liabilities and equity

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

The First Insurance Co., Ltd. Comprehensive Income Statement For periods from January 1 to March 31, 2020 and 2019 (Reviewed only; not audited in accordance with generally accepted audit principles) Unit: NTD thousands, except EPS which is in dollars

Code Revenue 41110 Written premiums (Notes 30 and 36) 41120 Reinsurance premiums (Note 36) 41100 Premium revenues 51100 Less: Reinsurance expenses (Note 36) 51310 Less: Net change in unearned premium reserve 41130 Retained earned premiums (Note 36) 41300 Reinsurance commissions received (Note 36) 41400 Service fee Net investment gains 41510 Interest income 41521 Gains on financial assets or liabilities at fair value through profit and loss 41550 Gain (loss) on exchange (Note 25) 41570 Gains (losses) on investment property (Note 25) 41585 Expected credit impairment loss and reversal gain on investment 41500 Total net investment gains Other operating revenues 41830 Gain on exchange - non-investment (Note 25) 41890 Other operating revenues - Others 41800 Total other operating income 41000 Total operating revenues	January1 to March	31,2020 % 154 9 163 ( 40 ) ( 11) 112 6 1 2 ( 23 ) 1 1 - ( 19 ) - - - 100	January1 to March	31,2019	31,2019
					%
				108 6 114 ( 32 ) ( 6) 76 5 - 1 17 - 1 - 19 - - - 100

(Continued next page)

(Continued from previous page)

Code Operating Cost Retained claims and benefits paid (Note 36) 51200 Insurance claims and benefits (Note 30) 41200 Less: Claims recovered from reinsurers 51260 Total retained claims and benefits paid Net change in other insurance liabilities (Note 36) 51320 Net change in claim reserves 51340 Net change in special claim reserves 51300 Total net change in other liabilities 51510 Commission expenses (Note 36) 51600 Service charges (Note 36) Other operating costs 51810 Contribution to insurance stabilization fund (Note 36) 51830 Interest expenses 51890 Other operating costs - Others 51800 Total other operating costs 51000 Total operating costs 60000 Gross profit Operating expenses (Notes 25 and 30) 58100 Selling expenses 58200 Administrative expenses 58300 Employees training expenses 58000 Total operating expenses 61000 Operating profit (loss)	January1 toMarch	31,2020 % 86 ( 23) 63 ( 1 ) ( 2) ( 3 ) 21 3 - - - - 84 16 27 2 - 29 ( 13)	January1 toMarch	January1 toMarch	31,2019	31,2019
				Amount $1,044,478 334,462) 710,016 25,375 1,862) 23,513 255,679 38,505 3,799 - - 3,799 1,031,512 720,323 298,390 26,725 856 325,971 394,352		%
		( ( ( ( (	( (		(	60 19) 41 1 - 1 15 2 - - - - 59 41 17 1 - 18 23

Non-operating income and expenses (Continued next page)

(Continued from previous page)

Code 59920 Sundry income 59990 Other non-operating expenses (Note 16) 59900 Total other non-operating income and expenses 62000 Pre-tax profit (loss) from continuing operations 63000 Income tax expenses (Notes 4 and 26) 66000 Current net income (loss) Other comprehensive income (Note 24) 83100 Items not reclassified into profit and loss 83190 Gains/losses on valuation of equity instruments at fair value through other comprehensive income 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 (losses) per share (Note 27) 97500 Basic 98500 Diluted	January1 toMarch	31,2020 % - - - ( 13 ) 2 ( 15) ( 42 ) 2 ( 40) ( 55)	January1 toMarch	January1 toMarch	31,2019	31,2019
				Amount - 18) 18) $ 394,334 19,121 375,213 120,520 6,273 126,793 $ 502,006 $ 1.25 $ 1.24		%
			( (			- - - 23 1 22 7 - 7 29

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

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

(Reviewed only; not audited in accordance with generally accepted audit principles)

(in NT$ 1,000)

Code A1 Balance as of January 1, 2019 D1 Net income (loss) for January 1 to March 31, 2019 D3 Other comprehensive income for January 1 to March 31, 2019 D5 Total comprehensive income for January 1 to March 31, 2019 Z1 Balance as of March 31, 2019 A1 Balance as of January 1, 2020 D1 Net income (loss) for January 1 to March 31, 2020 D3 Other comprehensive income for January 1 to March 31, 2020 D5 Total comprehensive income for January 1 to March 31, 2020 Q1 Disposal of equity instruments at fair value through other comprehensive income (Note 8(1)) Z1 Balance as of March 31, 2020	Share capital (Note 24) $ 3,011,638 - - - $ 3,011,638 $ 3,011,638 - - - - $ 3,011,638	Retained earnings(Note 24) Legal reserve Special reserve Undistributed earnings $ 1,156,391 $ 1,530,505 $ 243,074 - - 375,213 - - - - - 375,213 $ 1,156,391 $ 1,530,505 $ 618,287 $ 1,246,749 $ 1,740,117 $ 405,734 - - ( 172,346) - - - - - ( 172,346) - - 53,253 $ 1,246,749 $ 1,740,117 $ 286,641	Retained earnings(Note 24) Legal reserve Special reserve Undistributed earnings $ 1,156,391 $ 1,530,505 $ 243,074 - - 375,213 - - - - - 375,213 $ 1,156,391 $ 1,530,505 $ 618,287 $ 1,246,749 $ 1,740,117 $ 405,734 - - ( 172,346) - - - - - ( 172,346) - - 53,253 $ 1,246,749 $ 1,740,117 $ 286,641	Other Equity Unrealized gains/losses on financial assets at fair value through other comprehensive income (Note 24) $ 27,302 - 126,793 126,793 $ 154,095 $ 407,023 - ( 466,293) ( 466,293) ( 53,253) ($ 112,523)		Total equity
		Legal reserve $ 1,156,391 - - - $ 1,156,391 $ 1,246,749 - - - - $ 1,246,749	Special reserve $ 1,530,505 - - - $ 1,530,505 $ 1,740,117 - - - - $ 1,740,117
				( ( ( (	$ 5,968,910 375,213 126,793 502,006 $ 6,470,916 $ 6,811,261 ( 172,346) ( 466,293) ( 638,639) - $ 6,172,622

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

The First Insurance Co., Ltd. Cash Flow Statement For periods from January 1 to March 31, 2020 and 2019 (Reviewed only; not audited in accordance with generally accepted audit principles)

(in NT$ 1,000)

Code Cash flow from operating activities A10000 Current pre-tax profit (loss) Adjustments: Income, expenses and losses A20100 Depreciation A20200 Amortizations A20900 Interest expenses A21200 Interest income A21400 Net change of various reserves - current A21830 Expected credit impairment loss (reversal gain) on investment A24100 Unrealized gain on foreign exchange Change in assets/liabilities related to operating activities A51110 Notes receivable A51120 Premiums receivable A51130 Other receivables A51140 Gains on financial assets or liabilities at fair value through profit and loss A51141 Financial assets at fair value through other comprehensive income A51145 Debt instrument investments measured at cost after amortization A51160 Other financial assets A51170 Reinsurance Contracts Assets A51190 Guarantee deposits paid A51990 Other assets A52120 Insurance claim and benefit payments payable A52140 Commission payable A52150 Reinsurance accounts payable A52160 Other payables	January 1 to March 31,2020 ($ 148,587) 5,768 1,242 32 ( 23,313) 77,285 ( 38) ( 575) ( 5,551) ( 7,350 ) 174 ( 229,974) 92,446 - 42,080 ( 54,057) 966 ( 6,236) 2,550 3,332 44,281 ( 57,648 )	January 1 to March 31,2019
		$ 394,334 4,994 1,855 18 ( 20,814) 27,262 2,620 ( 245) 3,241 118,753 136,589 82,818 ( 352,575) ( 547,521) ( 25,647) 83,930 1,814 4,146 7,244 1,325 136,445 ( 58,335)

(Continued next page)

(Continued from previous page)

Code A52200 Provision for employee benefits A52240 Guarantee deposits received A52990 Other liabilities A33000 Cash inflow (outflow) from operating activities A33100 Interests received A33300 Interests paid A33500 Income tax paid AAAA Net cash inflow (outflow) 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 outflow from financing activities C04020 Repayment of lease principal DDDD Exchange rate effects on cash EEEE Increase (decrease) in cash and cash equivalents in current period E00100 Opening cash and cash equivalents E00200 Closing cash and cash equivalents	January 1 to March 31,2020 ($ 10,779) ( 585 ) ( 2,050) ( 276,587) 26,551 ( 32) ( 2,210) ( 252,278) ( 11,829) ( 3,222) ( 15,051) ( 386) 575 ( 267,140 ) 1,860,014 $ 1,592,874	January 1 to March 31,2019
		($ 5,251 ) - 16,001 13,001 6,341 ( 18) ( 628) 18,696 ( 1,347 ) - ( 1,347) ( 301) 245 17,293 1,626,898 $ 1,644,191

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

Chairman: C. H. Lee

Manager: Chu-Minn Leu

Head of Accounting: Fei-Fen Hsiao

10 -

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

(Reviewed only; not audited in accordance with generally accepted audit principles) (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 April 29, 2020.

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

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

(2) IFRSs published by IASB but yet to be approved by FSC New/Amended/Modified Standards and Effective date of IASB Interpretations announcement (Note 1) Amendments to IFRS 10 and IAS 28 - "Sale or Undetermined Contribution of Assets between an Investor and its Associate or Joint Venture"
IFRS 17 - "Insurance Contracts" Friday, January 1, 2021 (Note 2)
Amendments to IAS 1 - "Classification of Liabilities Saturday, January 1, 2022 as Current or Non-current"
Note 1: Unless otherwise specified, all new/amended/modified standards and interpretations above shall take effect from the financial year that begins after the specified date.
Note 2: IASB resolved on March 17, 2020 to postpone effect of this standard until reporting period after January 1, 2023. However, an amendment of this standard is expected to be announced in 2020 Q2.

IFRS 17 - "Insurance Contracts"

Accounting treatment of insurance contracts stated under IFRS 17 will supersede IFRS 4 - "Insurance Contracts." Main context of IFRS 17 is as follows: Level of aggregation for insurance contracts

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

11 -

portfolio of insurance contracts issued by the Company shall be divided into a minimum of:

(a) A group of contracts that are onerous at initial recognition;
(b) A group of contracts that, at initial recognition, have no significant possibility of becoming onerous subsequently; and
(c) A group of the remaining contracts in the portfolio.

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

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

(a) The beginning of the coverage period of the group of contracts;
(b) The date when the first payment from a policyholder in the group becomes due; and
(c) For a group of onerous contracts, when the group becomes onerous.

Measurement at initial recognition

On initial recognition, the Company shall measure a group of insurance contracts at the total of fulfillment cash flows and contractual service margin. The fulfillment cash flows (“FCF”) comprise estimates of future cash flows, an adjustment to reflect the time value of money (“TVM”) and the financial risks associated with the future cash flows, and a risk adjustment for non-financial risk. Contractual service margin represents the unearned profit of the group of insurance contracts that the Company will recognize as it provides services in the future. Unless the group of contracts is onerous, contractual service margin is measured on initial recognition of a group of insurance contracts at an amount that results in no income or expenses arising from: (a) The initial recognition of an amount for the FCF; (b) The de-recognition at that date of any asset or liability recognized for insurance acquisition cash flows; and (c) Any cash flows arising from the contracts in the group at that date.

Subsequent measurement

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

Onerous contracts

An insurance contract is onerous at initial recognition if the total of the FCF, any previously recognized acquisition cash flows and any cash flows arising from the contract at that date is a net outflow. The Company shall recognize a loss in profit or loss for the net outflow, resulting in the carrying amount of the liability for the group being equal to the FCF and the CSM of the group being zero. The CSM cannot increase and no revenue can be recognized, until the onerous amount previously recognized has been reversed in profit or loss.

Premium allocation approach

The Company may simplify measurement for a group of insurance contracts using the Premium Allocation Approach (PAA) on the condition that, at the inception of the group:

12 -
(a) The Company reasonably expects the size of liability for remaining coverage measured from PAA to be a reasonable approximation of the general model, or

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

Using the PAA, the liability for remaining coverage shall be initially recognized as the premiums received at initial recognition minus any insurance acquisition cash flows. Subsequently, the carrying amount of the liability shall be adjusted for premiums received, amortization of acquisition cash flows, minus the amount recognized as insurance revenue for coverage provided in that period, and minus any investment component paid or transferred to the liability for incurred claims. Investment contracts with a discretionary participation feature

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

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 IAS 34 - "Interim Financial Reporting." This financial report does not contain all IFRSs disclosures required in a full-year report.

(2) Basis of preparation

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

13 -

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

Level 1 input: Refers to quotations that can be obtained from an active market (unadjusted) on the measurement date for asset or liability of equivalent nature.
Level 2 input: Refers to inputs that can be observed directly (i.e. price) or indirectly (i.e. established from price) for an asset or liability, other than Level 1 quotations.
Level 3 input: Refers to inputs that cannot be observed for an asset or liability.

(3) Other significant accounting policies Apart from the explanations presented below, please refer to the 2019 financial

report for a summary of significant accounting policies.

Retirement benefits - defined benefit plan
Interim retirement costs are calculated from the beginning until the end of
the interim period using the actuarial pension cost rate determined at the end of the previous year, and adjusted for major market changes, plan modifications, settlements and other one-time events that took place in the current period.
1. Income tax

Income tax expense represents the sum of current income tax and deferred income tax. Income taxes for the interim period are assessed by determining the tax rate applicable to expected total annual earnings, and applying the tax rate to interim pre-tax profit. If tax rate impact arising from a tax law amendment during the interim period is consistent with the accounting principles of the transaction giving rise to the tax consequence, the tax impact is recognized through profit and loss, other comprehensive income or directly into equity in one entry in the period occurred.

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.

(3) Special claim reserves
14 -

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

A. Special claim reserves for major incidents

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

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

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

B. 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. (4) 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.

(5) Liabilities adequacy reserve

15 -

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

5. Main source of uncertainty for major accounting judgments, estimates and assumptions

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

The management will continually review its estimates and basic assumptions. If a revision of accounting estimate affects only the current period, the effect shall be 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

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	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	each balance ied by amount of	each balance ied by amount of
March 31,2020 December 31, 2019 March 31,2019 Petty cash and cash on hand $ 765 $ 357 $ 1,113 Check and current deposit 1,592,109 1,859,657 1,643,078 $ 1,592,874 $ 1,860,014 $ 1,644,191 Foreign currency deposits are placed with domestic banks. As of March 31, 2020, December 31, 2019 and March 31, 2019, the Company held NT$2,621,073,000, NT$2,663,153,000 and NT$2,600,324,000 of time deposit, respectively, that had initial maturity of more than 3 months and were presented as other financial assets (refer to Note 11). Financial assets at fair value through profit and loss March 31,2020 December 31, 2019 March 31,2019 Mandatory at fair value throughout profit and loss Non-derivative financial assets - TWSE/TPEx listed shares $ 638,070 $ 735,535 $ 2,026,409 - Beneficiary certificates 666,809 434,142 1,034,173 - Securitized beneficiary certificates 519,133 424,851 473,436 - Bank debentures 51,055 50,565 51,043 Subtotal $ 1,875,067 $ 1,645,093 $ 3,585,061		March 31,2019
Mandatory at fair value throughout profit and loss Non-derivative financial assets - TWSE/TPEx listed shares - Beneficiary certificates - Securitized beneficiary certificates - Bank debentures Subtotal	March 31,2020 $ 638,070 666,809 519,133 51,055 $ 1,875,067
			$ 2,026,409 1,034,173 473,436 51,043 $ 3,585,061

Foreign currency deposits are placed with domestic banks. As of March 31, 2020, December 31, 2019 and March 31, 2019, the Company held NT$2,621,073,000, NT$2,663,153,000 and NT$2,600,324,000 of time deposit, respectively, that had initial maturity of more than 3 months and were presented as other financial assets (refer to Note 11).

7. Financial assets at fair value through profit and loss

16 -

8. Financial assets at fair value through other comprehensive income

Investment in equity instruments Investment in debt instruments	March 31,2020 $ 2,095,026 519,098 $ 2,614,124	December 31, 2019 $ 2,676,438 509,305 $ 3,185,743	March 31,2019	March 31,2019
				$ 820,984 364,229 $ 1,185,213

(1) Equity instruments at fair value through other comprehensive income

Domestic investments TWSE/TPEx listed shares Unlisted shares	March 31,2020 $ 1,348,121 746,905 $ 2,095,026	December 31, 2019 $ 1,730,675 945,763 $ 2,676,438	March 31,2019	March 31,2019
				$ - 820,984 $ 820,984

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

For the purpose of risk diversification, the Company made a series of adjustments to its investment position between January 1 and March 31, 2020. Listed common shares with a total fair value of NT$646,859,000 were sold during the process, and as a result, NT$53,253,000 of unrealized gains on financial assets at fair value through other comprehensive income previously presented as other equity item were realized and charged to retained earnings in accordance with IFRS9.

(2) Debt instruments at fair value through other comprehensive income

Domestic investments Government bonds Less: Amount placed as guarantee deposit	March 31,2020 $ 1,048,963 ( 529,865) $ 519,098	December 31, 2019 $ 1,027,166 ( 517,861) $ 509,305	March 31,2019	March 31,2019
	(	(	(	$ 835,642 471,413) $ 364,229

Information on government bond investments as at the balance	Information on government bond investments as at the balance	Information on government bond investments as at the balance	sheet date:
		December 31,
	March 31,2020	2019	March 31,2019
Face value of investment	$ 909,000	$ 909,000	$ 759,000
Coupon interest rate	1.125%~5.000%	1.125%~5.000%	1.125%~5.000%
Average maturity	7.84 years	8.09 years	7.67 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 bond for insurance business as of March 31, 2020, December 31, 2019 and March 31, 2019.

17 -

9. Financial assets carried at cost after amortization

Domestic investments Bank debenture (1) Corporate bond (2) Subtotal Less: loss provisions	March 31,2020 $ 1,515,733 30,000 1,545,733 ( 16,786) $ 1,528,947	December 31, 2019 $ 1,516,154 30,000 1,546,154 ( 16,821) $ 1,529,333	March 31,2019	March 31,2019
	(	(	(	$ 1,867,423 30,000 1,897,423 14,652) $ 1,882,771

(1) Information on bank debenture investments as of the balance sheet date:

Domestic investments Face value of investment Effective interest rate Average maturity	March 31,2020 $ 1,510,000 1.550%~3.000% 3.57 years	December 31, 2019 $ 1,510,000 1.550%~3.000% 3.82 years	March 31,2019
			$ 1,867,423 1.550%~3.000% 3.20 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 coupon rate and effective interest rate were both 3.7%.
(3) Please refer to Note 10 for information relating to credit risk management and impairment assessment of financial assets carried at cost after amortization.
Credit risk management of debt instrument investments

Debt instrument investments are classified as financial assets at fair value through other comprehensive income and financial assets carried at cost after amortization: March 31, 2020

March 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 $ 987,658 ( 255) 987,403 61,560 $ 1,048,963 At fair value through other comprehensive income $ 988,541 ( 258) 988,283 38,883 $ 1,027,166		At cost after amortization $ 1,545,733 16,786) $ 1,528,947 At cost after amortization $ 1,546,154 16,821) $ 1,529,333		Total
		(		(	$ 2,533,391 17,041) 2,516,350 61,560 $ 2,577,910 Total
	(	(		(	$ 2,534,695 17,079) 2,517,616 38,883 $ 2,556,499

18 -

March 31, 2019

March 31, 2019
Cost Loss provisions Cost after amortization Fair value adjustment	At fair value through other comprehensive income $ 813,150 ( 212) 812,938 22,704 $ 835,642		At cost after amortization $ 1,897,423 14,652) $ 1,882,771		Total
	(	(		(	$ 2,710,573 14,864) 2,695,709 22,704 $ 2,718,413

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

11. Other financial assets

11.	policy on debt instruments. Other financial assets
12. (1)	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 Interest and security	March 31,2020 $ 2,074,000 547,073 $ 2,621,073 0.10%~1.04% 1.06%~3.05% March 31,2020 $ 147,986 700 ( 3,884) $ 144,802 $ 322,142 ( 36,265) $ 285,877 $ 40,452	December 31, 2019 $ 2,084,000 579,153 $ 2,663,153 0.13%~1.04% 2.10%~3.20% December 31, 2019 $ 140,767 2,057 ( 3,573) $ 139,251 $ 318,833 ( 40,306) $ 278,527 $ 39,395	March 31,2019
				$ 2,054,000 546,324 $ 2,600,324 0.13%~1.04% 2.15%~3.70% March 31,2019

		( (	( (	( (	$ 163,735 282 4,103) $ 159,914 $ 317,271 40,578) $ 276,693 $ 44,810

19 -

dividends receivable Others Less: loss provisions ( Claims recoverable from reinsurers At cost after amortization Total book value Less: loss provisions ( Reinsurance accounts receivable At cost after amortization Total book value Less: loss provisions (	7,527 4,483) ( $ 43,496 $ 164,285 1,073) ( $ 163,212 $ 300,182 3,002) ( $ 297,180	6,441 229) ( $ 45,607 $ 167,092 1,010) ( $ 166,082 $ 219,176 3,589) ( $ 215,587	3,266 241) $ 47,835 $ 192,745 1,790) $ 190,955 $ 289,477 1,995) $ 287,482

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

(II) Notes, premiums and other receivables

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

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

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

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

Notes receivable

rate. otes receivable
Not yet matured/	March 31,2020 $ 148,682	December 31, 2019 $ 142,818	March 31,2019
			$ 164,001

20 -

redeemed/ collected Returned notes Total Premiums receivable 0~90 days 91 days and above Total	4 $ 148,686 March 31,2020 $ 211,336 110,806 $ 322,142	6 $ 142,824 December 31, 2019 $ 256,064 62,769 $ 318,833	16 $ 164,017 March 31,2019	16 $ 164,017 March 31,2019
				$ 279,429 37,842 $ 317,271

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

Other receivables

effective date. ther receivables
0~90 days 91 days and above Total	March 31,2020 $ 43,715 4,264 $ 47,979	December 31, 2019 $ 45,836 - $ 45,836	March 31,2019
				$ 48,076 - $ 48,076

Aging analysis for other receivables was prepared based on bookkeeping date. Claims recoverable from reinsurers and reinsurance accounts receivable

0~270 days 271 days and above Total	March 31,2020 $ 463,935 532 $ 464,467	December 31, 2019 $ 385,319 949 $ 386,268	March 31,2019	March 31,2019
				$ 476,519 5,703 $ 482,222

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

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

bookkeeping date. Change in loss provisions: March 31, 2020 Notes receivable
Loss ratio Total book value Loss provisions Cost after amortization Premiums receivable Loss ratio Total book value Loss provisions Cost after amortization	Not yet matured/ redeemed/ collected 2.61%~50% $ 148,682 ( 3,880) $ 144,802 0~90 days 0.5%~1% $ 211,336 ( 1,723) $ 209,613	Returned notes 100% $ 4 ( 4) $ - 91 days and above 2%~100% $ 110,806 ( 34,542) $ 76,264		Total
		(	(	$ 148,686 3,884) $ 144,802 Total
	(	(	(	$ 322,142 36,265) $ 285,877

Other receivables

21 -

			91	days and
	0~90 days			above		Total
Loss ratio	0.5%~1%		2%~100%
Total book value	$	43,715	$	4,264	$	47,979
Loss provisions	(	219)	(	4,264)	(	4,483)
Cost after amortization	$	43,496	$	-	$	43,496
Claims recoverable from	reinsurers and reinsurance accounts receivable
			271 days and
	0~270 days			above		Total
Loss ratio	0.5%~1%		2%~100%
Total book value	$	463,935	$	532	$	464,467
Loss provisions	(	3,887)	(	188)	(	4,075)
Cost after amortization	$	460,048	$	344	$	460,392
December 31, 2019
Notes receivable
	Not yet matured/
	redeemed/
	collected		Returned notes			Total
Loss ratio	2.5%~50%			100%
Total book value	$	142,818	$	6	$	142,824
Loss provisions	(	3,567)	(	6)	(	3,573)
Cost after amortization	$	139,251	$	-	$	139,251
Premiums receivable
			91	days and
	0~90 days			above		Total
Loss ratio		0.5%	2%~100%
Total book value	$	256,064	$	62,769	$	318,833
Loss provisions	(	1,280)	(	39,026)	(	40,306)
Cost after amortization	$	254,784	$	23,743	$	278,527
Other receivables
			91	days and
	0~90 days			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
			271 days and
	0~270 days			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

March 31, 2019

22 -

Notes receivable

Notes receivable	Notes receivable	Notes receivable	Notes receivable
Not yet matured/ redeemed/ collected Returned notes Total Loss ratio 2.49%~50% 100% Total book value $ 164,001 $ 16 $ 164,017 Loss provisions ( 4,087) ( 16) ( 4,103) Cost after amortization $ 159,914 $ - $ 159,914 Premiums receivable 0~90 days 91 days and above Total Loss ratio 0.5%~1% 100% Total book value $ 279,429 $ 37,842 $ 317,271 Loss provisions ( 2,736) ( 37,842) ( 40,578) Cost after amortization $ 276,693 $ - $ 276,693 Other receivables 0~90 days 91 days and above Total Loss ratio 0.5% - Total book value $ 48,076 $ - $ 48,076 Loss provisions ( 241) - ( 241) Cost after amortization $ 47,835 $ - $ 47,835 Claims recoverable from reinsurers and reinsurance accounts receivable 0~270 days 271 days and above Total Loss ratio 0.5%~1% 2%~100% Total book value $ 476,519 $ 5,703 $ 482,222 Loss provisions ( 3,083) ( 702) ( 3,785) Cost after amortization $ 473,436 $ 5,001 $ 478,437					Total
				(	$ 164,017 4,103) $ 159,914 Total
				(	$ 317,271 40,578) $ 276,693 Total
Loss ratio Total book value Loss provisions Cost after amortization		0~270 days 0.5%~1% $ 476,519 3,083) $ 473,436	271 days and above 2%~100% $ 5,703 ( 702) $ 5,001
	(		(	(	$ 482,222 3,785) $ 478,437

Change in loss provisions by account category:

	January1 to March 31,2020
Notes receivable $ 3,573 313 ( 2) $ 3,884	Premiums receivable Other receivables Claims recoverable from reinsurers $ 40,306 $ 229 $ 1,010 443 4,265 63 ( 4,484) ( 11) - $ 36,265 $ 4,483 $ 1,073 January1 to March 31,2019	Reinsurance accounts receivable
(	(	(	$ 3,589 73 660) $ 3,002
Notes receivable	Premiums receivable Other receivables Claims recoverable	Reinsurance accounts

23 -

Opening balance Plus: Losses/expenses provided in the current period Less: losses/expenses reversed in the current period Closing balance		$ 4,186 41 124) $ 4,103		$ 40,516 783 721) $ 40,578		$ 853 - 612) $ 241	from reinsurers $ 1,803 - ( 13) $ 1,790	receivable	receivable
	(		(		(		(		$ 1,349 646 - $ 1,995

Explanation to overdue receivables and loss provisions:

Balances of notes receivable, premiums receivable and other receivables as of March 31, 2020 included NT$4,000, NT$110,806,000 and NT$4,264,000 that were overdue, for which the Company had made loss provisions totaling NT$4,000, NT$34,542,000 and NT$4,264,000, respectively. Reinsurance accounts receivable has been assessed for impairment and unrecoverable amounts. The balance includes NT$532,000 of overdue receivables, for which a loss provision of NT$188,000 has been made.
Balances of notes receivable and premiums receivable as of December 31, 2019 included NT$6,000 and NT$62,769,000 that were overdue, for which the Company had made loss provisions totaling NT$6,000 and NT$39,026,000, respectively. Reinsurance accounts receivable has been assessed for 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.
Balances of notes receivable and premiums receivable as of March 31, 2019 included NT$16,000 and NT$37,842,000 that were overdue, for which the Company had made loss provisions totaling NT$16,000 and NT$37,842,000, respectively. Reinsurance accounts receivable has been assessed for impairment and unrecoverable amounts. The balance includes NT$5,703,000 of overdue receivables, for which a loss provision of NT$702,000 has been made.

13. Investment property

made. Investment property
Cost Opening balance Reclassification Closing balance Increase from revaluation Opening balance Closing balance Accumulated depreciation Opening balance Depreciation Reclassification Closing balance Cumulative impairment Opening balance Closing balance Closing net balance		January1 to March 31,2020
		Land $ 609,119 22,659) 586,460 163,480 163,480 - - - - 15,526 15,526 $ 734,414		Buildings $ 364,598 22,660) 341,938 - - 172,251 1,674 6,878) 167,047 6,172 6,172 $ 168,719		Total
	(		( (		( (	$ 973,717 45,319) 928,398 163,480 163,480 172,251 1,674 6,878) 167,047 21,698 21,698 $ 903,133

24 -

Cost Opening balance Closing balance Increase from revaluation Opening balance Closing balance Accumulated depreciation Opening balance Depreciation Closing balance Cumulative impairment Opening balance Closing balance Closing net balance		January1 to March 31,2019	January1 to March 31,2019	January1 to March 31,2019	January1 to March 31,2019	January1 to March 31,2019
		Land $ 609,119 609,119 163,480 163,480 - - - 15,526 15,526 $ 757,073		Buildings $ 364,598 364,598 - - 165,313 1,735 167,048 6,172 6,172 $ 191,378		Total
						$973,717 973,717 163,480 163,480 165,313 1,735 167,048 21,698 21,698 $948,451

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 March 31, 2020, December 31, 2019 and March 31, 2019 amounted to NT$2,672,774,000, NT$2,747,898,000 and NT$2,841,029,000, respectively. Fair value was determined by the management based on actual transaction prices of properties near the investments 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.

25 -

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

follows:
Year 1 Year 2 Year 3 Year 4 Year 5 More than 5 years	March 31,2020 $ 62,978 7,633 18,237 54,636 26,780 - $ 170,264	December 31, 2019 $ 68,795 11,454 21,106 60,651 29,774 - $ 191,780	March 31,2019
				$ 57,899 9,027 22,685 15,467 21,429 - $ 126,507

Reinsurance contract assets (1) Details:

insurance contract assets Details:
Claims recoverable from reinsurers Reinsurance accounts receivable Reinsurance reserve assets	March 31,2020 $ 163,212 297,180 1,863,484 $ 2,323,876	December 31, 2019 $ 166,082 215,587 1,888,150 $ 2,269,819	March 31,2019
				$ 190,955 287,482 2,344,989 $ 2,823,426

With regards to ceded insurance as of March 31, 2020, the Company was required to disclose ceded claim reserve for reported and unpaid liability totaling NT$29,000 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 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$253,000 and ceded claim reserve for reported and unpaid liability totaling NT$18,000.

In addition, the Company was required to make provisions for substandard reinsurance reserve of NT$300,000 (including NT$253,000 of claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months, and NT$47,000 of ceded claim reserve for reported and unpaid liability) when preparing regulatory reports; however, this NT$300,000 of additional reserve and liability does not affect the Company's financial statements.

26 -

conform with the credit grading requirements stated in Article 8 of "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms."

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

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

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

With regards to ceded reinsurance as of March 31, 2019, the Company was required to disclose ceded claim reserve for reported and unpaid liability totaling NT$266,000 on the sum of marine hull insurance ceded to Tugu Insurance Company Ltd., a reinsurer that did not conform with the credit grading requirements stated in Article 8 of "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms."

For the sum of 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$648,000 and ceded claim reserve for reported and unpaid liability totaling NT$37,000.

In addition, the Company was required to make provisions for substandard reinsurance reserve of NT$1,184,000 (including NT$831,000 of ceded unearned premium reserve, NT$831,000 of claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months, and NT$353,000 of ceded

27 -

claim reserve for reported and unpaid liability) when preparing regulatory reports; however, this NT$1,184,000 of additional reserve and liability does not affect the Company's financial statements.

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

Ceded unearned premium reserve Ceded claim reserve Deficiency reserve for ceded coverage	March 31,2020 $ 1,071,622 784,298 7,564 $ 1,863,484	December 31, 2019 $ 1,077,452 803,134 7,564 $ 1,888,150	March 31,2019	March 31,2019
				$ 1,383,610 954,693 6,686 $ 2,344,989

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

15. Property, plant, and equipment

Cost Opening balance Increase - current period Decrease - current period Reclassification Closing balance Increase from revaluation Opening balance Closing balance		January1 to March 31,2020	January1 to March 31,2020	January1 to March 31,2020
	Proprietary land $308,401 - - 22,659 331,060 123,786 123,786		Buildings $337,281 - - 22,660 359,941 - -	Sundry equipment $ 52,309 11,829 ( 352 ) - 63,786 - -	Total
					$697,991 11,829 ( 352) 45,319 754,787 123,786 123,786

(Continued next page)

28 -

(Continued from previous page)

	January1 to March 31,2020	January1 to March 31,2020
Proprietary land $ - - - - - 4,774 4,774 $450,072			Total
			$195,067 3,487 ( 352) 6,878 205,080 6,672 6,672 $666,821
Proprietary land $308,401 - 308,401 123,786 123,786 - - - 4,774 4,774 $427,413	Buildings $337,142 139 337,281 - - 154,126 1,665 155,791 1,898 1,898 $179,592	Sundry equipment $ 47,133 1,208 48,341 - - 31,421 1,285 32,706 - - $ 15,635		Total
				$692,676 1,347 694,023 123,786 123,786 185,547 2,950 188,497 6,672 6,672 $622,640

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

Buildings

Main structure

Confined masonry 35 years - Steel-reinforced concrete 50 to 62 years Renovation of exterior wall 41 years Renovation of interior 8 to 19 years
29 -

Other constructions 10 to 25 years Others 15 to 30 years Sundry equipment 3 to 15 years

Property, plant, and equipment for periods from January 1 to March 31, 2020 and 2019 exclude capitalized interest.

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

Lease arrangements (1) Right-of-use asset

March 31, 2020, December 31, 2019 and March 31, 2019. Lease arrangements (1) Right-of-use asset	, 2019.
March 31,2020 December 31, 2019 Book value of right-of-use assets Buildings $ 3,004 $ 3,452 Transportation equipment 709 868 $ 3,713 $ 4,320 January 1 to March 31,2020 Additional right-of-use asset $ - Depreciation expense on right-of-use assets Buildings $ 448 Transportation equipment 159 $ 607 (2) Lease liability March 31,2020 December 31, 2019 Book value of lease liabilities $ 3,753 $ 4,139 Discount rate range for lease liabilities: March 31,2020 December 31, 2019 Buildings 2.65% 2.65% Transportation equipment 2.65% 2.65% January 1 to March 31,2020 Interest expense on lease liabilities Buildings $ 23 Transportation equipment 5 $ 28	December 31, 2019	March 31,2019 $ 1,051 1,347 $ 2,398 January 1 to March 31,2019	March 31,2019
		$ - $ 150 159 $ 309 March 31,2019 $ 2,406 March 31,2019 2.65% 2.65% January 1 to March 31,2019	$ - $ 150 159 $ 309 March 31,2019
			$ 2,406 March 31,2019
				$ 8 10 $ 18

(3) Other lease information

30 -

Short-term rent expense Total cash (outflow) from lease	January 1 to March 31,2020 $ 902 ($ 1,316)	January 1 to March 31,2019	January 1 to March 31,2019
	(	(	$ 1,171 $ 1,490)

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

17. Intangible assets

Intangible assets
Cost Opening balance Increase - current period Removals in the current period Closing balance Accumulated depreciation Opening balance Amortization expenses Removals in the current period Closing balance Closing net balance	January 1 to March 31,2020 $ 27,805 3,222 - 31,027 20,602 1,242 - 21,844 $ 9,183	January 1 to March 31,2019
		( (	$ 28,379 - 3,593) 24,786 17,424 1,855 3,593) 15,686 $ 9,100

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 March 31, 2020, December 31, 2019 and March 31, 2019.

18. Guarantee deposits paid

Guarantee deposits paid
Guarantee deposit for insurance business - Government bonds Others	March 31,2020 $ 529,865 44,030 $ 573,895	December 31, 2019 $ 517,861 44,997 $ 562,858	March 31,2019
				$ 471,413 47,434 $ 518,847

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

Other assets-others
Prepayments Prepaid equipment purchase Others	March 31,2020 $ 8,427 33,452 14,382 $ 56,261	December 31, 2019 $ 6,371 29,073 14,581 $ 50,025	March 31,2019
				$ 6,313 8,793 2,299 $ 17,405

Other payables

March 31, 2020 December 31, March 31, 2019

31 -

			2019
	Salary and bonus payable	$ 37,191	$ 84,563	$ 32,627
	Share settlements payable	-	16,147	13,779
	Leave encashment payable	2,734	415	2,525
	Pension payable	1,680	1,670	1,670
	Others	79,435	75,893	60,947
		$ 121,040	$ 178,688	$ 111,548
21.	Insurance liabilities
			December 31,
		March 31,2020	2019	March 31,2019
	Unearned premium reserve	$ 3,853,196	$ 3,726,659	$ 4,130,180
	Claim reserve	2,457,658	2,491,233	2,781,271
	Special reserve	1,653,888	1,669,565	1,673,738
	Deficiency reserve	24,293	24,293	29,171
		$ 7,989,035	$ 7,911,750	$ 8,614,360

Please refer to Items (2) to (5) in Note 36 - Disclosure of insurance contract-related information for more details on insurance liabilities presented above. 22. Retirement benefit plan

Defined benefit plan expenses for periods from January 1 to March 31, 2020 and 2019 were calculated based on actuarial assumptions and pension costs determined as of December 31, 2019 and 2018; the above amounts were NT$2,363,000 and NT$2,668,000, respectively.

23. Other liabilities - others

NT$2,668,000, respectively. 23. Other liabilities-others
Amount collected on behalf Amount received in advance 24. Equity Capital, fully paid Retained Earnings Other Equity (1) Share capital Common shares Authorized shares (thousands) Authorized capital Shares issued and fully paid up (thousands) Issued share capital	March 31,2020 $ 70,357 4,433 $ 74,790 March 31,2020 $ 3,011,638 3,273,507 ( 112,523) $ 6,172,622 March 31,2020 301,163.8 $ 3,011,638 301,163.8 $ 3,011,638	December 31, 2019 $ 75,096 1,744 $ 76,840 December 31, 2019 $ 3,011,638 3,392,600 407,023 $ 6,811,261 December 31, 2019 301,163.8 $ 3,011,638 301,163.8 $ 3,011,638	March 31,2019
			$ 103,891 4,024 $ 107,915 March 31,2019
			$ 3,011,638 3,305,183 154,095 $ 6,470,916 March 31,2019
				301,163.8 $ 3,011,638 301,163.8 $ 3,011,638

32 -

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-(2) - Employee and director remuneration for the Company's employee and director remuneration policy outlined in the Articles of Incorporation.

In addition to complying with requirements of the Insurance Act (see Note 28), the Company's dividend decisions involve several factors including the current business environment and growth stage, its future capital requirements and long-term financial plan, and shareholders' needs for cash flow. Payment of cash dividends shall amount to no less than 10% of total dividends.

The Company shall continue providing for legal reserve until the balance equals its paid-up capital. Legal reserves can be taken to offset previous losses. The Company is permitted under Article 241 of the Company Act to distribute legal reserves that it had previously provided according to Article 145-1 of the Insurance Act back to shareholders at the existing shareholding percentage, when the Company has no cumulative losses outstanding. To do so, the Company is required to present documentary proof of its financial position and seek permission from the competent 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 Company held its board of directors meeting on March 26, 2020 and annual general meeting on June 27, 2019 to propose and resolve earnings appropriation plans for 2019 and 2018, respectively, as follows:

Legal reserve Special reserve (Note 1) Special reserve (Note 2) Dividends	Earnings appropriationplan 2019 2018 $ 116,194 $ 90,358 207,452 208,715 ( 1,843) 2,160 289,117 147,570	Dividends per share (NT$)	Dividends per share (NT$)
	2019 $ 116,194 207,452 ( 1,843) 289,117	2019 $ 0.96	2018
			$ 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 purpose. New provisions amounting to NT$207,452,000 for 2019 had been made and accounted on December 31, 2019. Net provisions for January 1 to March 31, 2020 were estimated at NT$54,275,000.

Note 2: Represents net special reserve provided (reserved) for FinTech development according to Jin-Guan-Bao-Cai-Zi No. 10502066461 issued by the authority.
33 -

Appropriation of 2019 earnings is still pending for shareholders' resolution in the annual general meeting scheduled on June 23, 2020.

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

December 31,

March 31, 2020 2019 March 31, 2019 Special reserve $ 51,849 $ 51,849 $ 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 the Company makes earnings in subsequent years at a time when the initial reason for providing special reserves no longer exists, the Company shall make up for the required amount of special reserve before distributing earnings.

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

Change of special reserve balance between January 1 and March 31, 2020 and 2019:

2019:
January 1 to March 31, 2020 Opening balance Closing balance January 1 to March 31, 2019 Opening balance Closing balance	Special reserve $1,681,701 $1,681,701 $1,474,249 $1,474,249		Financial technology $ 6,567 $ 6,567 $ 4,407 $ 4,407	Provision for first-time adoption of IFRSs $ 51,849 $ 51,849 $ 51,849 $ 51,849		Total
						$ 1,740,117 $ 1,740,117 $1,530,505 $1,530,505

34 -

(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	January 1 to March 31,2020 $407,023 22,674 ($488,967) ( 53,253) ($112,523)	January 1 to March 31,2019
			$ 27,302 6,273 $120,520 - $154,095

25. Net income from continuing operations (1) Employee welfare expenses

t income from continuing operations Employee welfare expenses	nuing operations xpenses	nuing operations xpenses
January1 to March 31,2020 January1 to March 31,2019 Presented as operatingcost Presented as operating expense Total Presented as operatingcost Presented as operating expense Total Employee welfare expenses Salary expenses $ - $ 142,681 $ 142,681 $ - $ 143,668 $ 143,668 Labor/health insurance premium - 15,491 15,491 - 15,683 15,683 Pension expense - 7,384 7,384 - 7,695 7,695 Remuneration to Director - 2,350 2,350 - 5,669 5,669 Other employee welfare expenses - 87,431 87,431 - 95,765 95,765 $ - $ 255,337 $ 255,337 $ - $ 268,480 $ 268,480 January 1 to March 31,2020 January 1 to March 31,2019 Retirement benefits Defined contribution plan $ 5,021 $ 5,027 Defined benefit plan (Note 22) 2,363 2,668 $ 7,384 $ 7,695	January1 to March 31,		2020		January1 to March 31,			2019
	Presented as operatingcost	Presented as operating expense		Total		Presented as operating expense			Total
							$ 5,027 2,668 $ 7,695

As of March 31, 2020 and 2019, the Company employed a total of 855 and 857 employees, respectively.

(2) Employee and director remuneration

According to the Articles of Incorporation, the Company may provide employee remuneration at no less than 1% of pre-tax profit and director remuneration at no higher than 0.6% of pre-tax profit. However, earnings must first be taken to offset cumulative losses, if any, before the remainder is distributed as employee and director remuneration in the above percentages. No allocation for employee remuneration and director remuneration was required between January 1 and March 31, 2020, as per Articles of Incorporation. Employee remuneration and director remuneration for the period from January 1 to March 31, 2019 were estimated at 0.6% and 1% of pre-tax profit, respectively. All amounts have been expensed in statements of comprehensive income for the respective periods.

35 -

Employee and director remuneration estimated for the period from January 1 to March 31, 2019 are as follows:

Amount estimated

are as follows: ed
Employee remuneration Director remuneration	January 1 to March 31,2019
		$ 4,007 $ 2,404

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

The following are details of the 2019 and 2018 employee and director remuneration resolved during board of directors meetings held on March 26, 2020 and March 26, 2019:

and March 26, 2019:
Employee remuneration Director remuneration	2019 Cash Shares $ 6,744 $ - 4,046 -	2018
	Cash $ 6,744 4,046	Cash $ 5,322 3,193	Shares
			$ - -

The actual amounts of employee remuneration and director remuneration paid for years 2019 and 2018, as resolved in the above board meetings, were indifferent from the amounts recognized in the 2019 and 2018 financial statements.

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

(3) Depreciation and amortization

meetings in 2020 and 2019. Depreciation and amortization
Property, Plant and Equipment Right-of-use asset Investment Property Intangible Assets Total Depreciation and amortization expenses by function Depreciation (classified as operating costs) Depreciation (classified as operating expenses) Amortization (classified as operating expenses)	January 1 to March 31,2020 $ 3,487 607 1,674 1,242 $ 7,010 $ 1,674 4,094 1,242 $ 7,010	January 1 to March 31,2019
			$ 2,950 309 1,735 1,855 $ 6,849 $ 1,735 3,259 1,855 $ 6,849

36 -

(4) Gain/loss on investment property

(4)	Gain/loss on investment property
(5) 26. (1)	January 1 to March 31,2020 Rental income $ 17,125 Direct expenses associated with rental income ( 3,592) $ 13,533 Gain/loss on foreign currency exchange January 1 to March 31,2020 Total gain on foreign exchange $ 10,879 Total loss on foreign exchange ( 5,911) Net gain (loss) $ 4,968 Total gain/loss on foreign exchange Gain (loss) on exchange - investment (Note) $ 4,616 Gain (loss) on exchange - non-investment 352 $ 4,968 Note: Derived from foreign currency time deposits. Income tax expense for continuing operations Income tax recognized in profit and loss Main components of income tax expense: January 1 to March 31,2020 Current income tax From current profit $ 18,118 Additional tax on undistributed earnings - Deferred income tax From current profit 5,641 Income tax expense recognized in profit and loss $ 23,759	January 1 to March 31,2019
		$ 17,434 ( 3,405) $ 14,029 January 1 to March 31,2019
		$ 5,137 ( 1,346) $ 3,791 $ 3,208 583 $ 3,791 January 1 to March 31,2019
		(	$ 20,107 149 1,135) $ 19,121

(2) Assessment of income tax return

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

37 -

27. Earnings (losses) per share

Net income (loss) and the number of weighted average common shares used for calculating earnings (losses) per share are explained below: Current net income (loss)

Current net income (loss)
Net income (loss) 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	January 1 to March 31,2020 January 1 to March 31,2019 ($ 172,346) $ 375,213 Unit: thousand shares January 1 to March 31,2020 January 1 to March 31,2019 301,164 301,164 - 461 301,164 301,625	January 1 to March 31,2019
			301,164 461 301,625

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. The Company reported net loss between January 1 and March 31, 2020; due to the counter-dilutive effect, no calculation for diluted earnings per share was made. 28. Capital risk management

Please refer to Note 35(6) for more information on the management of asset and liability risks. According to the Insurance Act, the Company is required to maintain capital at no less than 200% of risk-weighted assets. Failure to maintain the abovementioned ratio will render the Company unable to distribute earnings; in addition, the Company would be required to raise capital within the due dates specified by the competent authority or have business activities and use of capital restricted in certain ways. As of March 31, 2020, the Company had maintained its capital above the percentage stated in the Insurance Act and was not subject to the above treatments.

38 -

29. 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 March 31, 2020

ring basis Fair value hierarchy March 31, 2020
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 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	Level 1 $ 638,070 1,185,942 - $ 1,824,012 $ 1,348,121 - 519,098 $ 1,867,219 $ 529,865 Level 1 $ 735,535 858,993 - $ 1,594,528 $ 1,730,675 - 509,305 $ 2,239,980	Level 2 $ - - - $ - $ - - - $ - $ - Level 2 $ - - - $ - $ - - - $ -	Level 3 $ - - 51,055 $ 51,055 $ - 746,905 - $ 746,905 $ - Level 3 $ - - 50,565 $ 50,565 $ - 945,763 - $ 945,763	Total
				$ 638,070 1,185,942 51,055 $ 1,875,067 $ 1,348,121 746,905 519,098 $ 2,614,124 $ 529,865 Total
				$ 735,535 858,993 50,565 $ 1,645,093 $ 1,730,675 945,763 509,305 $ 3,185,743

Guarantee deposits paid

39 -

TWSE/TPEx listed securities - Bond investments March 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 Non-listed domestic common shares Government bonds Total Guarantee deposits paid TWSE/TPEx listed securities - Bond investments		$ 517,861 Level 1 $ 2,026,409 1,507,609 - $ 3,534,018 $ - 364,229 $ 364,229 $ 471,413		$ - Level 2 $ - - - $ - $ - - $ - $ -		$ - Level 3 $ - - 51,043 $ 51,043 $ 820,984 - $ 820,984 $ -		$ 517,861 Total
								$ 2,026,409 1,507,609 51,043 $ 3,585,061 $ 820,984 364,229 $ 1,185,213 $ 471,413

In periods January 1 to March 31, 2020 and 2019, there was no change of fair value measurement between level 1 and level 2.

Reconciliation of level 3 fair value assessment on financial instruments January 1 to March 31, 2020

Financial assets	Measured at fair value through	Measured at fair value through	Measured at fair value through	profit and loss	profit and loss	Financial assets at fair value through other comprehensive income	Financial assets at fair value through other comprehensive income	Financial assets at fair value through other comprehensive income	Financial assets at fair value through other comprehensive income		Total
		Derivatives			Debt instrument		Equity instrument		Debt instrument
				$ 50,565 490 - $ 51,055 $ 1,055 profit and loss						(	$ 996,328 490 198,858) $ 797,960 $ 58,154 Total
Financial assets
	Derivatives		Equity instrument $ - -	Debt instrument		Equity instrument		Debt instrument
Opening balance Recognized through profit and loss (gain/loss on financial assets or	$ - -			$ 50,556 487		$ 700,464 -		$ - -			$ 751,020 487

40 -

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	- $ - $ -	- $ - $ -	- $ 51,043 $ 1,043	120,520 $ 820,984 $ 131,178	- $ - $ -	120,520
						$ 872,027
						$ 132,221

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.
(3) 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)	March 31,2020 $ 1,875,067 460,392 6,261,099 2,095,026 1,048,963 690,707	December 31, 2019	March 31,2019 $ 3,585,061 478,437 6,659,162 820,984 835,642 834,301
		$ 1,645,093 381,669 6,560,882 2,676,438 1,027,166 653,734

41 -
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 and cash equivalents, investment in debt instruments carried at cost after amortization, notes receivable - net, premiums receivable - net, other receivables, other financial assets, guarantee deposits paid (excluding insurance industry guarantee bond in the form of securities), and financial assets carried at cost after amortization.
Note 3: Balance includes debt instruments at fair value through other comprehensive income and insurance enterprise performance bonds placed in the form of securities (presented as guarantee deposits paid).
Note 4: Balance includes insurance claims and benefits payable, commissions payable, reinsurance account payable, other payables (excluding salary, bonus and leave encashment payable and pension payable), guarantee deposits received, and financial liabilities carried at cost after amortization.
(4) Purpose and policy of financial risk management

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

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.

(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 March 31, 2020, the Company had about 3.96% 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:

42 -

Unit: in thousands of foreign currency or NTD March 31, 2020

	March 31,2020	March 31,2020
Financial assets Monetary items Bank deposit and notes receivable USD EUR CNY (RMB) HKD GBP Other financial assets USD Financial assets Monetary items Bank deposit and notes receivable USD EUR CNY (RMB) GBP HKD Other financial assets USD CNY (RMB) Financial assets Monetary items Bank deposit and notes receivable USD EUR CNY (RMB) HKD GBP Other financial assets USD CNY (RMB)	Foreign currency Exchange rate TWD(NTD) $ 1,776 30.225 $ 53,668 15 33.240 500 27 4.255 116 573 3.898 2,234 57 37.250 2,120 18,100 30.225 547,073 December 31,2019		TWD(NTD)
	Foreign currency Exchange rate TWD(NTD) $ 3,376 29.980 $ 101,211 17 33.590 558 29 4.305 126 6 39.360 247 524 3.849 2,018 18,600 29.980 557,628 5,000 4.305 21,525 March 31,2019		TWD(NTD)
	Foreign currency $ 2,955 15 248 114 28 15,200 17,000	Exchange rate 30.820 34.610 4.580 3.926 40.110 30.820 4.580	TWD(NTD)
			$ 91,084 505 1,135 446 1,108 468,464 77,860

43 -

Unrealized foreign currency gain/loss of material impact: January1 to March 31,2020 January1 to March 31,2019 Foreign currency Exchange rate Unrealized net gain on currency exchange Exchange rate Unrealized net gain on currency exchange USD 1:30.225 (USD:NTD) $ 4,435 1:30.820 (USD:NTD) $ 1,596 CNY (RMB) 1:4.255 (CNY:TWD) - 1:4.580 (CNY:TWD) 1,836 $ 4,435 $ 3,432	Unrealized foreign currency gain/loss of material impact: January1 to March 31,2020 January1 to March 31,2019 Foreign currency Exchange rate Unrealized net gain on currency exchange Exchange rate Unrealized net gain on currency exchange USD 1:30.225 (USD:NTD) $ 4,435 1:30.820 (USD:NTD) $ 1,596 CNY (RMB) 1:4.255 (CNY:TWD) - 1:4.580 (CNY:TWD) 1,836 $ 4,435 $ 3,432	Unrealized foreign currency gain/loss of material impact: January1 to March 31,2020 January1 to March 31,2019 Foreign currency Exchange rate Unrealized net gain on currency exchange Exchange rate Unrealized net gain on currency exchange USD 1:30.225 (USD:NTD) $ 4,435 1:30.820 (USD:NTD) $ 1,596 CNY (RMB) 1:4.255 (CNY:TWD) - 1:4.580 (CNY:TWD) 1,836 $ 4,435 $ 3,432	Unrealized foreign currency gain/loss of material impact: January1 to March 31,2020 January1 to March 31,2019 Foreign currency Exchange rate Unrealized net gain on currency exchange Exchange rate Unrealized net gain on currency exchange USD 1:30.225 (USD:NTD) $ 4,435 1:30.820 (USD:NTD) $ 1,596 CNY (RMB) 1:4.255 (CNY:TWD) - 1:4.580 (CNY:TWD) 1,836 $ 4,435 $ 3,432
	Exchange rate 1:30.820 (USD:NTD) 1:4.580 (CNY:TWD)		Unrealized net gain on currency exchange
			$ 1,596 1,836 $ 3,432

Sensitivity analysis

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

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

amount.
Gain (loss) on USD Gain (loss) on CNY	January 1 to March 31,2020 ($ 6,007) ( 1)	January 1 to March 31,2019
		($ 5,595) ( 790)

(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	March31,2020 $ 707,271 1,048,963	December 31, 2019 $ 777,511 1,027,166	March31,2019
			$ 873,352 835,642

44 -

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 pre-tax profit/loss would decrease/increase by NT$18,000 for the period January 1 to March 31, 2020 and increase/decrease by NT$22,000 for the period January 1 to March 31, 2019, provided that all other variables remained unchanged. Exposure to interest rate risk is mainly attributed to bank deposits (demand deposits and foreign currency deposits).

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 equity between January 1 and March 31, 2020 and 2019 would decrease/increase by NT$1,251,000 and NT$914,000, respectively, due to changes in the fair value of debt instruments carried at fair value through other comprehensive income. (3) Other price risks

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

Sensitivity analysis

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

(4)

If equity price increased/decreased by 1%, pre-tax profit and equity between January 1 and March 31, 2020 and 2019 would increase/decrease by NT$18,240,000 and NT$35,340,000, respectively, due to changes in the fair value of financial assets carried at fair value through profit and loss. Meanwhile, other comprehensive income (pre-tax) and equity between January 1 and March 31, 2020 and 2019 would increase/decrease by NT$20,950,000 and NT$8,210,000, respectively, due to changes in the fair value of equity instruments carried at fair value through other comprehensive income. Value at risk (VaR)

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

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

45 -

model remains appropriate and effective in assessing the maximum potential risks of financial instruments or investment portfolios held on hand.

(5) Stress-testing

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

variables.
Date: March 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% ($ 182,401) Down 10% ( 209,503) A 100bps increase in the yield curve ( 125,060) 1% strengthening of NTD against all foreign currencies ( 5,471)
		($ 182,401) ( 209,503) ( 125,060) ( 5,471)

2. Credit risk

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

(1) Issuer credit risks are mostly prevalent in treasury debt instruments or bank deposits held on hand, and refer to the possibility of the Company suffering financial losses as a result of the issuer (or guarantor) or bank failing to fulfill repayment (or stand-in payment) obligation due to default, bankruptcy or liquidation.
(2) Counterparty credit risks refer to the possibility of the Company suffering financial losses as a result of the transaction counterparty failing to fulfill settlement or payment obligations on the agreed date.
(3) Asset credit risks refer to the possibility of losses suffered as a result of deteriorated credit quality, credit rating downgrade or occurrence of default event in the underlying asset of a financial instrument.
A. Credit risk concentration analysis
- The table below shows financial assets with the largest credit risk
- exposures by region and industry:

Credit risk exposure - by region

Date: March 31, 2020 Unit: NTD thousands

Financial assets	Taiwan	Asia	America	Europe	Others	Total
Cash and cash equivalents	$ 1,592,874	$ -	$ -	$ -	$ -	$ 1,592,874
Financial assets at fair value through profit and loss (securitized beneficiary certificates and debt instruments)	570,188	-	-	-	-	570,188
Financial assets (debt instrument) at fair value through other	1,048,963	-	-	-	-	1,048,963

46 -

comprehensive income(Note)
Financial assets carried at cost after amortization	1,528,947	-	-	-	-	1,528,947
Other financial assets (time deposit)	2,621,073	-	-	-	-	2,621,073
Total	7,362,045	-	-	-	-	7,362,045
Regional weight	100.00%	0.00%	0.00%	0.00%	0.00%	100.00%

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

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

Financial assets	I	II	III	Total
Financial assets (debt instrument) at fair value through other comprehensive income	$ 1,048,963	$ -	$ -	$ 1,048,963
Financial assets carried at cost after amortization	1,528,947	-	-	1,528,947
Total	$2,577,910	$ -	$ -	$2,577,910

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

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

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

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

D. Definition of defaulted and credit-impaired financial assets

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

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

a. The indicative market price falls below book cost in a continuous downward trend for more than one year, unless there is reason to suggest likely recovery of the indicative market price.
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).
47 -

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 between January 1 and March 31, 2020:

Investment in debt instruments Opening balance Variation Closing balance Receivables Opening balance Variation Closing balance	12-month expected credit loss	12-month expected credit loss	Expected credit loss over the remaining duration	Expected credit loss over the remaining duration	Expected credit loss over the remaining duration	Expected credit loss over the remaining duration	a	Impairment provided in ccordance with IFRS 9 (Subtotal)	Difference with impairments provided in accordance with "Regulation on Asset Valuation, Overdue Collection and Loan Loss Provisioning by Insurance Companies"	Difference with impairments provided in accordance with "Regulation on Asset Valuation, Overdue Collection and Loan Loss Provisioning by Insurance Companies"		Total
	(	$ 17,079 38) $ 17,041		$ - - $ -		$ - - $ -	(	$ 17,079 38) $ 17,041		$ - $ -	(	$ 17,079 38) $ 17,041
		$ 5,706 169 $ 5,875		$ - - $ -		$ - - $ -		$ 5,706 169 $ 5,875	(	$ 43,001 169) $ 42,832		$ 48,707 - $ 48,707

Liquidity risk
(1) Definition of liquidity risk

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

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

(2) Liquidity risk management

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

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

The following table is a maturity analysis for non-derivative financial liabilities (including insurance claims payable, commissions payable, reinsurance account payable, other payables and lease liabilities) with pre-arranged repayment date. The analysis has been prepared based on the

48 -

earliest date by which the Company may be required to repay, using undiscounted cash flow. March 31, 2020

undiscounted cash flow. March 31, 2020	sh flow.	sh flow.
Repayable upon demand or within 1 month Non-derivative financial liabilities Non-interest bearing liabilities $ 271,496 Lease liabilities - $ 271,496 December 31, 2019 Repayable upon demand or within 1 month Non-derivative financial liabilities Non-interest bearing liabilities $ 249,076 Lease liabilities - $ 249,076 March 31, 2019 Repayable upon demand or within 1 month Non-derivative financial liabilities Non-interest bearing liabilities $ 169,208 Lease liabilities - $ 169,208	Repayable upon demand or within 1 month		1~3 months	3 months ~ 1 year		1~5years	5 years and above
			$ 81,567 629 $ 82,196 1~3 months	$ 323,115 1,732 $ 324,847 3 months ~ 1 year		$ 14,529 1,487 $ 16,016 1~5years	$ - - $ - 5 years and above
Non-derivative financial liabilities Non-interest bearing liabilities Lease liabilities March 31, 2019
	$ 249,076 - $ 249,076 Repayable upon demand or within 1 month		$ 66,354 510 $ 66,864 1~3 months	$ 323,190 1,790 $ 324,980 3 months ~ 1 year		$ 15,114 1,961 $ 17,075 1~5years	$ - - $ - 5 years and above
Non-derivative financial liabilities Non-interest bearing liabilities Lease liabilities
		$ 169,208 - $ 169,208	$ 78,934 319 $ 79,253		$ 571,045 957 $ 572,002	$ 15,114 1,195 $ 16,309	$ - - $ -

Related party transactions (1) Name and relationship of related parties

Name of related party Relationship with the Company Yi Chih Co., Ltd. Other related parties Da Feng Construction Engineering Co., Other related parties Ltd. Zong Cheng Enterprise Co., Ltd. Other related parties Tu Ho Enterprise Co., Ltd. Other related parties Chien Yi Industrial Co., Ltd. Other related parties Chien Cheng Development Co., Ltd. Other related parties Hua Wang Manufacturer Co., Ltd. Other related parties Hai Hwa Construction Co., Ltd. Other related parties Tsai Cheng Enterprise Co., Ltd. Other related parties Tai Jing Apartment Building Management Other related parties and Maintenance Co., Ltd.

(Continued next page)

49 -

(Continued from previous page)

Name of related party Relationship with the Company Taiwan Fuji Die Co., Ltd. Other related parties Yongji Enterprise Co., Ltd. Other related parties Chimax Development Company Other related parties Pao Shan Construction Co., Ltd. Other related parties Yiguang Enterprise Development Co., Ltd. Other related parties AOPEN Inc. Other related parties Taiwan Real Estate Management Co., Ltd. Other related parties Jiatai Construction Co., Ltd. Other related parties Jinshi Construction Co., Ltd. Other related parties Chiyi Construction Management Co., Ltd. Other related parties Jui San Co., Ltd. Other related parties Fu Bi Shi Construction Co., Ltd. Other related parties Other related parties Second degree relatives or closer to the company's director, Chairman, President, Manager, or spouse thereof

(2) Major transactions with related parties 1. Premium revenues

1.	Premium revenues
2.	Type of relatedparty Other related parties Insurance claims paid Type of relatedparty Other related parties	January 1 to March 31,2020 $ 918 January 1 to March 31,2020 $ 2,642	January 1 to March 31,2019
			$ 946 January 1 to March 31,2019
				$ 3

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

Rental expense

Rental expense
Type of relatedparty Other related parties	January 1 to March 31,2020 $ -	January 1 to March 31,2019
			$ 6

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

50 -
Premiums receivable

Premiums receivable
Type of relatedparty Other related parties	March 31,2020 $ 174	December 31, 2019 $ 464	March 31,2019
				$ 335

(3) Remuneration to the executive management

Short-term employee benefits Retirement benefits	January 1 to March 31,2020 $ 11,120 1,023 $ 12,143	January 1 to March 31,2019	January 1 to March 31,2019
			$ 14,874 664 $ 15,538

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

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 March 31, 2020, the Company had NT$9,024,000 of system implementation expenses that were contracted but unpaid.

(2) Contingent liabilities

As of March 31, 2020, the Company had 10 unresolved major lawsuits concerning its insurance business. The Company was being claimed for a sum of NT$37,013,000, and NT$31,805,000 of which were covered by reinsurance while the remaining balance was covered by adequate claim reserve. These cases are currently being reviewed by court.

Losses from major disasters: None.
Major post-balance sheet events: None. 34. Information on foreign currency-denominated financial assets and liabilities and exchange rate

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

51 -

35. Risk management goals, policies, procedures and methods

(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
Risk management framework and organization

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

The responsibilities of each unit are listed as below: Board
(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.
(2) The board is responsible for the establishment of proper risk management systems and cultures, approval and regular review of risk management policies, and making the most efficient allocation of available resources.
(3) The board evaluates risks, consequences and effects from the perspective of the entire organization. It also makes decisions in line with legal capital requirements imposed by the competent authority, while taking into consideration various financial and business rules that are relevant to capital allocation.
(4) The board reviews risk appetite on a yearly basis and makes adjustments as deemed appropriate.
(5) The Chairman is authorized to approve risk management-related policies within the Company.

Risk Management Committee

(1) The committee outlines the Company's risk management policies, framework and organization, and implements quantitative or qualitative standards for the Company's major risk exposures. The committee presents formal reports to the board of directors at least twice a year, and provides the board with relevant updates and recommendation as deemed necessary.
52 -
(2) The committee executes the board's risk management decisions and performs full-scale review of the Company's risk management system, implementation and execution at least once a year.
(3) The committee assists and supervises various departments in risk management activities.
(4) The committee adjusts risk exposure category, risk limit and risk mitigation methods depending on changes in the environment.
(5) The committee coordinates risk management practices and establishes communication and interaction across different departments.
(6) The committee supervises overall risk management of the Company. Risk Management Department
(1) The department assists in the development of risk management policy, framework and organization, and executes board-approved risk management policy.
(2) The department assists in setting risk limits based on risk appetite.
(3) The department is responsible for consolidating risk information from all departments, and communicating/coordinating across different departments for the execution of risk policies and limits.
(4) The department prepares monthly risk management reports.
(5) The department monitors breach and use of risk limit by business units at least twice a year.
(6) The department assists in stress testing.
(7) The department performs back testing where necessary.
(8) The department resolves breach of risk limit by other units.
(9) Other risk management-related affairs. Business units
(1) Identify risk and report risk exposure
(2) Assess extent of impact (quantitative or qualitative) in the occurrence of risk event, and convey risk information in a timely and accurate manner.
(3) Review risk exposure and limits at least twice a year to ensure that risk limits are properly executed within business units.
(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

53 -

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

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

Insurance risks

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

Product design and pricing risks

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

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

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

54 -
(5) Control of insurance risk exposure and avoidance of risk concentration

The Company has adopted practices in accordance with “Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms" to manage the risks of retained, ceded and assumed insurance coverage. Reinsurance plans are devised and executed after taking into consideration the Company's risk tolerance. Please refer to Note 36(9) for retention limits of each insurance category.

(6) Asset and liability management

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

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

Receivables
Fire Insurance Marine Insurance Automobile Insurance Engineering insurance Other insurance Less: loss provisions Net amount Class Fire Insurance Marine Insurance Automobile Insurance Engineering insurance Other insurance Less: loss provisions Net amount		March 31,2020
	Notes receivable Premiums receivable $ 11,712 $ 134,098 27,796 53,597 98,982 28,049 2,832 6,874 6,664 99,524 147,986 322,142 ( 3,884) ( 36,265) $ 144,102 $ 285,877 December 31,2019				Total
	(			(	$ 145,810 81,393 127,031 9,706 106,188 470,128 40,149) $ 429,979
	Notes receivable $ 8,908 29,028 97,810 409 4,612 140,767 ( 3,573) $ 137,194		Premiums receivable $ 106,686 35,254 56,820 19,388 100,685 318,833 40,306) $ 278,527		Total
	(	(		(	$ 115,594 64,282 154,630 19,797 105,297 459,600 43,879) $ 415,721

55 -

Fire Insurance Marine Insurance Automobile Insurance Engineering insurance Other insurance Less: loss provisions Net amount Commission payable Class			March 31,2019	March 31,2019
	Notes receivable $ 14,212 28,090 105,910 6,280 9,243 163,735 ( 4,103) $ 159,632 March 31,2020 $ 16,145 9,341 59,618 1,775 26,615 $ 113,494			Premiums receivable $ 163,213 41,554 55,388 8,325 48,791 317,271 40,578) $ 276,693 December 31, 2019 $ 12,148 6,992 68,042 1,158 21,822 $ 110,162		Total
	(		(		$ 177,425 69,644 161,298 14,605 58,034 481,006 ( 44,681) $ 436,325 March 31,2019
Fire Insurance Marine Insurance Automobile Insurance Engineering insurance Other insurance Total		$ 16,145 9,341 59,618 1,775 26,615 $ 113,494				$ 11,540 8,924 66,027 2,153 19,862 $ 108,506

Reinsurance accounts receivable (payable) - retained reinsurance

MAT CMP CRC FMI FOH Others Less: loss provisions Net amount	March 31,	2020	2020
	Reinsurance accounts receivable $ 85,887 64,275 50,897 21,080 14,667 63,376 ( 3,002) $ 297,180	Reinsurance accountspayable
	(		$ 41,396 94,920 125,666 - 23,384 195,333 - $ 480,699

56 -

	MAT CRC CMP WIL FPH Others Less: loss provisions Net amount WIM CRC MAT CMP WIL Others Less: loss provisions Net amount	MAT CRC CMP WIL FPH Others Less: loss provisions Net amount WIM CRC MAT CMP WIL Others Less: loss provisions Net amount	December 31,2019	December 31,2019	December 31,2019	December 31,2019
			Reinsurance accounts receivable $ 74,186 30,048 28,954 27,288 8,198 50,502 ( 3,589) $ 215,587 March 31,	Reinsurance accountspayable
			(	$ 80,288 98,455 59,612 29,817 3,324 164,922 - $ 436,418 2019
				Reinsurance accountspayable
			(		$ 6,476 212,566 112,418 60,854 20,525 211,427 - $ 624,266 March 31,2019
(2)	Unearned premium reserve 1. Details of unearned premium reserve:
		Class One-year commercial fire insurance General automobile hull insurance for private vehicle General automobile liabilities insurance for private vehicle Mandatory automobile liabilities insurance for private vehicle Personal accident insurance Others
						$ 235,595 926,318 796,494 256,414 515,862 1,399,497 $ 4,130,180

(2)	Unearned premium reserve
	1. Details of unearned premium reserve:

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

57 -

2. Details of retained unearned premium reserve:

March 31, 2020

	March31,2020	March31,2020
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 Fire Insurance Marine Insurance	Ceded unearned premium reserve Unearned premium reserve Direct insurance (1) Assumed reinsurance (2) Ceded reinsurance (Note)(3) $ 553,258 $ 39,777 $ 292,509 88,383 1,894 39,451 2,227,006 146,803 363,621 218,770 23,002 102,984 430,564 1,874 233,756 111,231 10,634 39,301 $3,629,212 $ 223,984 $1,071,622 December 31,2019		Retained insurance (4)=(1)+(2)-(3)
	Direct insurance (1) $ 553,258 88,383 2,227,006 218,770 430,564 111,231 $3,629,212
				$ 300,526 50,826 2,010,188 138,788 198,682 82,564 $2,781,574
	Unearnedpremium reserve Direct insurance (1) Assumed reinsurance (2) $ 556,443 $ 31,493 72,767 2,061 2,153,139 146,807 218,126 22,934 405,792 1,832 104,579 10,686 $3,510,846 $ 215,813 March31,	Ceded unearned premium reserve Ceded reinsurance (Note)(3) $ 302,532 37,876 356,645 110,827 231,408 38,164 $1,077,452 2019	Retained insurance (4)=(1)+(2)-(3)
	Direct insurance (1) $ 556,443 72,767 2,153,139 218,126 405,792 104,579 $3,510,846
				$ 285,404 36,952 1,943,301 130,233 176,216 77,101 $2,649,207
	Unearned premium reserve Direct insurance (1) Assumed reinsurance (2) $ 650,252 $ 31,372 107,419 2,279	Ceded unearned premium reserve Ceded reinsurance (Note)(3) $ 353,839 48,885	Retained insurance (4)=(1)+(2)-(3)
	Direct insurance (1) $ 650,252 107,419
			$ 327,785 60,813

58 -

Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance	2,138,737 247,355 649,225 121,523 $ 3,914,511	145,855 25,593 1,988 8,582 $ 215,669	360,085 130,694 445,738 44,369 $1,383,610	1,924,507 142,254 205,475 85,736
				$2,746,570

Note: Presented as reinsurance contract assets.

Changes in unearned premium reserve and ceded unearned reserve:

Note: Presented as reinsurance contract assets. 3. Changes in unearned premium reserve and ceded unearned reserve:	contract assets. eserve and ceded unearned reserve:	contract assets. eserve and ceded unearned reserve:	contract assets. eserve and ceded unearned reserve:
January1 to March 31,2020 Item Unearned premium reserve Ceded unearned premium reserve Opening amount $ 3,726,659 $ 1,077,452 Provisions in the current period 3,853,196 1,071,622 Recoveries in the current period ( 3,726,659) ( 1,077,452) Closing amount $ 3,853,196 $ 1,071,622 January1 to March 31,2019 Item Unearned premium reserve Ceded unearned premium reserve Opening amount $ 4,032,127 $ 1,391,535 Provisions in the current period 4,130,180 1,383,610 Recoveries in the current period ( 4,032,127) ( 1,391,535) Closing amount $ 4,130,180 $ 1,383,610 (3) Claim reserve 1. Details of claim reserve: Class March 31,2020 December 31, 2019 March 31,2019 One-year commercial fire insurance $ 281,894 $ 303,266 $ 507,460 General automobile hull insurance for private vehicle 214,762 215,473 210,184 General automobile liabilities insurance for private vehicle 592,768 605,136 545,371 Mandatory automobile liabilities insurance for private vehicle 460,812 481,165 592,039 Mandatory motorcycle liabilities insurance 163,075 150,177 160,926	January1 to March 31,2020
	Unearned premium reserve Ceded unearned premium reserve $ 3,726,659 $ 1,077,452 3,853,196 1,071,622 ( 3,726,659) ( 1,077,452) $ 3,853,196 $ 1,071,622 January1 to March 31,2019	Ceded unearned premium reserve
	(
		Ceded unearned premium reserve
			$ 1,391,535 1,383,610 ( 1,391,535) $ 1,383,610 March 31,2019
			$ 507,460 210,184 545,371 592,039 160,926

59 -

General liabilities insurance Others	200,227 544,120 $ 2,457,658	204,552 531,464 $ 2,491,233	235,268 530,023
			$ 2,781,271

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

Details of retained claim reserve:

		March 31,	2020
Claim r	es	erve Assumed reinsurance (2) $ 760 428 37,313 12,133 - 45,263 95,897 270 - 150,785 4,996 - 1,467 157,518 $ 253,415	Ceded claim reserve Ceded reinsurance (Note)(3) $ 179,702 8,232 105,806 98,632 8,467 20,951 421,790 23 13,026 268,496 18,495 55,212 7,256 362,508 $ 784,298	Retained insurance (4)=(1)+(2)-(3)
Direct underwritten insurance (1) $ 318,168 40,134 684,327 206,922 15,880 53,402 1,318,833 2,632 20,838 688,262 45,382 111,313 16,983 885,410 $ 2,204,243
					$ 139,226 32,330 615,834 120,423 7,413 77,714 992,940 2,879 7,812 570,551 31,883 56,101 11,194 680,420 $ 1,673,360

60 -

		December 31,2019	December 31,2019
Claim r	es	erve Assumed reinsurance (2) $ 815 806 40,565 12,244 - 3,413 57,843 277 - 149,708 4,756 - 1,382 156,123 $ 213,966	Ceded claim reserve Ceded reinsurance (Note)(3) $ 172,105 7,609 109,857 124,539 7,900 16,706 438,716 23 13,026 270,406 18,495 55,212 7,256 364,418 $ 803,134	Retained insurance (4)=(1)+(2)-(3)
Direct underwritten insurance (1) $ 342,255 39,319 693,735 248,831 16,590 47,439 1,388,169 2,753 20,830 691,511 45,754 111,320 16,930 889,098 $ 2,277,267
					$ 170,965 32,516 624,443 136,536 8,690 34,146 1,007,296 3,007 7,804 570,813 32,015 56,108 11,056 680,803 $ 1,688,099

61 -

		March 31,	2019
Claim r	es	erve Assumed reinsurance (2) $ 2,672 319 42,438 45,672 7 3,559 94,667 761 - 146,324 13,606 2 1,126 161,819 $ 256,486	Ceded claim reserve Ceded reinsurance (Note)(3) $ 279,461 19,412 110,296 111,485 16,065 22,903 559,622 297 414 348,551 4,050 38,903 2,856 395,071 $ 954,693	Retained insurance (4)=(1)+(2)-(3)
Direct underwritten insurance (1) $ 538,396 68,378 670,131 222,358 27,328 71,068 1,597,659 5,016 6,840 791,808 34,288 80,128 9,046 927,126 $ 2,524,785
					$ 261,607 49,285 602,273 156,545 11,270 51,724 1,132,704 5,480 6,426 589,581 43,844 41,227 7,316 693,874 $ 1,826,578

Note: Presented as reinsurance contract assets.

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

					January1 to M	arch 31,2020
Direct underwr	itt	en insurance	Assumed	rei	nsurance	Net change in claim reserves (5)=(1)-(2)+ (3)-(4)	Ceded rei	ns	urance	Net change in ceded claim reserve (8)=(6)-(7)
Provisions(1)		Recoveries(2)	Provisions(3)		Recoveries(4)		Provisions(6)		Recoveries(7)
$ 318,168 40,134 684,327 206,922 15,880 53,402 1,318,833 2,632 20,838 688,262 45,382 111,313 16,983 885,410 $ 2,204,243		$ 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	$ 760 428 37,313 12,133 - 45,263 95,897 270 - 150,785 4,996 - 1,467 157,518 $ 253,415		$ 815 806 40,565 12,244 - 3,413 57,843 277 - 149,708 4,756 - 1,382 156,123 $ 213,966	($ 24,142) 437 ( 12,660) ( 42,020) ( 710) 47,813 ( 31,282) ( 128) 8 ( 2,172) ( 132) ( 7) 138 ( 2,293) ($ 33,575)	$ 179,702 8,232 105,806 98,632 8,467 20,951 421,790 23 13,026 268,496 18,495 55,212 7,256 362,508 $ 784,298		$ 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	$ 7,597 623 ( 4,051) ( 25,907) 567 4,245 ( 16,926) - - ( 1,910) - - - ( 1,910) ($ 18,836)

62 -

						January1 to M	arch 31,2019
Direct underwr	itt	en insurance		Assumed	rei	nsurance	Net change in claim reserves (5)=(1)-(2)+ (3)-(4)	Ceded re	ins	urance	Net change in ceded claim reserve (8)=(6)-(7)
Provisions(1)		Recoveries(2)	P	rovisions(3)		Recoveries(4)		Provisions(6)		Recoveries(7)
$ 538,396 68,378 670,131 222,358 27,328 71,068 1,597,659 5,016 6,840 791,808 34,288 80,128 9,046 927,126 $ 2,524,785		$ 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		$ 2,672 319 42,438 45,672 7 3,559 94,667 761 - 146,324 13,606 2 1,126 161,819 $ 256,486		$ 2,786 317 38,798 15,189 - 3,615 60,705 778 - 144,849 3,764 - 1,117 150,508 $ 211,213	($ 29,372) ( 97,727) ( 3,387) 36,089 20,408 ( 7,207) ( 81,196) ( 12) ( 696) 2,654 10,052 264 5 12,267 ($ 68,929)	$ 279,461 19,412 110,296 111,485 16,065 22,903 559,622 297 414 348,551 4,050 38,903 2,856 395,071 $ 954,693		$ 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	($ 24,365) ( 90,906) ( 3,288) 11,986 12,805 ( 875) ( 94,643) - - 339 - - - 339 ($ 94,304)

Changes in claim reserves and ceded claim reserves:

January 1 to March 31, 2020

Claim reserve Ceded claim reserve $ 2,491,233 $ 803,134 2,457,658 784,298 ( 2,491,233) ( 803,134) $ 2,457,658 $ 784,298 January1 to March 31,2019		Ceded claim reserve
(
Claim reserve $ 2,850,200 2,781,271 ( 2,850,200) $ 2,781,271		Ceded claim reserve
(	(	$ 1,048,997 954,693 1,048,997) $ 954,693

63 -

(4) Special claim reserve

Details of special claim reserve:

Nature Major incident Change of risk	Class Commercial earthquake insurance Typhoon and flood insurance Mandatory automobile liabilities insurance for private vehicle Mandatory commercial automobile liabilities insurance Mandatory motorcycle liabilities insurance Nuclear risks insurance Commercial earthquake insurance Typhoon and flood insurance Government-regulated earthquake insurance	March 31,2020 $ 89,774 62,867 152,641 36,171 ( 104,205 ) 525,569 74,687 587,411 184,083 197,531 1,501,247 $ 1,653,888	December 31, 2019	December 31, 2019	March 31,2019 $ 93,720 65,631 159,351 9,148 ( 112,724 ) 574,251 74,687 587,411 184,082 197,532 1,514,387 $ 1,673,738	March 31,2019 $ 93,720 65,631 159,351 9,148 ( 112,724 ) 574,251 74,687 587,411 184,082 197,532 1,514,387 $ 1,673,738
		(	(	$ 90,760 63,558 154,318 35,881 102,353 ) 538,007 74,687 587,411 184,083 197,531 1,515,247 $ 1,669,565		$ 93,720 65,631 159,351 9,148 112,724 ) 574,251 74,687 587,411 184,082 197,532 1,514,387 $ 1,673,738

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

insurance:
Item Opening amount Provisions in the current period Recoveries in the current period Closing amount	January 1 to March 31,2020 $ 471,535 290 ( 14,290) $ 457,535	January 1 to March 31,2019 $ 470,860 13,417 ( 13,602) $ 470,675
	(		$ 470,860 13,417 13,602) $ 470,675

Special claim reserve - voluntary automobile/motorcycle liabilities insurance

				January1 to March 31,2020	January1 to March 31,2020
	Liabilities			Total $1,198,030 1,677) $1,196,353		Special reserve
Major incident $ 154,318 ( 1,677) $ 152,641	Change of risk		(		Major incident $ 569,792 - $ 569,792	Change of risk $ 1,111,909 - $ 1,111,909	Total
(		$1,043,712 - $1,043,712					$1,681,701 - $1,681,701

64 -

January 1 to March 31, 2019

Item Opening amount Recoveries in the current period Closing amount		Liabilities		Total $1,204,740 1,677) $1,203,063		Special reserve
	Major incident $ 161,028 ( 1,677) $ 159,351	Change of risk $1,043,712 - $1,043,712			Major incident $ 504,170 - $ 504,170	Change of risk $ 970,079 - $ 970,079		Total
	(		(					$1,474,249 - $1,474,249

Note 1: "Notes on Natural Disaster Insurance (Commercial Earthquake Insurance and Typhoon/Flood Insurance) Reserve Enhancement for Non-life Insurance Companies" issued by the competent authority in 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 earnings 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$957,082,000 (net of NT$239,271,000 tax impact) against an increase in special earnings reserve of the same amount as of March 31, 2020; meanwhile, net income for the period from January 1 to March 31, 2020 would have fallen by NT$1,342,000 and earnings per share would have reduced by NT$0.01.
(5) Deficiency reserve

Details of deficiency reserve:

March 31, 2020

Aviation Insurance Professional liability insurance Fishing Vessel Insurance Vessel hull insurance Health Insurance Engineering insurance	Deficiencyr	Deficiencyr	eserve Assumed reinsurance (2) $ - 18 307 - - 6,007 $ 6,332	re	Deficiency serve for ceded coverage Ceded reinsurance (3) $ - - 7,564 - - - $ 7,564	Retained insurance (4)=(1)+(2)-(3)	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

65 -

		December 31,2019	December 31,2019	December 31,2019
Deficiencyr		eserve Deficiency reserve for ceded coverage Assumed reinsurance (2) Ceded reinsurance (3) $ - $ - 18 - 307 7,564 - - - - 6,007 - $ 6,332 $ 7,564 March 31,2019			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
	Deficiencyr	eserve Assumed reinsurance (2) $ - 1,058 221 - - 3,600 $ 4,879	re	Deficiency serve for ceded coverage Ceded reinsurance (3) $ - - 6,686 - - - $ 6,686	Retained insurance (4)=(1)+(2)-(3)
Direct insurance (1) $ 924 8,718 6,913 540 1,017 6,180 $ 24,292
						$ 924 9,776 448 540 1,017 9,780 $ 22,485

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

(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 for the period January 1 to March 31, 2020:

Class Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance		Premium revenues (1) $ 190,148 1,608,025 $ 1,798,173		Reinsurance Premium (2) $ 63,666 44,087 $ 107,753		Reinsurance premiums expense (3) $ 78,991 380,682 $ 459,673	Retained premium (4)=(1)+(2)-(3)	Retained premium (4)=(1)+(2)-(3)
								$ 174,823 1,271,430 $ 1,446,253

For voluntary automobile liabilities insurance, a sum of NT$3,216,000 was contributed to the stabilization fund using applicable percentages for the period January 1 to March 31, 2020.

66 -

		Direct written insurance	Direct written insurance	Direct written insurance	Direct written insurance			Assumed reinsurance unearned	Assumed reinsurance unearned	Assumed reinsurance unearned	Assumed reinsurance unearned	Assumed reinsurance unearned	Net change in	Net change in	Net change in
	unearned			premium reserve					premium		reserve				unearned
															premium
															reserve
														(9)=(5)-(6)
Class	Provisions(5)				Recoveries	(6)		Provisions(7)			Recoveries(8)				+(7)-(8)
Mandatory
automobile
liabilities
insurance	$	306,948			$ 309,040			$	146,803		$	146,807	($		2,096)
Voluntary
automobile
liabilities
insurance		3,322,264			3,201,806				77,181			69,006			128,633
	$	3,629,212			$ 3,510,846			$	223,984		$	215,813	$		126,537
				Ceded reinsurance unearned						Net change in			Retained earned
					premium reserve					ceded		unearned	gross premium
										premium reserve			(13)=(4)-(9)+
Item			Provisions(10)			Recoveries			(11)	(12)=(10)-(11)					(12)
Mandatory automobile liabilities insurance			$		184,183		$	185,437		( $		1,254 )	$		175,665
Voluntary automobile liabilities insurance					887,439			892,015		(		4,576)		1,138,221
			$	1,071,622			$	1,077,452		($		5,830)	$	1,313,886

The following shows amount and calculation of retained earned gross premiums for the Company's mandatory and voluntary automobile liabilities insurance for the period January 1 to March 31, 2019:

Class Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance		Premium revenues (1) $ 195,338 1,703,143 $ 1,898,481		Reinsurance Premium (2) $ 63,625 39,410 $ 103,035		Reinsurance premiums expense (3) $ 80,783 490,644 $ 571,427	Retained premium (4)=(1)+(2)-(3)	Retained premium (4)=(1)+(2)-(3)
								$ 178,180 1,251,909 $ 1,430,089

For voluntary automobile liabilities insurance, a sum of NT$3,406,000 was contributed to the stabilization fund using applicable percentages for the period January 1 to March 31, 2019.

Class Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance	Direct written insurance unearnedpremium reserve Provisions(5) Recoveries(6) $ 315,442 $ 319,204 3,599,069 3,505,321 $ 3,914,511 $ 3,824,525	Direct written insurance unearnedpremium reserve Provisions(5) Recoveries(6) $ 315,442 $ 319,204 3,599,069 3,505,321 $ 3,914,511 $ 3,824,525	Assumed reinsurance unearned premium reserve Provisions(7) Recoveries(8) $ 145,872 $ 144,164 69,797 63,438 $ 215,669 $ 207,602	Assumed reinsurance unearned premium reserve Provisions(7) Recoveries(8) $ 145,872 $ 144,164 69,797 63,438 $ 215,669 $ 207,602	Net change in unearned premium reserve (9)=(5)-(6) +(7)-(8)
	Provisions(5) $ 315,442 3,599,069 $ 3,914,511		Provisions(7) $ 145,872 69,797 $ 215,669
					($ 2,054) 100,107 $ 98,053

67 -

Item Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance	Ceded reinsurance unearned premium reserve Provisions(10) Recoveries(11) $ 189,279 $ 191,527 1,194,331 1,200,008 $ 1,383,610 $ 1,391,535	Ceded reinsurance unearned premium reserve Provisions(10) Recoveries(11) $ 189,279 $ 191,527 1,194,331 1,200,008 $ 1,383,610 $ 1,391,535	Net change in ceded unearned premium reserve (12)= (10)-(11) ( $ 2,248 ) ( 5,677) ($ 7,925)	Retained earned gross premium (13)= (4)-(9)+(12)	Retained earned gross premium (13)= (4)-(9)+(12)
	Provisions(10) $ 189,279 1,194,331 $ 1,383,610
			( ( (		$ 177,986 1,146,125 $ 1,324,111

(7) Retained claims

The following shows amount and calculation of retained claims for the Company's mandatory and voluntary automobile liabilities insurance for the period January 1 to March 31, 2020:

Class Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance	Insurance claims (including claim-related expenses) (1) $ 147,466 765,000 $ 912,466	Claims paid for reinsurance (2) $ 77,575 11,275 $ 88,850	Claims recovered from reinsurers (3) $ 87,835 175,724 $ 263,559	Retained claims (4)=(1)+(2)-(3)	Retained claims (4)=(1)+(2)-(3)
					$ 137,206 600,551 $ 737,757

The following shows amount and calculation of retained claims for the Company's mandatory and voluntary automobile liabilities insurance for the period January 1 to March 31, 2019:

Class Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance	Insurance claims (including claim-related expenses) (1) $ 153,303 832,474 $ 985,777	Claims paid for reinsurance (2) $ 50,435 8,266 $ 58,701	Claims recovered from reinsurers (3) $ 88,370 246,092 $ 334,462	Retained claims (4)=(1)+(2)-(3)	Retained claims (4)=(1)+(2)-(3)
					$ 115,368 594,648 $ 710,016

68 -

(8) Policyholders' reported claims liability Policyholders' reported and paid/unpaid and unreported claims liability: March 31, 2020

Insurance claimspayable Reported and paid $ - - - - - 2,550 $ 2,550		Claim reserves	Claim reserves
	Reported but notpaid Not reported $ 318,928 $ 2,902 40,562 20,838 721,640 839,047 219,055 50,378 15,880 111,313 98,665 18,450 $ 1,414,730 $ 1,042,928 December 31,2019			Total
				$ 321,830 61,400 1,560,687 269,433 127,193 117,115 $ 2,457,658
Insurance claimspayable Reported and paid $ - - - - - - $ -		Claim reserves
	Reported but notpaid $ 343,070 40,125 734,300 261,075 16,590 50,852 $ 1,446,012		Not reported $ 3,030 20,830 841,219 50,510 111,320 18,312 $ 1,045,221	Total
				$ 346,100 60,955 1,575,519 311,585 127,910 69,164 $ 2,491,233

69 -

March 31, 2019

	Claim reserves
Reported but notpaid		Total
	Actualpayments
	(	$ 2,354 13,363 83,454 11,992 80,995 587 192,745 1,790) $ 190,955

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

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

70 -

(9) Retention limits by insurance category

Class Fire Insurance Engineering insurance Liabilities insurance Cargo insurance Vessel hull insurance Fishing Vessel Insurance Automobile hull insurance Automobile third-party liability insurance (per incident) Automobile passenger liability insurance (per incident) Personal accident insurance Health insurance	January 1 to March 31,2020 $ 250,000 250,000 150,000 75,000 60,000 60,000 13,800 202,400 644,000 30,000 2,000	January 1 to March 31,2019
		$ 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

January 1 to March 31, 2020

Commission Expenses	Commission Expenses		Service Charges Reinsurance commission expense $ - $ 1,191 - 174 32,961 - - 2,961 - 24 - 304 $ 32,961 $ 4,654 January1 to March 31,2019	Total
	$ 19,809 8,531 159,544 12,875 29,240 6,265 $ 236,264			$ 21,000 8,705 192,505 15,836 29,264 6,569 $ 273,879
Commission Expenses		Service Charges $ - - 38,505 - - - $ 38,505	Reinsurance commission expense $ 797 100 - 3,528 68 361 $ 4,854	Total
	$ 22,758 16,075 159,752 18,618 27,858 5,764 $ 250,825			$ 23,555 16,175 198,257 22,146 27,926 6,125 $ 294,184

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

71 -

(11) Insurance profitability analysis

Profitability analysis for direct underwritten insurance:

January 1 to March 31, 2020

Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance		Premium revenues (1)	Net change in unearned premium reserve (2)		Acquisition costs for insurance contracts (3)	Insurance claims (including claim-related expenses) (4)	Insurance claims (including claim-related expenses) (4)	Net change in claim reserves (5)	Profit (loss) on insurance (6)=(1)-(2)- (3)-(4)-(5)	Profit (loss) on insurance (6)=(1)-(2)- (3)-(4)-(5)
		$ 238,369 85,591 1,163,854 87,817 157,642 64,900 $ 1,798,173	( $ 3,185) 15,616 73,867 644 24,772 6,652 $ 118,366		$ 19,809 8,531 192,505 12,875 29,240 6,265 $ 269,225		$ 54,544 22,662 677,184 42,608 97,761 17,707 $ 912,466	( $ 24,208) 823 ( 12,657) ( 42,281) ( 717) 6,016 ($ 73,024)		$ 191,409 37,959 232,955 73,971 6,586 28,260 $ 571,140

January 1 to March 31, 2019

Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance		Premium revenues (1)	Net change in unearned premium reserve (2)		Acquisition costs for insurance contracts (3)	Insurance claims (including claim-related expenses) (4)	Insurance claims (including claim-related expenses) (4)	Net change in claim reserves (5)	Profit (loss) on insurance (6)=(1)-(2)- (3)-(4)-(5)	Profit (loss) on insurance (6)=(1)-(2)- (3)-(4)-(5)
		$ 263,526 109,101 1,143,927 113,300 190,587 78,040 $ 1,898,481	$ 6,523 10,656 73,057 14,185 ( 36,201) 21,766 $ 89,986		$ 22,758 16,075 198,257 18,618 27,858 5,764 $ 289,330	(	$ 42,727 146,130 674,949 31,347 96,100 5,476) $ 985,777	( $ 29,253) ( 98,425) ( 5,848) 5,816 20,663 ( 7,155) ($ 114,202)		$ 220,771 34,665 203,512 43,334 82,167 63,141 $ 647,590

Profitability analysis for assumed reinsurance:

January 1 to March 31, 2020

Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance		Reinsurance Premium (1)	Net change in unearned premium reserve (2)		Reinsurance commission expense (3)		Claims paid for reinsurance (4)	Net change in claim reserves (5)	Profit (loss) on assumed reinsurance (6)=(1)-(2)- (3)-(4)-(5)
		$ 24,384 1,555 63,666 11,688 1,036 5,424 $ 107,753	$ 8,284 ( 167) ( 4) 68 42 ( 52) $ 8,171		$ 1,191 174 - 2,961 24 304 $ 4,654		$ 883 5,363 77,575 4,043 55 931 $ 88,850	( $ 62) ( 378) ( 2,175) 129 - 41,935 $ 39,449	$ 14,088 ( 3,437) ( 11,730) 4,487 915 ( 37,694) ($ 33,371)

72 -

		January1 to March 31,2019	January1 to March 31,2019	January1 to March 31,2019
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)
						$ 13,243 142 6,367 ( 36,580) 652 2,316 ($ 13,860)
Reinsurance premiums expense (1)	Net change in ceded unearned premium reserve (2)	Reinsurance Commission Received (3)		Claims recovered from reinsurers (4)	Net change in ceded claim reserve (5)	(Profit) loss on ceded reinsurance (6)=(1)-(2)- (3)-(4)-(5)
$ 129,268 26,760 172,539 34,120 66,398 30,588 $ 459,673	( $ 10,023) 1,575 6,976 ( 7,843) 2,348 1,137 ($ 5,830)				$ 7,597 623 ( 5,961) ( 25,907) 567 4,245 ($ 18,836)	$ 100,785 21,740 ( 4,966) 34,262 ( 21,693) 16,028 $ 146,156
Reinsurance premiums expense (1)	Net change in ceded unearned premium reserve (2)	Reinsurance Commission Received (3)		Claims recovered from reinsurers (4)	Net change in ceded claim reserve (5)	(Profit) loss on ceded reinsurance (6)=(1)-(2)- (3)-(4)-(5)
$ 152,828 43,246 171,937 63,291 100,561 39,564 $ 571,427	$ 620 9,188 4,378 14,069 ( 45,118) 8,938 ($ 7,925)	$ 7,814 3,530 35,319 16,053 17,072 2,903 $ 82,691	(	$ 19,771 106,654 140,857 13,239 61,097 7,156) $ 334,462	( $ 24,365) ( 90,906) ( 2,949) 11,986 12,805 ( 875) ($ 94,304)	$ 148,988 14,780 ( 5,668) 7,944 54,705 35,754 $ 256,503

(12) Information on insurance risks

Sensitivity analysis for insurance risks

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

73 -

while holding other major assumptions constant. For example, a change to the variable "average cost of claim" would result in a proportional change in claim reserves. Detailed analysis is presented below:

March 31, 2020

Average cost of claim	Single-varia ble Variation 5%	Effect on gross claims reserve	Effect on net claims reserve	Effect on pre-taxprofit Increase (decrease) ( $ 64,571)	Pre-tax effect on owners' equity
		Increase (decrease)	Increase (decrease)		Increase (decrease)
		$ 89,224	$ 64,571		( $ 64,571)

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

2. Explanation to concentration of insurance risks

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

explained below:
Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance	January1 to March 31,2020 Direct written premiums % $ 238,369 13.26% 85,591 4.76% 1,163,854 64.72% 87,817 4.88% 157,642 8.77% 64,900 3.61% $ 1,798,173 100.00%	January1 to March 31,2020
	Direct written premiums $ 238,369 85,591 1,163,854 87,817 157,642 64,900 $ 1,798,173	Cumulative retained premiums (Note) $ 133,485 60,386 1,054,981 65,385 92,280 39,736 $ 1,446,253	%
			9.23% 4.18% 72.95% 4.52% 6.38% 2.74% 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:

		March 31,2020	March 31,2020
		Year	count
1 $30,978,975 3,518,890 2,844,485 3,350,844 2,878,243 568,795	2 $31,120,332 3,768,046 3,138,851 3,575,988 3,024,506	3 $31,172,606 3,753,540 3,155,289 3,571,491	4 $31,172,925 3,755,040 3,148,385	5 $31,141,265 3,756,185	6
					$31,137,169

Note: The above table does not include mandatory automobile liabilities insurance, nuclear risks insurance, and government-regulated earthquake insurance. (13) Credit risk, liquidity risk and market risk of insurance contracts 1. Credit risk of insurance contracts

74 -

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, 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 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.

75 -

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.

For the sum of commercial fire insurance ceded to Trust International Insurance and Reinsurance Company B.S.C.(C). Trust Re Labuan Branch, a reinsurer that did not conform with the credit grading requirements stated in Article 8 of "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms," the Company was required to disclose claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months totaling NT$183,000 and ceded claim reserve for reported and unpaid liability totaling NT$50,000. 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$648,000 and ceded claim reserve for reported and unpaid liability totaling NT$37,000. In addition, the Company was required to make provisions for substandard reinsurance reserve of NT$1,184,000 (including NT$831,000 of ceded unearned premium reserve, NT$831,000 of claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months, and NT$353,000 of ceded claim reserve for reported and unpaid liability) when preparing regulatory reports; however, this NT$1,184,000 of additional reserve and liability does not affect the Company's financial statements.

2.

Liquidity risk of insurance contracts

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

Market risk of insurance contracts

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

76 -
(14) Assets, liabilities, revenues and costs of mandatory automobile liabilities insurance 1. Assets and liabilities of mandatory automobile liabilities insurance

(in NT$ 1,000)

							(in NT$1,000
Item		Amount		Item		Amount
Assets	March 31, 2020	December 31, 2019	March 31, 2019	Liabilities	March 31, 2020	December 31, 2019	March 31, 2019
Cash and bank deposits (Note) Cash equivalents 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	1,071,669 - 15,405 13,279 17,682 85,768 - - 184,182 291,225 - -	$ 1,089,353 - 8,511 16,055 23,744 50,416 - - 185,437 296,837 - -	$ 1,137,753 - 9,801 10,676 30,962 53,524 - - 189,279 380,211 1,949 -	Notes payable Insurance claim and benefit payments payable Claims payable for reinsurance Reinsurance accounts payable Unearned premium reserve Claim reserve Special reserve Receipts in suspense and pending settlement Other liabilities	85 - - 94,921 453,751 672,912 457,535 6 -	$ - - - 59,612 455,847 683,359 471,535 - -	$ - 608 - 60,854 461,314 820,704 470,675 - -
Total assets	$1,679,210	$1,670,353	$1,814,155	Total liabilities	$1,679,210	$1,670,353	$1,814,155

Note: As of March 31, 2020, December 31, 2019 and March 31, 2019, NT$355,669,000, NT$373,353,000 and NT$221,753,000 of which were presented as cash, while NT$716,000,000, NT$716,000,000 and NT$916,000,000 of which were presented as other financial assets, respectively.
Revenues and costs of mandatory automobile liabilities insurance

			(in NT$1,000)	(in NT$1,000)
Item	January 1 to March 31, 2020		January 1 to March 31, 2019
Revenue Pure premium revenues Reinsurance Premium Premium revenues Less: reinsurance premium expenses Net change in unearned premium reserve Retained Earned Premium Interest income Total operating revenues Operating Cost Insurance claims (including reinsurance claims, which amounted to NT$77,575,000 and NT$50,435,000, respectively) Less: claims recovered from reinsurers Retained claims Net change in claim reserves Net change in special claim reserves Total operatingcosts	( ( ( (	$ 131,635 63,666 195,301 78,991 ) 841 117,151 1,220 $ 118,371 $ 225,041 87,835) 137,206 4,835 ) 14,000) $ 118,371	( ( ( (	$ 134,618 63,625 198,243 80,783 ) 194) 117,266 1,218 $ 118,484 $ 203,738 88,370) 115,368 3,301 185) $ 118,484

77 -

37. Other disclosures

(1) Major transactions:
Acquisition of real estate properties amounting to more than NT$100 million or 20% of paid up capital: None.
Disposal of real estate properties amounting to more than NT$100 million or 20% of paid up capital: None.
Sales and purchases with related parties amounting to NT$100 million or more than 20% of paid up capital: None.
Related party receivables amounting to more than NT$100 million or 20% of paid up capital: None.
Trading of derivatives: None.
Others: None.
(2) Information on invested businesses: None.
(3) Information relating to investments and business activities in the Mainland: None. (4) Information of Dominant shareholders:

5. Trading of derivatives: None. 6. Others: None. Information on invested businesses: None. Information relating to investments and business activities in the Information of Dominant shareholders:	5. Trading of derivatives: None. 6. Others: None. Information on invested businesses: None. Information relating to investments and business activities in the Information of Dominant shareholders:	Mainland: None.
		Unit: shares
Shareholding Name of dominant shareholder	Shares held	Shareholding percentage(%)
Sheng Ching Investment Co., Ltd. Chien Cheng Development Da Feng Construction Engineering Co., Ltd.	19,299,289 18,806,192 15,823,085	6.40% 6.24% 5.25%

38. Segment information

Non-life insurance was the Company's primary and only major business segment for periods from January 1 to March 31, 2020 and 2019, therefore segment-by-segment disclosure of financial information is not required.

78 -

AI assistant

FIRST INS — Interim / Quarterly Report 2020

52208_rns_2020-12-28_57539331-cdf5-435d-9b8a-471d9682979e.pdf

The First Insurance Co., Ltd.

Financial Statements and Independent Auditor's Review Report For the First Quarter of 2020 and 2019

§TABLE OF CONTENTS§

Independent Auditor's Review Report

Foreword

Scope

The First Insurance Co., Ltd. Balance Sheet

The First Insurance Co., Ltd. Comprehensive Income Statement For periods from January 1 to March 31, 2020 and 2019 (Reviewed only; not audited in accordance with generally accepted audit principles) Unit: NTD thousands, except EPS which is in dollars

(Continued from previous page)

(Continued from previous page)

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

The First Insurance Co., Ltd. Cash Flow Statement For periods from January 1 to March 31, 2020 and 2019 (Reviewed only; not audited in accordance with generally accepted audit principles)

(Continued from previous page)

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

1. Corporate history

Measurement at initial recognition

Subsequent measurement

Onerous contracts

Premium allocation approach

Modification and derecognition

Transition

5. Main source of uncertainty for major accounting judgments, estimates and assumptions

Insurance liabilities from insurance contracts

7. Financial assets at fair value through profit and loss

8. Financial assets at fair value through other comprehensive income

9. Financial assets carried at cost after amortization

March 31, 2019

11. Other financial assets

Notes receivable

Notes receivable

Change in loss provisions by account category:

13. Investment property

15. Property, plant, and equipment

(Continued from previous page)

17. Intangible assets

18. Guarantee deposits paid

23. Other liabilities - others

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

25. Net income from continuing operations (1) Employee welfare expenses

27. Earnings (losses) per share

29. Financial instruments

Sensitivity analysis

Sensitivity analysis

Sensitivity analysis

(5) Stress-testing

2. Credit risk

(Continued from previous page)

35. Risk management goals, policies, procedures and methods

Risk Management Committee

2. Details of retained unearned premium reserve:

Note: Presented as reinsurance contract assets.

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

(4) Special claim reserve

(6) Retained earned premium revenue

(7) Retained claims

(9) Retention limits by insurance category

January 1 to March 31, 2020

(11) Insurance profitability analysis

Profitability analysis for direct underwritten insurance:

Profitability analysis for assumed reinsurance:

(12) Information on insurance risks

2. Explanation to concentration of insurance risks

Claims trends

2.

37. Other disclosures

38. Segment information

More from FIRST INS

FIRST INS Interim / Quarterly Report 2020