FIRST INS - Interim / Quarterly Report 2020

Stock ID: 2852

The First Insurance Co., Ltd.

Financial Statements and Independent Auditor’s Report For the Second Quarter of 2020 and 2019

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

§TABLE OF CONTENTS§

ITEM 1. Cover page 2. Table of contents 3. Independent auditor’s report 4. Balance Sheet 5. Statement of comprehensive income 6. Statement of changes in equity 7. Cash flow statement 8. Notes to financial statements (1) Corporate history (2) Financial statement approval date and procedures (3) Application of new and amended standards and interpretations (4) Summary of significant accounting policies (5) Sources of uncertainty to significant accounting judgments, estimates, and assumptions (6) Notes to major accounts (7) Related party transactions (8) Pledged assets (9) Major contingent liabilities and unrecognized contractual commitments (10) Losses from major disasters (11) Other matters (12) Major post-balance sheet events (13) Information on foreign currency-denominated financial assets and liabilities and exchange rate (14) Other disclosures 1. Information related to significant transactions 2. Information related to invested businesses 3. Information relating to investments and business activities in the Mainland China 4. Dominant shareholders (15) Segment information	PAGE 1 2 3~5 6 7~8 9 10~11 12 12 12~15 15~17 17 17~53, 55~80 53~55 - 55 55 55 55 55 81 81 81 81 81	SERIAL NUMBER OF NOTES TO FINANCIAL STATEMENTS
		- - - - - - - 1 2 3 4 5 6~38 31 - 32 33 34 35 36 39 39 39 39 40

Independent Auditor’s Report

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

Audit opinion

We have audited the balance sheet of The First Insurance Co., Ltd. as June 30, 2020, December 31, 2019, and June 30, 2019; the statement of comprehensive income, statement of changes in equity, and cash flow statement for periods April 1 to June 30, 2020 and 2019 and January 1 to June 30, 2020 and 2019; and the accompanying footnotes (including summary of significant accounting policies.

In our opinion, all material disclosures of the financial statements mentioned above were prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Insurance Enterprises and the version of IAS 34 - “Interim Financial Reporting” approved by the Financial Supervisory Commission, and presented a fair view of the financial position of The First Insurance Co., Ltd. as of June 30, 2020, December 31, 2019, and June 30, 2019, and business performance and cash flow for periods April 1 to June 30, 2020 and 2019; and January 1 to June 30, 2020 and 2019.

Basis of audit opinion

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

Key audit issues

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

Key audit issues concerning the 2020 second-quarter financial statements of The First Insurance Co., Ltd. are as follows: Estimation of not reported (NR) and not settled (NS) reserves

The First Insurance Co., Ltd. has an actuarial team that estimates NR/NS reserves based on previous claims and expenses incurred by the various types of insurance, using methods that conform with actuarial principles. The book value of claim reserves (presented as insurance liability) as of June 30, 2020 amounted to NT$2,378,124,000, of which NT$664,136,000 were NR/NS reserves. Because the amount was presented based on actuarial estimate, any change of assumption or any misjudgment may cause significant changes to profit and loss, and therefore has been listed as a key audit issue for the second quarter of 2020

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

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

Responsibilities of the management and governing body to the financial statements

Responsibilities of the management were to prepare and ensure fair presentation of financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Insurance Enterprises and the version of international financial reporting standards, International Accounting Standards 34 - “Interim Financial Reporting” and interpretations thereof approved and published by the Financial Supervisory Commission, and to exercise proper internal control practices that are relevant to the preparation of financial statements so that the financial statements are free of material misstatements caused by fraud or error.

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

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

Responsibilities of the auditor when auditing financial statements

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

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

Identifying and assessing risks of material misstatement due to fraud or error; designing and executing appropriate responsive measures for the identified risks; and obtaining adequate and appropriate audit evidence to support audit opinions. Fraud may involve conspiracy, forgery, intentional omission, untruthful declaration or breach of internal control, and our audit did not find any material misstatement where the risk of fraud is greater than the risk of error.
Developing the required level of understanding on relevant internal controls and designing audit procedures that are appropriate under the prevailing circumstances, but without providing opinion on the effectiveness of internal control system of The First Insurance Co., Ltd.
Assessing the appropriateness of accounting policies adopted by the management, and the rationality of accounting estimates and related disclosures made.
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Forming conclusions regarding the appropriateness of management’s decision to account for the business as a going concern, and whether there are doubts or uncertainties about the ability of The First Insurance Co., Ltd. to operate as a going concern, based on the audit evidence obtained. We are bound to remind financial statement users and make related disclosures if material uncertainties exist in regards to the abovementioned events or circumstances, and amend audit opinions when the disclosures are no longer appropriate. Our conclusions are based upon audit evidence obtained as of the audit report date. However, occurrences of future events or circumstances may still render The First Insurance Co., Ltd. no longer capable of operating as a going concern.
Assessing the overall presentation, structure and contents of the financial statements (including related footnotes), and whether certain transactions and events are presented appropriately in the financial statements.
We have communicated with the governing body about the scope, timing and significant
findings (including significant defects identified in the internal control) of our audit.

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

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

Deloitte Taiwan CPA: Alice Huang

CPA: Alice Huang

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

August 26, 2020

The First Insurance Co., Ltd.

Balance Sheet As of June 30, 2020, December 31, 2019, and June 30, 2019

(in NT$ 1,000)

Code	Assets	June 30,2020		December31,2	019	June 30,2019
		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 (Notes 12 and 38) Premiums receivable - net (Notes 12, 31 and 38) 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 38) 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 Liabilitiesand equity	$ 1,838,065 147,751 551,836 68,116 1,785,362 1,510,713 2,669,563 2,961,162 901,560 2,260,715 664,961 3,104 40,130 48,441 612,234 28,525 $ 16,092,238 $ 167 116,371 568,327 442,965 34,839 3,147 8,097,564 155,880 92,934 14,530 79,567 9,606,291 3,011,638 1,362,943 1,738,274 99,285 3,200,502 273,807 6,485,947 $ 16,092,238	11 1 4 1 11 9 17 18 6 14 4 - - - 4 - 100 - 1 4 3 - - 50 1 1 - - 60 19 8 11 1 20 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	$ 1,807,788 188,352 493,982 144,779 2,477,278 1,530,174 2,664,029 2,089,774 946,716 2,691,492 619,648 3,701 7,305 49,758 517,677 28,630 $ 16,261,083 $ 13,098 115,718 551,633 339,589 53,514 3,322 8,395,305 171,205 94,219 15,114 108,114 9,860,831 3,011,638 1,246,749 1,532,665 307,490 3,086,904 301,710 6,400,252 $ 16,261,083	11 1 3 1 15 10 16 13 6 17 4 - - - 3 - 100 - 1 3 2 - - 52 1 1 - 1 61 18 8 9 2 19 2 39 100
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 38) Commission payable (Note 38) Reinsurance accounts payable (Note 38) Other payables (Note 20) Current income tax liabilities (Note 4) Lease liabilities (Note 16) Insurance liabilities (Notes 4, 5, 21 and 38) 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 April 1 to June 30, 2020 and 2019, and from January 1 to June 30, 2020 and 2019

Unit: NTD thousands, except EPS which is in dollars

				April 1 to June	30,	2020		April 1 to June	30,	2019	January1 to June	January1 to June	30,	2020	January1 to June	January1 to June	30,	2019
Code				Amount		%		Amount		%		Amount		%		Amount		%
	Revenue
41110	Written premiums (Notes 31
	and 38)			$ 1,891,125		119		$ 1,788,390		145		$ 3,689,298		134		$ 3,686,871		123
41120	Reinsurance premiums (Note
	38)			91,087		5		98,260		8		198,840		7		201,295		7
41100	Premium revenues			1,982,212		124		1,886,650		153		3,888,138		141		3,888,166		130
51100	Less: Reinsurance expenses
	(Note 38)		(	540,136 )	(	34 )	(	477,976 )	(	39 )	(	999,809 )	(	36 )	(	1,049,403 )	(	35 )
51310	Less: Net change in unearned
	premium reserve		(	99,759)	(	6)	(	77,876)	(	6)	(	232,126)	(	9)	(	183,854)	(	6)
41130	Retained earned premiums
	(Note 38)			1,342,317		84		1,330,798		108		2,656,203		96		2,654,909		89
41300	Reinsurance commissions
	received (Note 38)			76,817		5		65,857		5		151,441		6		148,548		5
41400	Service fee			7,396		1		6,683		1		13,239		-		13,066		-
	Net	investment gains
41510		Interest income (Note 25)		24,539		1		32,197		3		47,852		2		53,011		2
41521		Gains on financial assets
		or liabilities at fair
		value through profit and
		loss		122,393		8	(	218,067 )	(	18 )	(	144,979 )	(	5 )		84,328		3
41527		Realized gain/loss on
		financial assets at fair
		value through other
		comprehensive income		13,050		1		-		-		13,050		-		-		-
41550		Gain (loss) on exchange -
		investment (Note 25)	(	11,246 )	(	1 )		2,866		-	(	6,630 )		-		6,074		-
41570		Gains (losses) on
		investment property
		(Note 25)		12,711		1		14,105		1		26,244		1		28,134		1
41585		Expected credit
		impairment loss and
		reversal gain on
		investment		2,187		-	(	2,174)		-		2,225		-	(	4,794)		-
41500		Total net investment
		gains		163,634		10	(	171,073 )	(	14 )	(	62,238 )	(	2 )		166,753		6
	Other operating revenues
41830		Gain on exchange -
		non-investment (Note
		25)	(	352 )		-		1,375		-		-		-		1,958		-
41890		Other operating revenues -
		Others		-		-	(	66)		-		-		-		175		-
41800		Total other operating
		income	(	352)		-		1,309		-		-		-		2,133		-
41000		Total operating revenues		1,589,812		100		1,233,574		100		2,758,645		100		2,985,409		100
	Operating Cost
	Retained claims and benefits
	(Note 38)
51200		Insurance claim and
		benefit payments		965,474		61		1,135,669		92		1,966,790		71		2,180,147		73
41200		Less: Claims recovered
		from reinsurers	(	238,016)	(	15)	(	340,896)	(	28)	(	501,575)	(	18)	(	675,358)	(	22)
51260		Total retained claims
		and benefits paid		727,458		46		794,773		64		1,465,215		53		1,504,789		51
	Net	change in other liabilities
	(Note 38)
51320		Net change in claim
		reserves	(	19,551 )	(	1 )	(	141,129 )	(	11 )	(	34,290 )	(	1 )	(	115,754 )	(	4 )
51340		Net change in special
		claim reserves		31,085		2		5,190		-		15,407		1		3,328		-
51350		Net change in premium
		deficiency reserves		4,337		-		9,494		1		4,337		-		9,494		1
51300		Total net change in
		other liabilities		15,871		1	(	126,445 )	(	10 )	(	14,546 )		-	(	102,932 )	(	3 )
51510	Commission expenses (Note
	38)			230,268		15		227,645		19		471,186		17		483,324		16

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			April 1 to June 30,2020	April 1 to June 30,2020	April 1 to June 30,2020		April 1 to June	April 1 to June	30,	2019	January1 to June	January1 to June	30,	2020	January1 to June 30,2019	January1 to June 30,2019	January1 to June 30,2019
Code				Amount	%			Amount		%		Amount		%		Amount	%
51600	Service charges (Note 38)		$	33,612	2		$	32,539		3	$	66,573		2	$	71,044	2
	Other operating costs
51810	Contribution to insurance
	stabilization fund (Note
	38)			3,786	-			3,577		-		7,385		-		7,376	-
51830	Interest expenses			13	-			22		-		17		-		22	-
51850	Loss on exchange -
	non-investment (Note
	25)			1,318	-			-		-		1,318		-		-	-
51890	Other operating costs -
	Others			89	-			-		-		203		-		-	-
51800	Total other operating
	costs			5,206	-			3,599		-		8,923		-		7,398	-
51000	Total operating costs			1,012,415	64			932,111		76		1,997,351		72		1,963,623	66
60000	Gross profit			577,397	36			301,463		24		761,294		28		1,021,786	34
	Operating expenses (Notes 25 and
	31)
58100	Selling expenses			315,518	20			310,824		25		628,932		23		609,214	20
58200	Administrative expenses			26,016	1			22,786		2		44,838		2		49,511	2
58300	Employees training expenses			449	-			747		-		1,080		-		1,603	-
58000	Total operating expenses			341,983	21			334,357		27		674,850		25		660,328	22
61000	TOTAL OPERATING INCOME			235,414	15	(		32,894)	(	3)		86,444		3		361,458	12
	Non-operating income and expenses
59920	Sundry income			283	-			-		-		694		-		-	-
59990	Other non-operating expenses
	(Note 16)	(		23)	-	(		18)		-	(	51)		-	(	36)	-
59900	Total other non-operating
	income and expenses			260	-	(		18)		-		643		-	(	36)	-
62000	Pre-tax profit from continuing
	operations			235,674	15	(		32,912 )	(	3 )		87,087		3		361,422	12
63000	Income tax expenses (Notes 4 and
	26)			19,562	1			37,797		3		43,321		1		56,918	2
66000	Current net income			216,112	14	(		70,709)	(	6)		43,766		2		304,504	10
	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			376,020	24			136,609		11	(	112,947 )	(	4 )		257,129	9
83200	Items likely to be reclassified
	into profit and loss
83290	Valuation gains/losses on
	debt instruments at fair
	value through other
	comprehensive income			10,310	-			11,006		1		32,984		1		17,279	-
83000	Other comprehensive
	income - current (net,
	after tax)			386,330	24			147,615		12	(	79,963)	(	3)		274,408	9
85000	Total comprehensive income -
	current		$	602,442	38		$	76,906		6	($	36,197)	(	1)	$	578,912	19
	Earnings per share (Note 27)
97500	Basic		$	0.72		(	$	0.23)			$	0.15			$	1.01
98500	Diluted		$	0.72		(	$	0.23)			$	0.15			$	1.01

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 From January 1 to June 30, 2020 and 2019

Code A1 Balance as of January 1, 2019 Appropriation and distribution of earnings: B1 Legal reserve B3 Special reserve B5 Cash dividend D1 Net income for January 1 to June 30, 2019 D3 Other comprehensive income for January 1 to June 30, 2019 D5 Total comprehensive income for January 1 to June 30, 2019 Z1 Balance as at June 30, 2019 A1 Balance as of January 1, 2020 Appropriation and distribution of earnings: B1 Legal reserve B3 Special reserve B5 Cash dividend D1 Net income for January 1 to June 30, 2020 D3 Other comprehensive income for January 1 to June 30, 2020 D5 Total comprehensive income for January 1 to June 30, 2020 Q1 Disposal of equity instruments at fair value through other comprehensive income (Note 8(1)) Z1 Balance as at June 30, 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 90,358 - ( 90,358 ) - 2,160 ( 2,160 ) - - ( 147,570 ) - - 304,504 - - - - - 304,504 $ 1,246,749 $ 1,532,665 $ 307,490 $ 1,246,749 $ 1,740,117 $ 405,734 116,194 - ( 116,194 ) - ( 1,843 ) 1,843 - - ( 289,117 ) - - 43,766 - - - - - 43,766 - - 53,253 $ 1,362,943 $ 1,738,274 $ 99,285	Retained earnings(Note 24) Legal reserve Special reserve Undistributed earnings $ 1,156,391 $ 1,530,505 $ 243,074 90,358 - ( 90,358 ) - 2,160 ( 2,160 ) - - ( 147,570 ) - - 304,504 - - - - - 304,504 $ 1,246,749 $ 1,532,665 $ 307,490 $ 1,246,749 $ 1,740,117 $ 405,734 116,194 - ( 116,194 ) - ( 1,843 ) 1,843 - - ( 289,117 ) - - 43,766 - - - - - 43,766 - - 53,253 $ 1,362,943 $ 1,738,274 $ 99,285	Other Equity Unrealized gains/losses on financial assets at fair value through other comprehensive income (Note 24) $ 27,302 - - - - 274,408 274,408 $ 301,710 $ 407,023 - - - - ( 79,963) ( 79,963) ( 53,253) $ 273,807	(in NT$ 1,000) Total equity
			Legal reserve $ 1,156,391 90,358 - - - - - $ 1,246,749 $ 1,246,749 116,194 - - - - - - $ 1,362,943	Special reserve $ 1,530,505 - 2,160 - - - - $ 1,532,665 $ 1,740,117 - ( 1,843 ) - - - - - $ 1,738,274
					( ( (	$ 5,968,910 - - ( 147,570 ) 304,504 274,408 578,912 $ 6,400,252 $ 6,811,261 - - ( 289,117 ) 43,766 ( 79,963) ( 36,197) - $ 6,485,947

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

From January 1 to June 30, 2020 and 2019

(in NT$ 1,000)

Code Cash flow from operating activities A10000 Pre-tax profit for the current period A20010 Income, expenses and losses A20100 Depreciation A20200 Amortizations A20900 Interest expenses A21200 Interest income A21300 Dividend income A21400 Net change of various reserves - current A21830 Expected credit impairment loss (reversal gain) on investment A24100 Unrealized gain (loss) on exchange A50000 Change in assets/liabilities related to operating activities A51110 Notes receivable A51120 Premiums receivable A51130 Other receivables A51140 Gains on financial assets or liabilities at fair value through profit and loss A51141 Financial assets at fair value through other comprehensive income A51145 Debt instrument investments measured at cost after amortization A51160 Other financial assets A51170 Reinsurance Contracts Assets A51190 Guarantee deposits paid A51990 Other assets A52120 Insurance claim and benefit payments payable A52140 Commission payable A52150 Reinsurance accounts payable A52160 Other payables A52200 Provision for employee benefits	January 1 to June 30,2020 $ 87,087 12,223 4,110 68 ( 47,852) ( 13,050) 185,814 ( 2,225) 1,636 ( 8,500) ( 273,309 ) 2,161 ( 160,129) 92,446 20,000 ( 6,410 ) 9,104 1,039 ( 3,345) 167 6,209 131,909 ( 24,840 ) ( 14,299 )	January 1 to June 30,2019
		$ 361,422 10,077 3,650 58 ( 53,011) - ( 191,793) 4,794 ( 666) ( 25,197) ( 98,536 ) 43,660 1,190,601 ( 1,110,429 ) ( 197,521 ) ( 89,352) 215,864 3,316 ( 7,079 ) 8,653 8,537 63,812 22,136 ( 6,679)

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Code A52240 Guarantee deposits received A52990 Other liabilities A33000 Cash inflow from operating activities A33100 Interests received A33200 Dividends received A33300 Interests paid A33500 Income tax paid AAAA Net cash inflow from operating activities Cash flow from investing activities B02700 Acquisition of property, plant and equipment B04500 Acquisition of intangible assets BBBB Cash outflow from investing activities CCCC 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 June 30,2020 ($ 584) 2,727 2,157 45,644 13,050 ( 68) ( 53,670) 7,113 ( 14,242) ( 12,192) ( 26,434) ( 992) ( 1,636) ( 21,949 ) 1,860,014 $ 1,838,065	January 1 to June 30,2019
		$ - 16,200 172,517 35,522 - ( 58) ( 25,366) 182,615 ( 1,347 ) - ( 1,347) ( 1,044) 666 180,890 1,626,898 $ 1,807,788

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

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

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The First Insurance Co., Ltd. Notes to financial statements From January 1 to June 30, 2020 and 2019

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

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). 2. Financial statement approval date and procedures

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

Adoption of new and amended standards and interpretations

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

Adoption of FSC-approved 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

New/Amended/Modified Standards and Effective date of IASB Interpretations announcement (Note 1) Saturday, January 1, 2022 “Improvements for years 2018-2020” (Note 2) Amendments to IFRS 3 regarding “Updating a Saturday, January 1, 2022 Reference to the Conceptual Framework” (Note 3) Amendments to IFRS 4 regarding “Extension of the Effective from the Temporary Exemption from Applying IFRS 9” announcement date Amendments to IFRS 10 and IAS 28 - “Sale or Undetermined Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17 - “Insurance Contracts” Sunday, January 1, 2023 Amendments to IFRS 17 Sunday, January 1, 2023 Amendments to IAS 1 - “Classification of Liabilities Sunday, January 1, 2023 as Current or Non-current” Amendments to IAS 16 - “Property, Plant and Saturday, January 1, 2022 Equipment: Proceeds before Intended Use” (Note 4) Amendments to IAS 37 - “Onerous Contracts - Cost Saturday, January 1, 2022 of Fulfilling a Contract” (Note 5)

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Note 1: Unless otherwise specified, all new/amended/modified standards and interpretations above shall take effect from the financial year that begins after the specified date.
Note 2: The IFRS 9 amendment will apply to exchange or modification of financial liability that occur in financial years starting on and after January 1, 2022. Amendments to IAS 41 - “Agriculture” will apply to fair value assessments for financial years starting on and after January 1, 2022. Amendments to IFRS 1 - “First-time Adoption of IFRSs” will apply retrospectively in financial years starting on and after January 1, 2022.
Note 3: These amendments are applicable to business combinations that take place in financial years starting on and after January 1, 2022.
Note 4: These amendments will apply to property, plant and equipment that reach the management’s intended location and state on and after January 1, 2021.
Note 5: These amendments will apply to all contracts with outstanding obligations as of January 1, 2022.

IFRS 17 - “Insurance Contracts”

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

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

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

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

Recognition

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

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

Measurement at initial recognition

On initial recognition, the Company shall measure a group of insurance contracts at the total of fulfillment cash flows and contractual service margin. The fulfillment cash flows (“FCF”) comprise estimates of future cash flows, an adjustment to reflect the time value of money (“TVM”) and the financial risks 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

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initial recognition of a group of insurance contracts at an amount that results in no income or expenses arising from: (a) The initial recognition of an amount for the FCF; (b) The de-recognition at that date of any asset or liability recognized for insurance acquisition cash flows; and (c) Any cash flows arising from the contracts in the group at that date.

Subsequent measurement

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

Onerous contracts

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

Premium allocation approach

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

(a) The Company reasonably expects the size of liability for remaining coverage measured from PAA to be a reasonable approximation of the general model, or (b) The coverage period of each contract in the group is one year or less. Where, at the inception of the group, the Company expects significant variances in the FCF before a claim is incurred that would affect the measurement of liabilities for remaining coverage, such contracts are not eligible for condition (a).

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

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

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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.

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. 2. 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.

Insurance liabilities

The Company provides insurance liabilities for various insurance contracts according to “Regulations Governing Reserve Provisioning by

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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

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.

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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

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.

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

The 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

Cash
Petty cash and cash on hand Check and current deposit	June 30,2020		December 31,2019		June 30,2019
		$ 827 1,837,238 $ 1,838,065		$ 357 1,859,657 $ 1,860,014		$ 973 1,806,815 $ 1,807,788

Foreign currency deposits are placed with domestic banks. As of June 30, 2020, December 31, 2019 and June 30, 2019, the Company held NT$2,669,563,000, NT$2,663,153,000 and NT$2,664,029,000 of time deposit, respectively, that had initial

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maturity of more than 3 months and were presented as financial assets (refer to Note 11).

	11).	11).	11).	11).
7. 8. (I)	Financial assets at fair value through profit and loss June 30,2020 December 31,2019 Mandatory at fair value throughout profit and loss Non-derivative financial assets - TWSE/TPEx listed shares $ 503,755 $ 735,535 - Beneficiary certificates 960,378 434,142 - Securitized beneficiary certificates 269,686 424,851 - Bank debentures 51,543 50,565 Subtotal $ 1,785,362 $ 1,645,093 Financial assets at fair value through other comprehensive income June 30,2020 December 31,2019 Investment in equity instruments $ 2,471,046 $ 2,676,438 Investment in debt instruments 490,116 509,305 $ 2,961,162 $ 3,185,743 Investment in equity instruments June 30,2020 December 31,2019 Domestic investments Public-listed shares $ 1,604,255 $ 1,730,675 Unlisted shares 866,791 945,763 $ 2,471,046 $ 2,676,438				June 30,2019
					$ 1,230,423 732,234 463,092 51,529 $ 2,477,278 June 30,2019
	June 30,2020 Investment in equity instruments $ 2,471,046 Investment in debt instruments 490,116 $ 2,961,162 Investment in equity instruments June 30,2020 Domestic investments Public-listed shares $ 1,604,255 Unlisted shares 866,791 $ 2,471,046	June 30,2020
					$ 1,715,447 374,327 $ 2,089,774 June 30,2019 $ 810,190 905,257 $ 1,715,447
			$ 1,604,255 866,791 $ 2,471,046	$ 1,730,675 945,763 $ 2,676,438		$ 810,190 905,257 $ 1,715,447

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 June 30, 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 losses on financial assets at fair value through other comprehensive income previously presented as other equity item were realized and charged directly to retained earnings in accordance with IFRS 9.

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(2) Investment in debt instruments

June 30, 2020 December 31, 2019 June 30, 2019 Domestic investments Government bonds $ 1,058,393 $ 1,027,166 $ 846,073 Less: Amount placed as guarantee deposit ( 568,277 ) ( 517,861 ) ( 471,746 ) $ 490,116 $ 509,305 $ 374,327

Information on government bond investments as at the balance sheet date:

Face value of investment Coupon interest rate Average maturity	June 30,2020	December31,2019	June 30,2019 $ 759,000 1.125%~5.000% 7.42 years
	$ 909,000 1.125%~5.000% 7.59 years	$ 909,000 1.125%~5.000% 8.09 years

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

Please refer to Note 18 for the amount of government bonds placed as guarantee bond for insurance business as of June 30, 2020, December 31, 2019, and June 30, 2019.

Financial assets carried at cost after amortization

Domestic investments Bank debenture (1) Corporate bond (2) Subtotal Less: loss provisions	June 30,2020 $ 1,395,312 130,000 1,525,312 ( 14,599) $ 1,510,713	December 31,2019	December 31,2019	June 30,2019	June 30,2019
	(	(	$ 1,516,154 30,000 1,546,154 16,821) $ 1,529,333	(	$ 1,517,000 30,000 1,547,000 16,826) $ 1,530,174

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

Domestic investments Face value of investment Effective interest rate Average maturity	June 30,2020	December31,2019 $ 1,510,000 1.550%~3.000% 3.82 years	June 30,2019
	$ 1,390,000 1.550%~2.600% 3.58 years		$ 1,510,000 1.550%~3.000% 4.33 years

(2) In November 2016 and June 2020, the Company purchased NT$30,000,000 and NT$100,000,000 of cumulative subordinated corporate bonds issued by Mercuries Life Insurance and CTBC Financial Holding at face value; interest rates for the two issues were 3.7% and 1.05%, respectively.

(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:

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June 30, 2020

June 30, 2020
Cost Loss provisions Cost after amortization Fair value adjustment December 31, 2019 Cost Loss provisions Cost after amortization Fair value adjustment June 30, 2019 Cost Loss provisions Cost after amortization Fair value adjustment	At fair value through other comprehensive income $ 986,778 ( 255) 986,523 71,870 $ 1,058,393 At fair value through other comprehensive income $ 988,541 ( 258) 988,283 38,883 $ 1,027,166 At fair value through other comprehensive income $ 812,574 ( 212) 812,362 33,711 $ 846,073		At cost after amortization $ 1,525,312 14,599) $ 1,510,713 At cost after amortization $ 1,546,154 16,821) $ 1,529,333 At cost after amortization $ 1,547,000 16,826) $ 1,530,174		Total
		(		(	$ 2,512,090 14,854) 2,497,236 71,870 $ 2,569,106 Total
		(		(	$ 2,534,695 17,079) 2,517,616 38,883 $ 2,556,499 Total
	(	(		(	$ 2,359,574 17,038) 2,342,536 33,711 $ 2,376,247

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

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June 30,2020	June 30,2020	December 31,2019	December 31,2019	June 30,2019 $ 2,084,000 580,029 $ 2,664,029 0.13%~1.04% 2.80%~3.70% June 30,2019	June 30,2019 $ 2,084,000 580,029 $ 2,664,029 0.13%~1.04% 2.80%~3.70% June 30,2019
$ 2,074,000 595,563 $ 2,669,563 0.10%~1.04% 0.98%~2.15% June 30,2020		$ 2,084,000 579,153 $ 2,663,153 0.13%~1.04% 2.10%~3.20% December 31,2019

( ( ( (	$ 151,042 500 3,791) $ 147,751 $ 591,339 39,503) $ 551,836 $ 19,860 44,205 6,600 2,549) $ 68,116 $ 153,932 803) $ 153,129	( ( ( (	$ 140,767 2,057 3,573) $ 139,251 $ 318,833 40,306) $ 278,527 $ - 39,395 6,441 229) $ 45,607 $ 167,092 1,010) $ 166,082	( ( ( (	$ 192,972 213 4,833) $ 188,352 $ 533,392 39,410) $ 493,982 $ 89,717 48,826 6,963 727) $ 144,779 $ 152,247 1,457) $ 150,790

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(Continued from previous page)

June 30, 2020 December 31, 2019 June 30, 2019

Reinsurance accounts

receivable At cost after amortization Total book value Less: loss provisions (	$ 253,263 2,061) ( $ 251,202	$ 219,176 3,589) ( $ 215,587	$ 368,479 2,280) $ 366,199

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

(2) Notes and premiums receivable

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

default rate. otes receivable
Not yet matured/redeemed/ collected Returned notes Total	June 30,2020		December 31,2019		June 30,2019
		$ 151,460 82 $ 151,542		$ 142,818 6 $ 142,824		$ 193,166 19 $ 193,185

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Premiums receivable

emiums receivable
0~90 days 91 days and above Total	June 30,2020 $ 501,056 90,283 $ 591,339	December 31,2019 $ 256,064 62,769 $ 318,833	June 30,2019
				$ 482,232 51,160 $ 533,392

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	June 30,2020		December 31,2019 $ 45,836 - $ 45,836		June 30,2019
		$ 67,497 3,168 $ 70,665		$ 45,836 - $ 45,836		$ 145,506 - $ 145,506

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	June 30,2020	June 30,2020	December 31,2019 $ 385,319 949 $ 386,268	June 30,2019	June 30,2019
		$ 403,756 3,439 $ 407,195			$ 499,979 20,747 $ 520,726

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

(3) Change in loss provisions: June 30, 2020 Notes receivable

bookkeeping date. Change in loss provisions: June 30, 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/redeem ed/collected 2.45%~50% $ 151,460 ( 3,709) $ 147,751 0~90 days 0.5%~1% $ 501,056 ( 2,505) $ 498,551	Returned notes 100% $ 82 ( 82) $ - 91 days and above 2%~100% $ 90,283 ( 36,998) $ 53,285		Total
		(	(	$ 151,542 3,791) $ 147,751 Total
	(	(	(	$ 591,339 39,503) $ 551,836

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Other receivables
			91	days and
	0~90 days			above		Total
Loss ratio		0.5%	2%~100%
Total book value	$	67,497	$	3,168	$	70,665
Loss provisions	(	338)	(	2,211)	(	2,549)
Cost after amortization	$	67,159	$	957	$	68,116
Claims recoverable from	reinsurers and reinsurance accounts receivable
			271 days and
	0~270 days			above		Total
Loss ratio		0.6%	2%~100%
Claims recoverable from
reinsurers	$	153,932	$	-	$	153,932
Reinsurance accounts
receivable		249,824		3,439		253,263
Loss provisions	(	2,427)	(	437)	(	2,864)
	$	401,329	$	3,002	$	404,331
December 31, 2019
Notes receivable
		Not yet
	matured/redeem
	ed/collected		Returned notes			Total
Loss ratio	2.5%~50%			100%
Total book value	$	142,818	$	6	$	142,824
Loss provisions	(	3,567)	(	6)	(	3,573)
Cost after amortization	$	139,251	$	-	$	139,251
Premiums receivable
			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

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Claims recoverable from reinsurers and reinsurance accounts receivable

0~270 days 271 days and above Total Loss ratio 0.5%~1.5% 2%~100% Claims recoverable from reinsurers $ 167,092 $ - $ 167,092 Reinsurance accounts receivable 218,227 949 219,176 Loss provisions ( 4,485) ( 114) ( 4,599) Cost after amortization $ 380,834 $ 835 $ 381,669 June 30, 2019 Notes receivable Not yet matured/redeem ed/collected Returned notes Total Loss ratio 2.49%~50% 100% Total book value $ 193,166 $ 19 $ 193,185 Loss provisions ( 4,814) ( 19) ( 4,833) Cost after amortization $ 188,352 $ - $ 188,352 Premiums receivable 0~90 days 91 days and above Total Loss ratio 0.5% 2%~100% Total book value $ 482,232 $ 51,160 $ 533,392 Loss provisions ( 2,411) ( 36,999) ( 39,410) Cost after amortization $ 479,821 $ 14,161 $ 493,982 Other receivables 0~90 days 91 days and above Total Loss ratio 0.5% 2%~100% Total book value $ 145,506 $ - $ 145,506 Loss provisions ( 727) - ( 727) Cost after amortization $ 144,779 $ - $ 144,779 Claims recoverable from reinsurers and reinsurance accounts receivable 0~270 days 271 days and above Total Loss ratio 0.6% 2%~100% Claims recoverable from reinsurers $ 152,247 $ - $ 152,247 Reinsurance accounts receivable 347,732 20,747 368,479 Loss provisions ( 3,068) ( 669) ( 3,737) $ 496,911 $ 20,078 $ 516,989	0~270 days 271 days and above Total Loss ratio 0.5%~1.5% 2%~100% Claims recoverable from reinsurers $ 167,092 $ - $ 167,092 Reinsurance accounts receivable 218,227 949 219,176 Loss provisions ( 4,485) ( 114) ( 4,599) Cost after amortization $ 380,834 $ 835 $ 381,669 June 30, 2019 Notes receivable Not yet matured/redeem ed/collected Returned notes Total Loss ratio 2.49%~50% 100% Total book value $ 193,166 $ 19 $ 193,185 Loss provisions ( 4,814) ( 19) ( 4,833) Cost after amortization $ 188,352 $ - $ 188,352 Premiums receivable 0~90 days 91 days and above Total Loss ratio 0.5% 2%~100% Total book value $ 482,232 $ 51,160 $ 533,392 Loss provisions ( 2,411) ( 36,999) ( 39,410) Cost after amortization $ 479,821 $ 14,161 $ 493,982 Other receivables 0~90 days 91 days and above Total Loss ratio 0.5% 2%~100% Total book value $ 145,506 $ - $ 145,506 Loss provisions ( 727) - ( 727) Cost after amortization $ 144,779 $ - $ 144,779 Claims recoverable from reinsurers and reinsurance accounts receivable 0~270 days 271 days and above Total Loss ratio 0.6% 2%~100% Claims recoverable from reinsurers $ 152,247 $ - $ 152,247 Reinsurance accounts receivable 347,732 20,747 368,479 Loss provisions ( 3,068) ( 669) ( 3,737) $ 496,911 $ 20,078 $ 516,989	0~270 days 271 days and above Total Loss ratio 0.5%~1.5% 2%~100% Claims recoverable from reinsurers $ 167,092 $ - $ 167,092 Reinsurance accounts receivable 218,227 949 219,176 Loss provisions ( 4,485) ( 114) ( 4,599) Cost after amortization $ 380,834 $ 835 $ 381,669 June 30, 2019 Notes receivable Not yet matured/redeem ed/collected Returned notes Total Loss ratio 2.49%~50% 100% Total book value $ 193,166 $ 19 $ 193,185 Loss provisions ( 4,814) ( 19) ( 4,833) Cost after amortization $ 188,352 $ - $ 188,352 Premiums receivable 0~90 days 91 days and above Total Loss ratio 0.5% 2%~100% Total book value $ 482,232 $ 51,160 $ 533,392 Loss provisions ( 2,411) ( 36,999) ( 39,410) Cost after amortization $ 479,821 $ 14,161 $ 493,982 Other receivables 0~90 days 91 days and above Total Loss ratio 0.5% 2%~100% Total book value $ 145,506 $ - $ 145,506 Loss provisions ( 727) - ( 727) Cost after amortization $ 144,779 $ - $ 144,779 Claims recoverable from reinsurers and reinsurance accounts receivable 0~270 days 271 days and above Total Loss ratio 0.6% 2%~100% Claims recoverable from reinsurers $ 152,247 $ - $ 152,247 Reinsurance accounts receivable 347,732 20,747 368,479 Loss provisions ( 3,068) ( 669) ( 3,737) $ 496,911 $ 20,078 $ 516,989	0~270 days 271 days and above Total Loss ratio 0.5%~1.5% 2%~100% Claims recoverable from reinsurers $ 167,092 $ - $ 167,092 Reinsurance accounts receivable 218,227 949 219,176 Loss provisions ( 4,485) ( 114) ( 4,599) Cost after amortization $ 380,834 $ 835 $ 381,669 June 30, 2019 Notes receivable Not yet matured/redeem ed/collected Returned notes Total Loss ratio 2.49%~50% 100% Total book value $ 193,166 $ 19 $ 193,185 Loss provisions ( 4,814) ( 19) ( 4,833) Cost after amortization $ 188,352 $ - $ 188,352 Premiums receivable 0~90 days 91 days and above Total Loss ratio 0.5% 2%~100% Total book value $ 482,232 $ 51,160 $ 533,392 Loss provisions ( 2,411) ( 36,999) ( 39,410) Cost after amortization $ 479,821 $ 14,161 $ 493,982 Other receivables 0~90 days 91 days and above Total Loss ratio 0.5% 2%~100% Total book value $ 145,506 $ - $ 145,506 Loss provisions ( 727) - ( 727) Cost after amortization $ 144,779 $ - $ 144,779 Claims recoverable from reinsurers and reinsurance accounts receivable 0~270 days 271 days and above Total Loss ratio 0.6% 2%~100% Claims recoverable from reinsurers $ 152,247 $ - $ 152,247 Reinsurance accounts receivable 347,732 20,747 368,479 Loss provisions ( 3,068) ( 669) ( 3,737) $ 496,911 $ 20,078 $ 516,989		Total
				(	$ 167,092 219,176 4,599) $ 381,669 Total
				(	$ 193,185 4,833) $ 188,352 Total
				(	$ 533,392 39,410) $ 493,982 Total
Loss ratio Claims recoverable from reinsurers Reinsurance accounts receivable Loss provisions		0~270 days 0.6% $ 152,247 347,732 3,068) $ 496,911	271 days and above 2%~100% $ - 20,747 ( 669) $ 20,078
	(		(	(	$ 152,247 368,479 3,737) $ 516,989

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Change in loss provisions by account category:

January 1 to June 30, 2020

		January1 to June 30,2020	January1 to June 30,2020	January1 to June 30,2020
Opening balance Plus: Losses/expenses provided in the current period Less: losses/expenses reversed in the current period Closing balance Opening balance Plus: Losses/expenses provided in the current period Less: losses/expenses reversed in the current period Closing balance	Notes receivable $ 3,573 218 - $ 3,791	Premiums receivable Other receivables Claims recoverable from reinsurers $ 40,306 $ 229 $ 1,010 1,225 2,320 - ( 2,028) - ( 207) $ 39,503 $ 2,549 $ 803 January1 to June 30,2019			Reinsuranc e accounts receivable
		(			(	$ 3,589 323 1,851) $ 2,061
	Notes receivable $ 4,186 767 ( 120) $ 4,833	Premiums receivable $ 40,516 432 ( 1,538) $ 39,410	Other receivables $ 853 - ( 126) $ 727	Claims recoverable from reinsurers $ 1,803 - ( 346) $ 1,457	Reinsuranc e accounts receivable
	(	(	(	(		$ 1,349 931 - $ 2,280

Explanation to overdue receivables and loss provisions:

Balances of notes receivable, premiums receivable and other receivables as June 30, 2020 included NT$82,000, NT$90,283,000 and NT$3,168,000 that were overdue, for which the Company had made loss provisions totaling NT$82,000, NT$36,998,000 and NT$2,211,000, respectively. Reinsurance accounts receivable has been assessed for impairment and unrecoverable amounts. The balance includes NT$3,439,000 of overdue receivables, for which a loss provision of NT$437,000 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 at June 30, 2019 included NT$19,000 and NT$51,160,000 that were overdue, for which the Company had made loss provisions totaling NT$19,000 and NT$36,999,000, respectively. Reinsurance accounts receivable has been assessed for impairment and unrecoverable amounts. The balance includes NT$20,747,000 of overdue receivables, for which a loss provision of NT$669,000 has been made.
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13. Investment property

Investment property
Cost Balance as of January 1, 2020 Reclassified to self-occupied asset Balance as at June 30, 2020 Increase from revaluation Balance as of January 1, 2020 Balance as at June 30, 2020 Accumulated depreciation Balance as of January 1, 2020 Depreciation Reclassified to self-occupied asset Balance as at June 30, 2020 Cumulative impairment Balance as of January 1, 2020 Balance as at June 30, 2020 Net balance as of June 30, 2020 Net balance as of December 31, 2019 and January 1, 2020 Cost Balance as of January 1, 2019 Balance as at June 30, 2019 Increase from revaluation Balance as of January 1, 2019 Balance as at June 30, 2019 Accumulated depreciation Balance as of January 1, 2019 Depreciation Balance as at June 30, 2019 Cumulative impairment Balance as of January 1, 2019 Balance as at June 30, 2019 Net balance as of June 30, 2019		January	1 to June 30,2020
		Land $ 609,119 22,659) ( 586,460 163,480 163,480 - - - ( - 15,526 15,526 $ 734,414 $ 757,073 January	Buildings $ 364,598 22,660) ( 341,938 - - 172,251 3,247 6,878) ( 168,620 6,172 6,172 $ 167,146 $ 186,175 1 to June 30,2019	Total
	(			$ 973,717 45,319) 928,398 163,480 163,480 172,251 3,247 6,878) 168,620 21,698 21,698 $ 901,560 $ 943,248
		Land $ 609,119 609,119 163,480 163,480 - - - 15,526 15,526 $ 757,073	Buildings $ 364,598 364,598 - - 165,313 3,470 168,783 6,172 6,172 $ 189,643	Total
				$ 973,717 973,717 163,480 163,480 165,313 3,470 168,783 21,698 21,698 $ 946,716

Some investment properties became self-occupied between January 1 and June 30, 2020, and were reclassified to property, plant and equipment as a result.

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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 June 30, 2020, December 31, 2019 and June 30, 2019 amounted to NT$2,670,760,000, NT$2,747,898,000 and

NT$2,605,400,000, 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.

Sum of lease payments collectible on investment properties leased out through operating lease as of June 30, 2020, December 31, 2019 and June 30, 2019 is as follows:

Year 1 Year 2 Year 3 Year 4 Year 5	June 30,2020 $ 60,115 48,214 35,231 8,544 1,327 $ 153,431	December 31,2019 $ 68,795 55,960 42,345 20,347 4,333 $ 191,780	June 30,2019	June 30,2019
				$ 49,796 29,131 16,632 8,834 4,034 $ 108,427

The outbreak of COVID-19 has severely impacted economic activities in 2020, and the Company agreed to reduce rent by a total of NT$974,000 between April and June 2020 on some leases. Based on assessment, the above reduction does not pose any material impact on the Company’s ability to operate as a going concern, give rise to any additional asset impairment, or raise financing risk.

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14. Reinsurance contract assets

. Reinsurance contract assets
(1) Details: Claims recoverable from reinsurers Reinsurance accounts receivable Reinsurance reserve assets	June 30,2020 $ 153,129 251,202 1,856,384 $ 2,260,715	December 31,2019 $ 166,082 215,587 1,888,150 $ 2,269,819	June 30,2019
				$ 150,790 366,199 2,174,503 $ 2,691,492

With regards to ceded insurance as of June 30, 2020, the Company was required to disclose ceded claim reserve for reported and unpaid liability totaling NT$28,000 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$34,000 and ceded claim reserve for reported and unpaid liability totaling NT$6,000.

In addition, the Company was required to make provisions for substandard reinsurance reserve of NT$68,000 (including NT$34,000 of claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months, and NT$34,000 of ceded claim reserve for reported and unpaid liability) when preparing regulatory reports; however, this NT$68,000 of additional reserve and liability does not affect the Company’s financial statements.

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.

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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 insurance as of June 30, 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$700,000 and ceded claim reserve for reported and unpaid liability totaling NT$21,000.

In addition, the Company was required to make provisions for substandard reinsurance reserve of NT$987,000 (including NT$700,000 of claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months, and NT$287,000 of ceded claim reserve for reported and unpaid liability) when preparing regulatory reports; however, this NT$987,000 of additional reserve and liability does not affect the Company’s financial statements.

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

Ceded unearned premium reserve Ceded claim reserve Deficiency reserve for ceded coverage	June 30,2020 $ 1,122,265 724,315 9,804 $ 1,856,384	December 31,2019 $ 1,077,452 803,134 7,564 $ 1,888,150	June 30,2019	June 30,2019
				$ 1,267,295 898,208 9,000 $ 2,174,503

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

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15. Property, plant, and equipment

	January1 to June 30,2020	January1 to June 30,2020
Proprietary land $ 308,401 - - 22,659 331,060 123,786 123,786 - - - - - 4,774 4,774 $ 450,072 $ 427,413			Total
			$ 697,991 14,242 ( 352) 45,319 757,200 123,786 123,786 195,067 7,760 6,878 ( 352) 209,353 6,672 6,672 $ 664,961 $ 620,038
Proprietary land $ 308,401 - 308,401 123,786 123,786	Buildings $ 337,142 139 337,281 - -	Sundry equipment $ 47,133 1,208 48,341 - -		Total
				$ 692,676 1,347 694,023 123,786 123,786

(Continued next page)

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(Continued from previous page)

January1 to June 30,2019 Proprietary land Buildings Sundry equipment Total Accumulated depreciation Balance as of January 1, 2019 $ - $ 154,126 $ 31,421 $ 185,547 Depreciation - 3,330 2,612 5,942 Balance as at June 30, 2019 - 157,456 34,033 191,489 Cumulative impairment Balance as of January 1, 2019 4,774 1,898 - 6,672 Balance as at June 30, 2019 4,774 1,898 - 6,672 Net balance as of June 30, 2019 $ 427,413 $ 177,927 $ 14,308 $ 619,648 Please refer to Note 13 for explanation on reclassification from investment property. Depreciation expenses are provided on property, plant and equipment on a straight-line basis over the number of useful years shown as follows: Buildings Main structure - Confined masonry 35 years - Steel-reinforced concrete 50 to 62 years Renovation of exterior wall 41 years Renovation of interior 8 to 19 years Other constructions 10 to 25 years Others 15 to 30 years Sundry equipment 3 to 15 years				January1 to June 30,2019
						Total

Property, plant, and equipment for periods from January 1 to June 30, 2020 and 2019 exclude capitalized interest.

The Company’s property, plant, and equipment showed no sign of impairment as of June 30, 2020, December 31, 2019 and June 30, 2019.

Lease arrangements
(1) Right-of-use asset

ase arrangements Right-of-use asset
Book value of right-of-use assets Buildings Transportation equipment	June 30,2020 $ 2,555 549 $ 3,104	December 31, 2019 $ 3,452 868 $ 4,320	June 30,2019
				$ 2,514 1,187 $ 3,701

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April 1 to June 30,2020 April 1 to June 30,2019 January 1 to June 30,2020 January 1 to June 30,2019 Additional right-of-use asset $ - $ 1,659 Depreciation expense on right-of-use assets Buildings $ 450 $ 196 $ 898 $ 346 Transportation equipment 159 160 318 319 $ 609 $ 356 $ 1,216 $ 665 (2) Lease liability June 30,2020 December 31, 2019 June 30,2019 Book value of lease liabilities $ 3,147 $ 4,139 $ 3,322 Discount rate range for lease liabilities: June 30,2020 December 31, 2019 June 30,2019 Buildings 2.65% 2.65% 2.65% Transportation equipment 2.65% 2.65% 2.65% April 1 to June 30,2020 April 1 to June 30,2019 January 1 to June 30,2020 January 1 to June 30,2019 Interest expense on lease liabilities Buildings $ 18 $ 10 $ 41 $ 18 Transportation equipment 5 8 10 18 $ 23 $ 18 $ 51 $ 36 (3) Other lease information April 1 to June 30,2020 April 1 to June 30,2019 January 1 to June 30,2020 January 1 to June 30,2019 Short-term rent expense $ 962 $ 1,136 $ 1,864 $ 2,307 Total cash (outflow) from lease ($ 2,907) ($ 3,387)	January 1 to June 30,2019	January 1 to June 30,2019
$ 3,322 June 30,2019
	2.65% 2.65% January 1 to June 30,2019
	$ 18 18 $ 36 January 1 to June 30,2019
	(	$ 2,307 $ 3,387)

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.

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17. Intangible assets

Intangible assets
Cost Opening balance Additions Disposals Reclassification from prepayment for equipment purchase Closing balance Accumulated depreciation Opening balance Amortization expenses Disposals Closing balance Closing net balance	January 1 to June 30,2020 $ 27,805 12,192 - 24,845 64,842 20,602 4,110 - 24,712 $ 40,130	January 1 to June 30,2019
		$ 28,379 - ( 3,593) - 24,786 17,424 3,650 ( 3,593) 17,481 $ 7,305

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 June 30, 2020, December 31, 2019 and June 30, 2019.

18. Guarantee deposits paid

Guarantee deposits paid
Guarantee deposit for insurance business - Government bonds Others	June 30,2020 $ 568,277 43,957 $ 612,234	December 31, 2019 $ 517,861 44,997 $ 562,858	June 30,2019
				$ 471,746 45,931 $ 517,677

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.

19. Other assets - others

Other assets-others
Prepayments Prepaid equipment purchase Others	June 30,2020 $ 10,044 4,228 14,253 $ 28,525	December 31, 2019 $ 6,371 29,073 14,581 $ 50,025	June 30,2019
				$ 8,692 12,704 7,234 $ 28,630

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20. 21.	Other payables Cash dividends payable Salary and bonus payable Pension payable Leave encashment payable Share settlements payable Others Insurance liabilities Unearned premium reserve Claim reserve Special reserve Deficiency reserve	June 30,2020 $ 289,117 49,807 1,680 4,515 - 97,846 $ 442,965 June 30,2020 $ 4,003,598 2,378,124 1,684,972 30,870 $ 8,097,564	December 31,2019 $ - 84,563 1,670 415 16,147 75,893 $ 178,688 December 31,2019 $ 3,726,659 2,491,233 1,669,565 24,293 $ 7,911,750	June 30,2019	June 30,2019
				$ 147,570 49,791 1,670 3,786 56,450 80,322 $ 339,589 June 30,2019
					$ 4,091,741 2,583,657 1,678,928 40,979 $ 8,395,305

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

22. Retirement benefit plan

Defined benefit plan expenses for periods from April 1 to June 30, 2020 and 2019, and from January 1 to June 30, 2020 and 2019 were calculated proportionally based on pension costs determined as of December 31, 2019 and 2018; the above amounts were reported at NT$2,363,000, NT$2,668,000, NT$4,726,000 and NT$5,336,000, respectively.

23. Other liabilities - others

23.	respectively. Other liabilities-others
24. (1)	Amount collected on behalf Amount received in advance Equity Capital, fully paid Retained Earnings Other Equity Share capital Common shares Authorized shares (thousands) Authorized capital Shares issued and fully paid up (thousands) Issued share capital	June 30,2020 $ 75,341 4,226 $ 79,567 June 30,2020 $ 3,011,638 3,200,502 273,807 $ 6,485,947 June 30,2020 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	June 30,2019
				$ 104,143 3,971 $ 108,114 June 30,2019
				$ 3,011,638 3,086,904 301,710 $ 6,400,252 June 30,2019
					301,163.8 $ 3,011,638 301,163.8 $ 3,011,638

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

(2) Retained earnings and dividend policy

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

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

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

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

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

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

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 June 30, 2020 were estimated at NT$96,020,000.

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

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

Special reserve	June 30,2020 $ 51,849	December 31, 2019 $ 51,849	June 30,2019	June 30,2019
				$ 51,849

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

This special reserve can be reversed proportionally back into retained earnings and distributed to shareholders when the underlying assets are used, disposed or reclassified on a later date. Special reserves provided during first-time adoption of IFRSs can be used to offset losses in subsequent years. If 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 June 30, 2020 and 2019:

2019:
January 1 to June 30, 2020 Opening balance Current provisions Closing balance January 1 to June 30, 2019 Opening balance Current provisions Closing balance	Special reserve $1,681,701 - $1,681,701 $1,474,249 - $1,474,249		Financial technology $ 6,567 1,843) $ 4,724 $ 4,407 2,160 $ 6,567	Provision for first-time adoption of IFRSs $ 51,849 - $ 51,849 $ 51,849 - $ 51,849		Total
		(			(	$ 1,740,117 1,843) $1,738,274 $1,530,505 2,160 $1,532,665

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(4) Other equity items

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

	income	income	income	income	income	income
25. (1) (2)	Opening balance Generated in current period Unrealized gains Debt instrument Equity instrument Transfer of cumulative gains/losses to retained earnings following disposal of equity instrument Closing balance Net income from continuing operations Interest income April 1 to June 30,2020 Bank deposit $ 6,607 Financial Assets at Fair Value through Profit or Loss 6,159 Debt instruments at fair value through other comprehensive income 3,026 Financial assets carried at cost after amortization 7,856 Others 891 $ 24,539 Employee benefit expenses						January 1 to June 30,2020 January 1 to June 30,2019 $407,023 $ 27,302 32,984 17,279 ( 112,947) 257,129 ( 53,253) - $273,807 $301,710 April 1 to June 30,2019 January 1 to June 30,2020 January 1 to June 30,2019 $ 8,461 $ 14,123 $ 15,907 10,874 9,638 12,539 2,681 6,051 4,584 8,962 15,929 17,542 1,219 2,111 2,439 $ 32,197 $ 47,852 $ 53,011				January 1 to June 30,2019
													$ 27,302 17,279 257,129 - $301,710 January 1 to June 30,2019
										$ 14,123 9,638 6,051 15,929 2,111 $ 47,852				$ 15,907 12,539 4,584 17,542 2,439 $ 53,011
		Employee welfare expenses Salary expenses Labor/ health insurance premium Pension expense Remuneration to Director Other employee welfare expenses	April 1 to June 30,2020						April 1 to June 30,2019
			Presented as operating cost		Presented as operating expense			Total	Presented as operating cost $ 83,074 - - - - $ 83,074		Presented as operating expense				Total
				$ 81,138 - - - - $ 81,138		$140,979 13,824 7,407 2,663 3,360 $168,233		$222,117 13,824 7,407 2,663 3,360 $249,371				$132,131 13,979 7,554 1,465 3,615 $158,744			$215,205 13,979 7,554 1,465 3,615 $241,818

		April	1 to June 30,	2020			April	1 to June 30,	2019
	Presented as		Presented as			Presented as		Presented as
	operating		operating			operating		operating
		cost	expense	Total			cost	expense	Total
Employee welfare
expenses
Salary expenses	$ 81,138		$140,979	$222,117		$ 83,074		$132,131	$215,205
Labor/ health
insurance premium		-	13,824		13,824		-	13,979		13,979
Pension expense		-	7,407		7,407		-	7,554		7,554
Remuneration to
Director		-	2,663		2,663		-	1,465		1,465
Other employee
welfare expenses		-	3,360		3,360		-	3,615		3,615
	$ 81,138		$168,233	$249,371		$ 83,074		$158,744	$241,818

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January1 to June 30,2020	January1 to June 30,2020	January1 to June 30,2020	January1 to June 30,2020	January1 to June 30,2019	January1 to June 30,2019	January1 to June 30,2019
Presented as operating cost	Presented as operating expense		Total	Presented as operating cost	Presented as operating expense	Total

		$ 4,886 2,668 $ 7,554

As of June 30, 2020 and 2019, the Company employed a total of 866 and 846 employees, respectively.

(3) 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. Employee remuneration and director remuneration were estimated at 1% and 0.6% of pre-tax profit, respectively, for periods April 1 to June 30 and January 1 to June 30, 2020 and 2019. All amounts have been expensed in statements of comprehensive income for the respective periods.

Employee remuneration and director remuneration estimated for periods April 1 to June 30 and January 1 to June 30, 2020 and 2019, are as follows: Amount estimated

Amount estimated
Employee remuneration Director remuneration	April 1 to June 30,2020 $ 885 $ 531	April 1 to June 30,2019 ($ 334) ($ 200)	January 1 to June 30,2020 $ 885 $ 531	January 1 to June 30,2019
		( (			$ 3,673 $ 2,204

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:

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Employee remuneration Director remuneration	2019 Cash Shares $ 6,744 $ - 4,046 -	2018	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.

(4) Depreciation and amortization

(4) Depreciation and amortization
April 1 to June 30,2020 Property, Plant and Equipment $ 4,273 Right-of-use asset 609 Investment Property 1,573 Intangible Assets 2,868 Total $ 9,323 Depreciation expense by accounting classification Depreciation (classified as operating costs) $ 1,573 Depreciation (classified as operating expenses) 4,882 Amortization (classified as operating expenses) 2,868 $ 9,323 (5) Gain/loss on investment property April 1 to June 30,2020 Rental income $ 16,048 Direct expenses associated with rental income ( 3,337) $ 12,711	April 1 to June 30,2019 $ 2,992 356 1,735 1,795 $ 6,878 $ 1,735 3,348 1,795 $ 6,878 April 1 to June 30,2019 $ 17,438 ( 3,333) $ 14,105	January 1 to June 30,2020 $ 7,760 1,216 3,247 4,110 $ 16,333 $ 3,247 8,976 4,110 $ 16,333 January 1 to June 30,2020 $ 33,173 ( 6,929) $ 26,244	January 1 to June 30,2019
			$ 5,942 665 3,470 3,650 $ 13,727 $ 3,470 6,607 3,650 $ 13,727 January 1 to June 30,2019
	(	(	(	$ 34,872 6,738) $ 28,134

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(6) Gain/loss on foreign exchange

Total gain on foreign exchange Total loss on foreign exchange Net gain (loss) Total gain/loss on foreign exchange Gain (loss) on exchange - investment (Note) Gain (loss) on exchange - non-investment	April 1 to June 30,2020	April 1 to June 30,2020	April 1 to June 30,2019	April 1 to June 30,2019	January 1 to June 30,2020	January 1 to June 30,2020	January 1 to June 30,2019	January 1 to June 30,2019
	( ( ( ( (	$ 7,189 20,105) $ 12,916) $ 11,246 ) 1,670) $ 12,916)	(	$ 14,350 10,109) $ 4,241 $ 2,866 1,375 $ 4,241	( ( ( ( (	$ 18,068 26,016) $ 7,948) $ 6,630 ) 1,318) $ 7,948)	(	$ 19,487 11,455) $ 8,032 $ 6,074 1,958 $ 8,032

Note: Derived from foreign currency time deposits.

26. Income tax expense for continuing operations

(1) Income tax recognized in profit and loss

Main components of income tax expense:

Current income tax From current profit Adjustment of previous year figures Deferred income tax From current profit Income tax expense recognized in profit and loss	April 1 to June 30,2020	April 1 to June 30,2020	April 1 to June 30,2019	April 1 to June 30,2019	January 1 to June 30,2020	January 1 to June 30,2020	January 1 to June 30,2019	January 1 to June 30,2019
	( (	$ 21,119 57 ) 1,500) $ 19,562	(	$ 36,777 179 ) 1,199 $ 37,797	(	$ 39,237 57 ) 4,141 $ 43,321	(	$ 57,033 179 ) 64 $ 56,918

(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.

27. Earnings per share

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

Current net income

Current net income
Net income used for calculating earnings per share	April 1 to June 30,2020 $ 216,112	April 1 to June 30,2019 ($ 70,709)	January 1 to June 30,2020 $ 43,766	January 1 to June 30,2019
		(			$ 304,504

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Shares Weighted average common shares used for calculating basic earnings per share Dilutive effect of potential common shares: Employee remuneration Weighted average common shares used for calculating diluted earnings per share	April 1 to June 30,2020 301,164 32 301,196	April 1 to June 30,2019 301,164 173 301,337	Unit: thousand shares January 1 to June 30,2020 January 1 to June 30,2019 301,164 301,164 251 294 301,415 301,458	Unit: thousand shares January 1 to June 30,2020 January 1 to June 30,2019 301,164 301,164 251 294 301,415 301,458	Unit: thousand shares January 1 to June 30,2020 January 1 to June 30,2019 301,164 301,164 251 294 301,415 301,458
					301,164 294 301,458

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

Change of liabilities relating to financing activities January 1 to June 30, 2020

Lease liabilities	January1,2020 $ 4,139		Cash flow	Changes without	Changes without	cash effect Others $ 51)	June 30,2020	June 30,2020
				Amortization of interest expense $ 51
		(	$ 992)		(			$ 3,147

January 1 to June 30, 2019

Lease liabilities		January 1, 2019 $ 2,707		Cash flow $ 1,044)		Changes without cash effect New leases Amortization of interest expense Others $ 1,659 $ 36 ($ 36)	Changes without cash effect New leases Amortization of interest expense Others $ 1,659 $ 36 ($ 36)	Changes without cash effect New leases Amortization of interest expense Others $ 1,659 $ 36 ($ 36)	June 30,2019	June 30,2019
						New leases $ 1,659	Amortization of interest expense $ 36
			(					(		$ 3,322

29. Capital risk management

Please refer to Note 37(6) for more information on the management of asset and liability risks. According to the Insurance Act, the Company is required to maintain capital at no less than 200% of risk-weighted assets. Failure to maintain the

abovementioned ratio will render the Company unable to distribute earnings; in addition, the Company would be required to raise capital within the due dates specified by the competent authority or have business activities and use of capital restricted in certain ways. As of June 30, 2020, the Company had maintained its capital above the percentage stated in the Insurance Act and was not subject to the above treatments. 30. Financial instruments

(1) Fair value information - financial instruments that are not measured at fair value
The management considers that all financial assets and liabilities not measured
at fair value have had book values closely resembling their fair values, or that their fair values can not be determined reliably.
(2) Fair value information - financial instruments with fair value measured on a recurring basis
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1. Fair value hierarchy June 30, 2020

Fair value hierarchy June 30, 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 Guarantee deposits paid TWSE/TPEx listed securities - Bond investments	Level 1 $ 503,755 1,230,064 - $ 1,733,819 $ 1,604,255 - 490,116 $ 2,094,371 $ 568,277 Level 1 $ 735,535 858,993 - $ 1,594,528 $ 1,730,675 - 509,305 $ 2,239,980 $ 517,861	Level 2 $ - - - $ - $ - - - $ - $ - Level 2 $ - - - $ - $ - - - $ - $ -	Level 3 $ - - 51,543 $ 51,543 $ - 866,791 - $ 866,791 $ - Level 3 $ - - 50,565 $ 50,565 $ - 945,763 - $ 945,763 $ -	Total
				$ 503,755 1,230,064 51,543 $ 1,785,362 $ 1,604,255 866,791 490,116 $ 2,961,162 $ 568,277 Total
				$ 735,535 858,993 50,565 $ 1,645,093 $ 1,730,675 945,763 509,305 $ 3,185,743 $ 517,861

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June 30, 2019

June 30, 2019
Financial Assets at Fair Value through Profit or Loss TWSE/TPEx listed shares Fund beneficiary certificates Bond investments - bank debentures Total Financial assets at fair value through other comprehensive income TWSE/TPEx listed common shares Non-listed domestic common shares Government bonds Total Guarantee deposits paid TWSE/TPEx listed securities - Bond investments		Level 1 $ 1,230,423 1,195,326 - $ 2,425,749 $ 810,190 - 374,327 $ 1,184,517 $ 471,746		Level 2 $ - - - $ - $ - - - $ - $ -		Level 3 $ - - 51,529 $ 51,529 $ - 905,257 - $ 905,257 $ -		Total
								$ 1,230,423 1,195,326 51,529 $ 2,477,278 $ 810,190 905,257 374,327 $ 2,089,774 $ 471,746

In periods January 1 to June 30, 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 June 30, 2020

January 1 to June	30, 2020	30, 2020
Financial assets	Measured at		fair value through profit and loss			Financial assets at fair value through other comprehensive income				Total
	Derivatives			Equity instrument $ - - - $ - $ -	Debt instrument		Equity instrument	Debt instrument
Opening balance Recognized through profit and loss (gain/loss on financial assets or liabilities at fair value through profit and loss) Recognized through other comprehensive income (gain/loss on valuation of equity instruments at fair value through other comprehensive income) Closing balance Unrealized gains and losses at the end of period		$ - - - $ - $ -			$ 50,565 978 - $ 51,543 $ 1,543	(	$ 945,763 - 78,972) $ 866,791 $ 176,985	$ - - - $ - $ -	(	$ 996,328 978 78,972) $ 918,334 $ 178,528

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January 1 to June 30, 2019

Financial assets	Measured at fair value through profit and loss	Measured at fair value through profit and loss	Measured at fair value through profit and loss	Measured at fair value through profit and loss	Measured at fair value through profit and loss	Measured at fair value through 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			Equity instrument		Debt instrument		Equity instrument		Debt instrument
Opening balance Recognized through profit and loss (gain/loss on financial assets or liabilities at fair value through profit and loss) Recognized through other comprehensive income (gain/loss on valuation of equity instruments at fair value through other comprehensive income) Closing balance Unrealized gains and losses at the end of period		$ - - - $ - $ -		$ - - - $ - $ -		$ 50,556 973 - $ 51,529 $ 1,529		$ 700,464 204,793 $ 905,257 $ 215,451		$ - - - $ - $ -		$ 751,020 973 204,793 $ 956,786 $ 216,980

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

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)	June 30,2020 $ 1,785,362 404,331 6,830,001 2,471,046 1,058,393 1,086,358	December 31, 2019 $ 1,645,093 381,669 6,560,882 2,676,438 1,027,166 655,404	June 30,2019
			$ 2,477,278 516,989 6,875,035 1,715,447 846,073 981,575

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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.

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

(1) Exchange rate risk

The Company holds assets and liabilities denominated in foreign currencies, which presents the Company with risk of exchange rate variation. As of June 30, 2020, the Company had about 4.52% of assets that were not denominated in the functional currency of the transaction entity.

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

the balance sheet date:
Financial assets Monetary items Bank deposit and notes receivable USD EUR CNY (RMB) GBP HKD Other financial assets USD Financial assets Monetary items Bank deposit and notes receivable USD EUR CNY (RMB) GBP HKD Other financial assets USD USD Financial assets Monetary items Bank deposit and notes receivable USD EUR CNY (RMB) GBP HKD Other financial assets USD CNY (RMB)	Unit: in thousands of foreign currency or NTD June 30,2020
	Foreign currency Exchange rate TWD(NTD) $ 4,317 29.630 $ 127,904 14 33.270 453 27 4.191 114 57 36.430 2,074 347 3.823 1,328 20,100 29.630 595,563 December 31,2019		TWD(NTD)
	Foreign currency Exchange rate $ 3,376 29.980 17 33.590 29 4.305 6 39.360 524 3.849 18,600 29.980 5,000 4.305 June 30,2019		TWD(NTD)
			$ 101,211 558 126 247 2,018 557,628 21,525
	Foreign currency $ 802 11 248 28 56 16,200 17,000	Exchange rate 31.060 35.380 4.521 39.390 3.977 31.060 4.521	TWD(NTD)
			$ 24,919 392 1,121 1,083 223 503,172 76,857

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Unrealized foreign currency gain/loss of material impact:

Foreign currency USD CNY (RMB)	January1 to June 30,2020	January1 to June 30,2020	January1 to June 30,2019	January1 to June 30,2019	January1 to June 30,2019
	Exchange rate 1:29.630 (USD:TWD) 1:4.191 (CNY:TWD)	Unrealized net gain (loss) on exchange	Exchange rate 1:31 AM.060 (USD:TWD) 1:4.521 (CNY:TWD)	Unrealized net gain (loss) on exchange
		($ 7,035) - ($ 7,035)			$ 5,589 833 $ 6,422

Sensitivity analysis

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

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

Gain (loss) on USD Gain (loss) on CNY	January 1 to June 30,2020 ($ 7,235) ( 1)	January 1 to June 30,2019
		($ 5,281) ( 780)

(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	June 30,2020 $ 766,058 1,058,393	December 31, 2019 $ 777,511 1,027,166	June 30,2019
			$ 839,607 846,073

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

48 -

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 the interest rate increased/decreased by 1 basis point, the Company’s pre-tax profit and equity for the periods January 1 to June 30, 2020 and 2019, would increase/decrease by NT$38,000 and NT$42,000, respectively, provided that all other variables remain unchanged. Exposure to interest rate risk is mainly attributed to bank deposits (demand deposits and foreign currency deposits) held on hand.

B. Risk of fair value changes due to interest rate

All of the Company’s bond investments pay fixed interest. A change in market interest rate would cause changes in the fair value of bond investments.

If the market interest rate increased/decreased by 1 basis point, other comprehensive income (pre-tax) and equity for the periods January 1 to June 30, 2020 and 2019, would decrease/increase by NT$1,246,000 and NT$917,000, 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 the price increased/decreased by 1%, pre-tax profit and equity for the periods January 1 to June 30, 2020 and 2019, would increase/decrease by NT$17,338,000 and NT$24,257,000, 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 for the periods January 1 to June 30, 2020 and 2019, would increase/decrease by NT$24,710,000 and NT$17,154,000, 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 model remains appropriate and effective in assessing the maximum potential risks of financial instruments or investment portfolios held on hand.

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(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: June 30, 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% ($ 173,382) Down 10% ( 247,105) A 100bps increase in the yield curve ( 124,625) 1% strengthening of NTD against all foreign currencies ( 5,956)
		($ 173,382) ( 247,105) ( 124,625) ( 5,956)

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: June 30, 2020 Unit: NTD thousands

Financial assets	Taiwan	Asia	America	Europe	Others	Total
Cash and cash equivalents	$1,838,065	$ -	$ -	$ -	$ -	$1,838,065
Financial assets at fair value through profit and loss (securitized beneficiary certificates and debt instruments)	321,229	-	-	-	-	321,229
Financial assets (debt instrument) at fair value through other comprehensive income(Note)	1,058,393	-	-	-	-	1,058,393
Financial assets carried at cost after amortization	1,510,713	-	-	-	-	1,510,713

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Other financial assets (time deposit)	2,669,563	-	-	-	-	2,669,563
Total	7,397,963	-	-	-	-	7,397,963
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	$ 1,058,393	$ -	$ -	$ 1,058,393
Financial assets carried at cost after amortization	1,510,713	-	-	1,510,713
Total	$2,569,106	$ -	$ -	$2,569,106

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).

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.

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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 June 30, 2020:

Investment in debt instrument s Opening balance Variation Closing balance Receivables Opening balance Variation Closing balance		12-month expected credit loss		Expected credit loss over the remaining duration		Expected credit loss over the remaining duration		Impairment provided in accordance with IFRS 9 (Subtotal)	Difference with impairments provided in accordance with “Regulation on Asset Valuation, Overdue Collection and Loan Loss Provisioning by Insurance Companies”	Difference with impairments provided in accordance with “Regulation on Asset Valuation, Overdue Collection and Loan Loss Provisioning by Insurance Companies”		Total
	(	$ 17,079 2,225) $ 14,854 $ 5,706 2,042 $ 7,748		$ - - $ - $ - - $ -		$ - - $ - $ - - $ -	(	$ 17,079 2,225) $ 14,854 $ 5,706 2,042 $ 7,748	(	$ - $ - $ 43,001 2,042) $ 40,959	(	$ 17,079 2,225) $ 14,854 $ 48,707 - $ 48,707

3. 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.
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The following table is a maturity analysis for non-derivative financial liabilities (including insurance claims payable, commissions payable, reinsurance account payable and other payables) with pre-arranged repayment date. The analysis has been prepared based on the earliest date by which the Company may be required to repay, using undiscounted cash flow.

June 30, 2020

June 30, 2020
Repayable upon demand or within 1 month Non-derivative financial liabilities Non-interest bearing liabilities $ 270,447 Lease liabilities - $ 270,447 December 31, 2019 Repayable upon demand or within 1 month Non-derivative financial liabilities Non-interest bearing liabilities $ 261,262 Lease liabilities - $ 261,262 June 30, 2019 Repayable upon demand or within 1 month Non-derivative financial liabilities Non-interest bearing liabilities $ 299,727 Lease liabilities - $ 299,727	Repayable upon demand or within 1 month		1~3 months	3 months ~ 1 year		1~5years	5 years and above
			$ 369,342 409 $ 369,751 1~3 months	$ 432,039 1,340 $ 433,379 3 months ~ 1 year		$ 14,530 1,104 $ 15,634 1~5years	$ - - $ - 5 years and above
Non-derivative financial liabilities Non-interest bearing liabilities Lease liabilities June 30, 2019 Non-derivative financial liabilities Non-interest bearing liabilities Lease liabilities
	$ 261,262 - $ 261,262 Repayable upon demand or within 1 month		$ 54,168 510 $ 54,678 1~3 months	$ 323,190 1,790 $ 324,980 3 months ~ 1 year		$ - 1,961 $ 1,961 1~5years	$ - - $ - 5 years and above
		$ 299,727 - $ 299,727	$ 176,963 463 $ 177,426		$ 537,472 1,389 $ 538,861	$ - 1,980 $ 1,980	$ - - $ -

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

(Continued next page)

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(Continued from previous page)

Name of related party

Tai Jing Apartment Building Management and Maintenance Co., Ltd. Taiwan Fuji Die Co., Ltd. Yongji Enterprise Co., Ltd. Chimax Development Company Pao Shan Construction Co., Ltd. Yiguang Enterprise Development Co., Ltd. Chien Chi Co., Ltd. Taiwan Real Estate Management Co., Ltd. Jiatai Construction Co., Ltd. Jinshi Construction Co., Ltd. Chiyi Construction Management Co., Ltd. Jui San Co., Ltd. Fu Bi Shi Construction Co., Ltd. Other related parties

Relationship with the Company Other related parties

Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Second degree relatives or closer to the company’s director, Chairman, President, Manager, or spouse thereof

(2) Major transactions with related parties

Premium revenues

Premium revenues
Type of relatedparty Other related parties	April 1 to June 30,2020 $ 901	April 1 to June 30,2019 $ 867	January 1 to June 30,2020 $ 1,819	January 1 to June 30,2019
					$ 1,813

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

Insurance claims paid

Type of relatedparty Other related parties	April 1 to June 30,2020 $ -	April 1 to June 30,2019 $ -	January 1 to June 30,2020 $ 2,642	January 1 to June 30,2019	January 1 to June 30,2019
					$ 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	April 1 to June 30,2020 $ 4	April 1 to June 30,2019 $ -	January 1 to June 30,2020 $ 4	January 1 to June 30,2019
					$ 6

Rental of conference room from the above related parties were undertaken at terms that were not materially different from ordinary transactions. 4. Premiums receivable

Premiums receivable
Type of relatedparty Other related parties	June 30,2020 $ 348	December 31, 2019 $ 464	June 30,2019
				$ 244

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(3) Remuneration of senior management April 1 to June 30,2020 Short-term employee benefits $ 11,249 Retirement benefits 1,023 $ 12,272	April 1 to June 30,2019 $ 10,427 663 $ 11,090	January 1 to June 30,2020 $ 22,369 2,046 $ 24,415	January 1 to June 30,2019	January 1 to June 30,2019
				$ 25,301 1,327 $ 26,628

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.

(1) Major unrecognized contractual commitments

As of June 30, 2020, the Company had NT$1,770,000 of system

implementation expenses that were contracted but unpaid.

(2) Contingent liabilities

As of June 30, 2020, the Company had 6 unresolved major lawsuits concerning its insurance business. The Company was being claimed for a sum of NT$29,593,000, and NT$23,199,000 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.
Other matters: Please see Note 13 for impacts of COVID-19.
Major post-balance sheet events: None. 36. Information on foreign currency-denominated financial assets and liabilities and exchange rate:

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

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37. 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.
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(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

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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. 4. 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.

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.

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

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

(6) Asset and liability management

The Company’s insurance liabilities are of short-term nature, which makes liquidity the primary concern in asset and liability management. The Company has 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 Personal accident insurance Others Less: loss provisions Net amount		June 30,2020
	Notes receivable Premiums receivable $ 15,282 $ 298,487 31,755 52,014 95,896 89,719 1,268 22,284 6,841 128,835 151,042 591,339 ( 3,791) ( 39,503) $ 147,251 $ 551,836 December 31,2019				Total
	(			(	$ 313,769 83,769 185,615 23,552 135,676 742,381 43,294) $ 699,087
	Notes receivable $ 8,908 29,028 97,810 409 2,323 2,289 140,767 ( 3,573) $ 137,194		Premiums receivable $ 106,686 35,254 56,820 19,388 68,833 31,852 318,833 40,306) $ 278,527		Total
	(	(		(	$ 115,594 64,282 154,630 19,797 71,156 34,141 459,600 43,879) $ 415,721

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June 30,2019 Notes receivable Premiums receivable Total Fire Insurance $ 16,635 $ 337,410 $ 354,045 Marine Insurance 34,646 42,855 77,501 Automobile Insurance 126,575 59,405 185,980 Engineering insurance 3,383 11,196 14,579 Personal accident insurance 3,864 28,119 31,983 Other insurance 7,869 54,407 62,276 192,972 533,392 726,364 Less: loss provisions ( 4,833) ( 39,410) ( 44,243) Net amount $ 188,139 $ 493,982 $ 682,121 Commission payable Class June 30,2020 December 31, 2019 June 30,2019 Fire Insurance $ 15,860 $ 12,148 $ 19,389 Marine Insurance 8,055 6,992 8,327 Automobile Insurance 63,562 68,042 65,074 Engineering insurance 1,840 1,158 2,246 Other insurance 27,054 21,822 20,682 Total $ 116,371 $ 110,162 $ 115,718 Reinsurance accounts receivable (payable)-retained reinsurance June 30,2020 Reinsurance accounts receivable Reinsurance accountspayable MAT $ 101,413 $ 60,820 CMP 51,426 79,424 CRC 31,105 162,447 WIL 16,487 27,938 Others 52,832 237,698 Less: loss provisions ( 2,061) - Net amount $ 251,202 $ 568,327 December 31,2019 Reinsurance accounts receivable Reinsurance accountspayable MAT $ 74,186 $ 80,288 CRC 30,048 98,455 CMP 28,954 59,612 WIL 27,288 29,817 FPH 8,198 3,324 Others 50,502 164,922 Less: loss provisions ( 3,589) - Net amount $ 215,587 $ 436,418		June 30,2019
					Total
			$ 354,045 77,501 185,980 14,579 31,983 62,276 726,364 ( 44,243) $ 682,121 June 30,2019
					$ 19,389 8,327 65,074 2,246 20,682 $ 115,718
MAT CMP CRC WIL Others Less: loss provisions Net amount MAT CRC CMP WIL FPH Others Less: loss provisions Net amount
	Reinsurance accounts receivable Reinsurance accountspayable $ 101,413 $ 60,820 51,426 79,424 31,105 162,447 16,487 27,938 52,832 237,698 ( 2,061) - $ 251,202 $ 568,327 December 31,2019	Reinsurance accountspayable
	(
	Reinsurance accounts receivable $ 74,186 30,048 28,954 27,288 8,198 50,502 ( 3,589) $ 215,587	Reinsurance accountspayable
	(			$ 80,288 98,455 59,612 29,817 3,324 164,922 - $ 436,418

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CRC MAT CMP WRT WIM Others Less: loss provisions Net amount	June 30,2019	June 30,2019	June 30,2019
	Reinsurance accounts receivable $ 120,190 82,208 41,612 26,530 19,596 78,343 ( 2,280) $ 366,199	Reinsurance accountspayable
	(		$ 189,235 57,375 73,695 17,278 6,600 207,450 - $ 551,633

(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	June 30,2020 $ 252,262 947,343 867,637 254,680 385,839 1,295,837 $ 4,003,598	December 31, 2019 $ 193,492 914,858 836,070 255,166 397,695 1,129,378 $ 3,726,659	June 30,2019	June 30,2019
				$ 278,064 905,134 802,463 254,640 420,105 1,431,335 $ 4,091,741

Due to the extensive range of insurance categories involved, only categories that represented more than 5% of outstanding balance were presented above. 2. Details of retained unearned premium reserve:

June 30,2020	June 30,2020
Unearned premium reserve Direct insurance (1) Assumed reinsurance (2) $ 668,897 $ 33,318 87,183 2,446 2,224,851 145,300 236,854 23,169 389,008 2,010 180,939 9,623 $3,787,732 $ 215,866	Ceded unearned premium reserve Ceded reinsurance (Note)(3) $ 323,796 48,190 363,788 119,363 185,753 81,375 $1,122,265	Retained insurance (4)=(1)+(2)-(3)
Direct insurance (1) $ 668,897 87,183 2,224,851 236,854 389,008 180,939 $3,787,732
			$ 378,419 41,439 2,006,363 140,660 205,265 109,187 $2,881,333

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December31,2019	December31,2019
Unearned premium reserve Direct insurance (1) Assumed reinsurance (2) $ 556,443 $ 31,493 72,767 2,061 2,153,139 146,807 218,126 22,934 405,792 1,832 104,579 10,686 $3,510,846 $ 215,813	Ceded unearned premium reserve Ceded reinsurance (Note)(3) $ 302,532 37,876 356,645 110,827 231,408 38,164 $1,077,452	Retained insurance (4)=(1)+(2)-(3)
Direct insurance (1)
$ 556,443 72,767 2,153,139 218,126 405,792 104,579 $3,510,846			$ 285,404 36,952 1,943,301 130,233 176,216 77,101 $2,649,207

June 30,2019	June 30,2019
Unearnedpremium reserve Direct insurance (1) Assumed reinsurance (2) $ 739,159 $ 29,540 100,891 2,775 2,126,963 145,526 250,164 25,652 512,500 1,910 148,457 8,204 $3,878,134 $ 213,607	Ceded unearned premium reserve Ceded reinsurance (Note)(3) $ 366,450 49,788 354,696 125,617 318,417 52,327 $1,267,295	Retained insurance (4)=(1)+(2)-(3)
Direct insurance (1)
$ 739,159 100,891 2,126,963 250,164 512,500 148,457 $3,878,134			$ 402,249 53,878 1,917,793 150,199 195,993 104,334 $2,824,446

Note: Presented as reinsurance contract assets.

Changes in unearned premium reserve and ceded unearned reserve:

Item Opening amount Provisions in the current period Recoveries in the current period	January1 to June 30,2020	January1 to June 30,2020	January1 to June 30,2020
	Unearned premium reserve $ 3,726,659 4,003,598 ( 3,726,659)	Ceded unearned premium reserve
	(	(	$ 1,077,452 1,122,265 1,077,452)

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$ 4,003,598 $ 1,122,265 January1 to June 30,2019	$ 4,003,598 $ 1,122,265 January1 to June 30,2019	$ 4,003,598 $ 1,122,265 January1 to June 30,2019	$ 4,003,598 $ 1,122,265 January1 to June 30,2019
Ceded unearned premium reserve
	(	$ 1,391,535 1,267,295 1,391,535) $ 1,267,295 June 30,2019
			$ 432,859 194,018 554,131 513,795 215,618 144,503 96,555 432,178 $ 2,583,657

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

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2. Details of retained claim reserve:

		June 30, 2020	June 30, 2020
Claim r	es	erve Assumed reinsurance (2) $ 465 2,239 41,401 1,350 - 41,901 87,356 199 - 149,840 597 - 98 150,734 $ 238,090	Ceded claim reserve Ceded reinsurance (Note)(3) $ 157,230 11,155 110,243 105,268 15,631 12,851 412,378 8 5,410 231,862 20,243 46,317 8,097 311,937 $ 724,315	Retained insurance (4)=(1)+(2)-(3)
Direct underwritten insurance (1) $ 286,805 42,077 698,771 222,179 25,229 39,634 1,314,695 4,587 10,956 636,212 49,253 105,890 18,441 825,339 $ 2,140,034
					$ 130,040 33,161 629,929 118,261 9,598 68,684 989,673 4,778 5,546 554,190 29,607 59,573 10,442 664,136 $ 1,653,809

		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

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		June 30,2019	June 30,2019
Claim r	es	erve Assumed reinsurance (2) $ 3,426 764 40,415 13,512 36 3,598 61,751 1,088 - 147,652 4,004 12 1,251 154,007 $ 215,758	Ceded claim reserve Ceded reinsurance (Note)(3) $ 250,530 23,791 113,551 100,840 12,117 20,893 521,722 40 12,018 281,636 25,546 51,180 6,066 376,486 $ 898,208	Retained insurance (4)=(1)+(2)-(3)
Direct underwritten insurance (1) $ 464,903 64,344 667,614 206,557 24,415 66,460 1,494,293 3,457 19,976 679,780 61,316 95,770 13,307 873,606 $ 2,367,899
					$ 217,799 41,317 594,478 119,229 12,334 49,165 1,034,322 4,505 7,958 545,796 39,774 44,602 8,492 651,127 $ 1,685,449

Note: Presented as reinsurance contract assets.

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

					January1 to J	une 30,2020
Direct underwr	itt	en insurance	Assumed r	ein	surance	Net change in claim reserves (5)=(1)-(2) +(3)-(4)	Ceded re	ins	urance	Net change in ceded claim reserve (8)=(6)-(7)
Provisions(1)		Recoveries(2)	Provisions(3)		Recoveries(4)		Provisions(6)		Recoveries(7)
$ 286,805 42,077 698,771 222,179 25,229 39,634 1,314,695 4,587 10,956 636,212 49,253 105,890 18,441 825,339 $ 2,140,034		$ 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	$ 465 2,239 41,401 1,350 - 41,901 87,356 199 - 149,840 597 - 98 150,734 $ 238,090		$ 815 806 40,565 12,244 - 3,413 57,843 277 - 149,708 4,756 - 1,382 156,123 $ 213,966	($ 55,800) 4,191 5,872 ( 37,546) 8,639 30,683 ( 43,961) 1,756 ( 9,874) ( 55,167) ( 660) ( 5,430) 227 ( 69,148) ($ 113,109)	$ 157,230 11,155 110,243 105,268 15,631 12,851 412,378 8 5,410 231,862 20,243 46,317 8,097 311,937 $ 724,315		$ 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	($ 14,875) 3,546 386 ( 19,271) 7,731 ( 3,855) ( 26,338) ( 15) ( 7,616) ( 38,544) 1,748 ( 8,895) 841 ( 52,481) ($ 78,819)

					January1 to J	une 30,2019
Direct underwr	itt	en insurance	Assumed r	ein	surance	Net change in claim reserves (5)=(1)-(2) +(3)-(4)	Ceded re	ins	urance	Net change in ceded claim reserve (8)=(6)-(7)
Provisions(1)		Recoveries(2)	Provisions(3)		Recoveries(4)		Provisions(6)		Recoveries(7)
$ 464,903 64,344 667,614 206,557 24,415 66,460 1,494,293 3,457 19,976 679,780 61,316 95,770 13,307 873,606 $ 2,367,899		$ 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	$ 3,426 764 40,415 13,512 36 3,598 61,751 1,088 - 147,652 4,004 12 1,251 154,007 $ 215,758		$ 2,786 317 38,798 15,189 - 3,615 60,705 778 - 144,849 3,764 - 1,117 150,508 $ 211,213	($ 102,111) ( 101,316) ( 7,927) ( 11,872) 17,524 ( 11,776) ( 217,478) ( 1,244) 12,440 ( 108,046) 27,478 15,916 4,391 ( 49,065) ($ 266,543)	$ 250,530 23,791 113,551 100,840 12,117 20,893 521,722 40 12,018 281,636 25,546 51,180 6,066 376,486 $ 898,208		$ 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	($ 53,296) ( 86,527) ( 33) 1,341 8,857 ( 2,885) ( 132,543) ( 257) 11,604 ( 66,576) 21,496 12,277 3,210 ( 18,246) ($ 150,789)

Changes in claim reserves and ceded claim reserves:

January 1 to June 30, 2020

Item Opening amount Provisions in the current period Recoveries in the current period Closing amount	Claim reserve $ 2,491,233 2,378,124 ( 2,491,233) $ 2,378,124		Ceded claim reserve
	(	(	$ 803,134 724,315 803,134) $ 724,315

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January 1 to June 30, 2019

Item Opening amount Provisions in the current period Recoveries in the current period Closing amount (4) Special claim reserve 1. Details of special claim reserve: Nature Class Major incident Commercial earthquake insurance Typhoon and flood insurance Change of risk 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	Claim reserve $ 2,850,200 2,583,657 ( 2,850,200) ( $ 2,583,657 June 30,2020 December 31, 2019 $ 88,787 $ 90,760 62,176 63,558 150,963 154,318 69,579 35,881 ( 102,983 ) ( 102,353 ) 523,701 538,007 74,686 74,687 587,411 587,411 184,083 184,083 197,532 197,531 1,534,009 1,515,247 $ 1,684,972 $ 1,669,565	Claim reserve $ 2,850,200 2,583,657 ( 2,850,200) ( $ 2,583,657 June 30,2020 December 31, 2019 $ 88,787 $ 90,760 62,176 63,558 150,963 154,318 69,579 35,881 ( 102,983 ) ( 102,353 ) 523,701 538,007 74,686 74,687 587,411 587,411 184,083 184,083 197,532 197,531 1,534,009 1,515,247 $ 1,684,972 $ 1,669,565	Ceded claim reserve	Ceded claim reserve	Ceded claim reserve
			$ 1,048,997 898,208 1,048,997) $ 898,208 June 30,2019 $ 92,734 64,940 157,674 27,503 ( 105,681 ) 555,720 74,687 587,411 184,082 197,532 1,521,254 $ 1,678,928

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	(	$ 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		(	$ 92,734 64,940 157,674 27,503 105,681 ) 555,720 74,687 587,411 184,082 197,532 1,521,254 $ 1,678,928

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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 June 30,2020 $ 471,535 33,698 ( 14,936) $ 490,297	January 1 to June 30,2019 $ 470,860 11,796 ( 5,114) $ 477,542
	(		$ 470,860 11,796 5,114) $ 477,542

Special claim reserve - voluntary automobile/motorcycle liabilities insurance

January 1 to June 30, 2020

					January1 to June 30,2020	une 30,2020
Item Opening amount Recoveries in the current period Closing amount Item Opening amount Recoveries in the current period Closing amount		Liabilities			Total Major incident $1,198,030 $ 569,792 3,355) - $1,194,675 $ 569,792 January1 to June 30,2019		Special reserve
	Major incident $ 154,318 ( 3,355) $ 150,963	Change of risk $1,043,712 - $1,043,712					Change of risk $ 1,111,909 - $ 1,111,909	Total
	(			(				$1,681,701 - $1,681,701
			Liabilities		Total $1,204,740 3,354) $1,201,386		Special reserve
	Major incident $ 161,028 ( 3,354) $ 157,674	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 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$955,740,000 (net of NT$238,935,000 tax impact) against an increase in special reserve of the same amount as of June 30, 2020; meanwhile, net income for the period from January 1 to June 30, 2020 would have fallen by NT$2,684,000 and earnings per share would have reduced by NT$0.01.
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(5) Deficiency reserve Details of deficiency reserve:

June 30, 2020

	June 30,2020	June 30,2020	June 30,2020	June 30,2020	June 30,2020
Aviation Insurance Professional liability insurance Fishing Vessel Insurance Vessel hull insurance Engineering insurance Health Insurance Aviation Insurance Typhoon and flood insurance Fishing Vessel Insurance Vessel hull insurance Health Insurance Engineering insurance	Deficiencyreserve Deficiency reserve for ceded coverage Direct insurance (1) Assumed reinsurance (2) Ceded reinsurance (3) $ 3,237 $ - $ - 2,349 16 - 10,532 289 9,804 812 - - 6,065 6,878 - 692 - - $ 23,687 $ 7,183 $ 9,804 December 31,2019					Retained insurance (4)=(1)+(2)-(3)
	Direct insurance (1) $ 3,237 2,349 10,532 812 6,065 692 $ 23,687
							$ 3,237 2,365 1,017 812 12,943 692 $ 21,066

		Deficiencyreserve			Deficiency reserve for ceded coverage Ceded reinsurance (3) $ - - 7,564 - - - $ 7,564	Retained insurance (4)=(1)+(2)-(3)
		Direct insurance (1)	Assumed reinsurance (2) $ - 18 307 - - 6,007 $ 6,332
		$ 1,424 2,376 8,035 605 368 5,153 $ 17,961		$ - 18 307 - - 6,007 $ 6,332			$ 1,424 2,394 778 605 368 11,160 $ 16,729

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June 30, 2019

Aviation Insurance Typhoon and flood insurance Fishing Vessel Insurance Vessel hull insurance Engineering insurance Health Insurance		Deficiencyreserve Direct insurance (1) Assumed reinsurance (2) $ 5,212 $ - 15,473 977 9,418 202 493 - 4,290 4,006 908 - $ 35,794 $ 5,185	Deficiencyreserve Direct insurance (1) Assumed reinsurance (2) $ 5,212 $ - 15,473 977 9,418 202 493 - 4,290 4,006 908 - $ 35,794 $ 5,185	Deficiency reserve for ceded coverage Ceded reinsurance (3) $ - - 9,000 - - - $ 9,000	Retained insurance (4)=(1)+(2)-(3)	Retained insurance (4)=(1)+(2)-(3)
		Direct insurance (1) $ 5,212 15,473 9,418 493 4,290 908 $ 35,794
						$ 5,212 16,450 620 493 8,296 908 $ 31,979

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 June 30, 2020:

Class Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance		Premium revenues (1) $ 383,521 3,305,777 $3,689,298	Reinsurance Premium (2)	Reinsurance Premium (2)	Reinsurance premiums expense (3) $ 159,984 839,825 $ 999,809	Retained premium (4)=(1)+(2)-(3)	Retained premium (4)=(1)+(2)-(3)
				$ 127,044 71,796 $ 198,840			$ 350,581 2,537,748 $2,888,329

For voluntary automobile liabilities insurance, a sum of NT$6,612,000 was contributed to the stabilization fund using applicable percentages for the period January 1 to June 30, 2020.

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												Net change in	Net change in	Net change in
														unearned
														premium
		Direct written insurance					Assumed reinsurance unearned							reserve
	unearned			premium reserve				premium reserve					(9)=(5)-(6)
Class	Provisions(5)				Recoveries	(6)	Provisions(7)			Recoveries(8)				+(7)-(8)
Mandatory
automobile
liabilities
insurance	$	306,807			$ 309,040		$	145,300		$	146,807	($		3,740)
Voluntary
automobile
liabilities
insurance		3,480,925			3,201,806			70,566			69,006			280,679
	$	3,787,732			$ 3,510,846		$	215,866		$	215,813		$	276,939
									Net change in			Retained earned
				Ceded reinsurance unearned					ceded		unearned	gross premium
					premium reserve				premium reserve					(13)=
Item			Provisions(10)			Recoveries		(11)	(12)=(10)-(11)			(4)-(9)+(12)
Mandatory automobile liabilities insurance			$		184,102	$	185,437		(	$	1,335 )	$		352,986
Voluntary automobile liabilities insurance					938,163		892,015				46,148			2,303,217
			$	1,122,265		$	1,077,452			$	44,813	$		2,656,203

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 June 30, 2019:

Class Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance		Premium revenues (1) $ 388,703 3,298,168 $ 3,686,871		Reinsurance Premium (2) $ 129,700 71,595 $ 201,295		Reinsurance premiums expense (3) $ 161,366 888,037 $ 1,049,403	Retained premium (4)=(1)+(2)-(3)	Retained premium (4)=(1)+(2)-(3)
								$ 357,037 2,481,726 $ 2,838,763

For voluntary automobile liabilities insurance, a sum of NT$6,596,000 was contributed to the stabilization fund using applicable percentages for the period January 1 to June 30, 2019.

Class Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance	Direct written insurance unearnedpremium reserve Provisions(5) Recoveries(6) $ 311,973 $ 319,204 3,566,161 3,505,321 $ 3,878,134 $ 3,824,525	Direct written insurance unearnedpremium reserve Provisions(5) Recoveries(6) $ 311,973 $ 319,204 3,566,161 3,505,321 $ 3,878,134 $ 3,824,525	Assumed reinsurance unearned premium reserve Provisions(7) Recoveries(8) $ 145,541 $ 144,164 68,066 63,438 $ 213,607 $ 207,602	Assumed reinsurance unearned premium reserve Provisions(7) Recoveries(8) $ 145,541 $ 144,164 68,066 63,438 $ 213,607 $ 207,602	Net change in unearned premium reserve (9)=(5)-(6) +(7)-(8)
	Provisions(5) $ 311,973 3,566,161 $ 3,878,134		Provisions(7) $ 145,541 68,066 $ 213,607
					($ 5,854) 65,468 $ 59,614

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Item Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance	Ceded reinsurance unearned premium reserve Provisions(10) Recoveries(11) $ 187,199 $ 191,527 1,080,096 1,200,008 $ 1,267,295 $ 1,391,535	Ceded reinsurance unearned premium reserve Provisions(10) Recoveries(11) $ 187,199 $ 191,527 1,080,096 1,200,008 $ 1,267,295 $ 1,391,535	Net change in ceded unearned premium reserve (12)=(10)-(11) ( $ 4,328 ) ( 119,912) ($ 124,240)	Retained earned gross premium (13)= (4)-(9)+(12)	Retained earned gross premium (13)= (4)-(9)+(12)
	Provisions(10)
		$ 187,199 1,080,096 $ 1,267,295	( ( (		$ 358,563 2,296,346 $ 2,654,909

(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 June 30, 2020:

Class Mandatory insurance Voluntary insurance	Insurance claims (including claim-related expenses) (1)	Insurance claims (including claim-related expenses) (1)	Claims paid for reinsurance (2) $ 131,326 17,019 $ 148,345	Claims recovered from reinsurers (3) $ 170,205 331,370 $ 501,575	Retained claims (4)=(1)+(2)-(3)	Retained claims (4)=(1)+(2)-(3)
		$ 283,358 1,535,087 $ 1,818,445				$ 244,479 1,220,736 $ 1,465,215

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 June 30, 2019:

Class Mandatory automobile liabilities insurance Voluntary automobile liabilities insurance	Insurance claims (including claim-related expenses) (1)	Insurance claims (including claim-related expenses) (1)	Claims paid for reinsurance (2) $ 131,133 47,261 $ 178,394	Claims recovered from reinsurers (3) $ 196,443 478,915 $ 675,358	Retained claims (4)=(1)+(2)-(3)	Retained claims (4)=(1)+(2)-(3)
		$ 339,319 1,662,434 $ 2,001,753				$ 274,009 1,230,780 $ 1,504,789

(8) Claims liabilities to policyholders

Policyholders’ reported and paid/unpaid and unreported claims liability:

June 30, 2020

Insurance

	Insurance
Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance	claims payable Reported and paid $ - - - - - 167 $ 167		Claim reserves
		Reported but notpaid $ 287,270 44,316 740,172 223,529 25,229 81,535 $ 1,402,051		Not reported $ 4,786 10,956 786,052 49,850 105,890 18,539 $ 976,073	Total
					$ 292,056 55,272 1,526,224 273,379 131,119 100,074 $ 2,378,124

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December 31, 2019

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

Accident/ health insurance Other insurance	- - $ -	16,590 111,320 50,852 18,312 $ 1,446,012 $ 1,045,221	16,590 111,320 50,852 18,312 $ 1,446,012 $ 1,045,221	16,590 111,320 50,852 18,312 $ 1,446,012 $ 1,045,221	127,910 69,164 $ 2,491,233
Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance		June 30,2019
	Insurance claims payable Reported and paid $ 118 - 9,135 - 3,845 $ 13,098		Claim reserves
		Reported but notpaid $ 468,329 65,108 708,029 220,069 24,451 70,058 $ 1,556,044		Not reported $ 4,545 19,976 827,432 65,320 95,782 14,558 $ 1,027,613	Total
					$ 472,874 85,084 1,535,461 285,389 120,233 84,616 $ 2,583,657

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

Class Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance Less: loss provisions Net amount	June 30,2020 Actualpayments $ 6,267 824 77,794 19,226 34,575 15,246 153,932 ( 803) $ 153,129	December31,2019 Actualpayments $ 4,968 17,977 76,637 11,682 49,562 6,266 167,092 ( 1,010) $ 166,082	June 30,2019	June 30,2019
			Actualpayments
	(	(	(	$ 4,842 8,251 77,216 13,215 48,169 554 152,247 1,457) $ 150,790

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

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(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 June 30,2020 $ 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 June 30,2019
		$ 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 June 30, 2020

Commission Expenses	Commission Expenses			Total
	$ 39,978 17,867 313,282 24,223 56,493 10,792 $462,635			$ 41,758 18,168 379,855 29,759 56,566 11,653 $537,759
Commission Expenses		Service Charges $ - - 71,044 - - - $ 71,044	Reinsurance commission expense $ 1,419 395 - 6,153 79 677 $ 8,723	Total
	$ 46,473 21,561 306,979 31,564 55,667 12,357 $474,601			$ 47,892 21,956 378,023 37,717 55,746 13,034 $554,368

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

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

January 1 to June 30, 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)
		$ 591,108 172,119 2,264,865 190,023 278,238 192,945 $ 3,689,298	$ 112,454 14,416 71,712 18,728 ( 16,784) 76,360 $ 276,886		$ 39,978 17,867 379,855 24,223 56,493 10,792 $ 529,208		$ 93,566 54,558 1,368,529 77,557 178,245 45,990 $ 1,818,445	( $ 53,616) ( 7,116) ( 50,263) ( 23,153) 3,209 ( 6,294) ($ 137,233)		$ 398,726 92,394 495,032 92,668 57,075 66,097 $ 1,201,992

January 1 to June 30, 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)
		$ 607,724 203,784 2,194,194 211,419 307,857 161,893 $ 3,686,871	$ 95,430 4,128 61,283 16,994 ( 172,926) 48,700 $ 53,609		$ 46,473 21,561 378,023 31,564 55,667 12,357 $ 545,645		$ 126,528 180,712 1,400,293 72,898 219,013 2,309 $ 2,001,753	( $ 104,305) ( 89,323) ( 120,393) 17,043 33,392 ( 7,502) ($ 271,088)		$ 443,598 86,706 474,988 72,920 172,711 106,029 $ 1,356,952

Profitability analysis for assumed reinsurance:

January 1 to June 30, 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)
		$ 34,344 2,944 127,044 22,469 2,137 9,902 $ 198,840	$ 1,825 385 ( 1,507) 235 178 ( 1,063) $ 53		$ 1,780 301 - 5,536 73 861 $ 8,551		$ 1,080 5,793 131,326 8,801 278 1,067 $ 148,345	( $ 428) 1,433 968 ( 15,053) - 37,204 $ 24,124	$ 30,087 ( 4,968) ( 3,743) 22,950 1,608 ( 28,167) $ 17,767

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Fire Insurance Marine Insurance Automobile Insurance Engineering/ liability insurance Accident/ health insurance Other insurance					January1 to June 30,2019	January1 to June 30,2019	January1 to June 30,2019
		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)
		$ 29,086 4,146 129,700 26,989 1,952 9,422 $ 201,295	( $ 1,032) ( 1,106) 1,378 4,676 175 1,914 $ 6,005		$ 1,419 395 - 6,153 79 677 $ 8,723		$ 2,928 3,981 131,133 39,246 109 997 $ 178,394	$ 950 447 4,420 ( 1,437) 48 117 $ 4,545	$ 24,821 429 ( 7,231) ( 21,649) 1,541 5,717 $ 3,628

Current profit/loss recognized on ceded insurance contracts:

January 1 to June 30, 2020

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)
$ 296,655 60,920 340,606 92,026 106,737 102,865 $ 999,809	$ 21,264 10,314 7,143 8,536 ( 45,655) 43,211 $ 44,813				( $ 14,890) ( 4,070) ( 38,158) ( 17,523) ( 1,164) ( 3,014) ($ 78,819)	$ 233,853 46,281 24,806 39,667 ( 62) 36,254 $ 380,799
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)
$ 307,532 76,715 332,380 105,865 151,178 75,733 $ 1,049,403	$ 13,231 10,091 ( 1,011) 8,992 ( 172,439) 16,896 ($ 124,240)	$ 17,370 8,335 53,286 28,827 34,103 6,627 $ 148,548	(	$ 64,688 115,988 302,042 46,288 150,746 4,394) $ 675,358	( $ 53,553) ( 74,923) ( 66,609) 22,837 21,134 325 ($ 150,789)	$ 265,796 17,224 44,672 ( 1,079) 117,634 56,279 $ 500,526

(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

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are established by making reasonable and possible changes to one assumption while holding other major assumptions constant. For example, a change to the variable “average cost of claim” would result in a proportional change in claim reserves. Detailed analysis is presented below:

		June 30,2020
Single-varia ble change 5%	Effect on gross claims reserve Increase (decrease) $ 87,962	Effect on net claims reserve	Effect on pre-taxprofit Increase (decrease) ( $ 64,607 )	Pre-tax effect on owners’ equity
		Increase (decrease)		Increase (decrease)
		$ 64,607		( $ 64,607 )

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

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 June	30,2020 % 16.02% 4.67% 61.39% 5.15% 7.54% 5.23% 100.00%	January1 to June	30,2020
	Direct written premiums $ 591,108 172,119 2,264,865 190,023 278,238 192,945 $ 3,689,298		Cumulative retained premiums (Note) $ 328,797 114,143 2,051,303 120,466 173,638 99,982 $ 2,888,329	%
				11.39% 3.95% 71.02% 4.17% 6.01% 3.46% 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:

		June 30,2020	June 30,2020
		Year count
1	2 31,120,332 3,768,046 3,138,851 3,575,988 3,075,928	3	4 31,172,925 3,755,040 3,148,472	5 31,141,265 3,741,924	6
30,978,975 3,518,890 2,844,485 3,350,844 2,878,243 1,279,078		31,172,606 3,753,540 3,155,289 3,583,683			31,137,742

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

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

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

With regards to ceded insurance as of December 31, 2019, the Company was required to disclose claims recoverable from reinsurers for obligatory payments made to policyholders in the last 9 months totaling NT$59,000 and ceded claim reserve for reported and unpaid liability totaling NT$85,000 on the sum of marine hull insurance ceded to Tugu Insurance Company Ltd., a reinsurer that did not conform with the credit grading requirements stated in Article 8 of “Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms.” For the sum of commercial fire insurance ceded to ASIA CAPITAL REINSURANCE GROUP PTE LTD, a reinsurer that did not conform with the credit grading requirements stated in Article 8 of “Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms,” the Company was required to disclose substandard reinsurance premium expenses totaling NT$694,000.

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

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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.

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$700,000 and ceded claim reserve for reported and unpaid liability totaling NT$21,000.

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 June 30, 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.

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(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	June 30, 2020	December 31, 2019	June 30, 2019	Liabilities	June 30, 2020	December 31, 2019	June 30, 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	$ 1,070,276 - 17,912 14,941 23,496 72,708 - - 184,102 257,221 - -	$ 1,089,353 - 8,511 16,055 23,744 50,416 - - 185,437 296,837 - -	$ 1,101,016 - 12,065 11,705 24,108 62,860 1,097 - 187,199 317,793 6,702 -	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	$ 139 - - 79,424 452,107 618,689 490,297 - -	$ - - - 59,612 455,847 683,359 471,535 - -	$ - 283 - 73,695 457,514 715,511 477,542 - -
Total assets	$1,640,656	$1,670,353	$1,724,545	Total liabilities	$1,640,656	$1,670,353	$1,724,545

Note: As of June 30, 2020, December 31, 2019 and June 30, 2019, NT$354,276,000, NT$373,353,000 and NT$185,016,000 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)

	April 1 to June 30,2020	April 1 to June 30,2020	April 1 to June 30,2019	April 1 to June 30,2019	January 1 to June 30,2020	January 1 to June 30,2020	January 1 to June 30,2019	January 1 to June 30,2019
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 of NT$53,751,000, NT$80,698,000, NT$131,326,000 and NT$131,133,000, respectively) Less: claims recovered from reinsurers Retained claims Net change in claim reserves Net change in special claim reserves Total operating costs	( ( (	$ 134,977 63,378 198,355 80,993 ) 1,564 118,926 890 $ 119,816 $ 189,643 82,370) 107,273 20,218 ) 32,761 $ 119,816	( ( (	$ 134,302 66,075 200,377 80,583 ) 1,720 121,514 1,219 $ 122,733 $ 266,714 108,073) 158,641 42,775 ) 6,867 $ 122,733	( ( (	$ 266,612 127,044 393,656 159,984 ) 2,405 236,077 2,110 $ 238,187 $ 414,684 170,205) 244,479 25,054 ) 18,762 $ 238,187	( ( (	$ 268,920 129,700 398,620 161,366 ) 1,526 238,780 2,437 $ 241,217 $ 470,452 196,443) 274,009 39,474 ) 6,682 $ 241,217

80 -
Other disclosures (1) Major transactions:
1. Acquisition of real estate properties amounting to more than NT$100 million or 20% of paid up capital: None.
2. Disposal of real estate properties amounting to more than NT$100 million or 20% of paid up capital: None.
3. Core business transactions conducted with related parties that amount to more than NT$100 million or more than 20% of paid-up capital: None.
4. Related party receivables amounting to more than NT$100 million or 20% of paid up capital: None.
5. Trading of derivatives: None.
6. Others: None.
(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 Co., Ltd. Da Feng Construction Engineering Co., Ltd.	19,218,289 18,806,192 15,823,085	6.38% 6.24% 5.25%

Note 1: Information on major shareholders, as presented in this chart, was taken from records of the Taiwan Depository & Clearing Corporation as of the final business day of the reported quarter; and included parties holding book-entry common and preferred shares (including treasury stock) for an aggregate ownership of 5% and above. Share capital reported in the Company’s consolidated financial statements may differ from the number of shares delivered via book entry due to different basis of preparation/calculation.
Note 2: Shareholders who placed shares under trust are disclosed based on sub-accounts under trustee’s main trust account. Shareholders with more than 10% ownership interest are subject to insider equity reporting, according to the Securities and Exchange Act. Insider equity includes shares held in own name and any shares placed under trust that the insider has control over. Please access the Market Observation Post System for reports on insider equity.

40. Segment information

Non-life insurance was the Company’s primary and only major business segment for periods from January 1 to June 30, 2020 and 2019; therefore, segment-by-segment disclosure of financial information is not required.

81 -

AI assistant

FIRST INS — Interim / Quarterly Report 2020

52208_rns_2020-12-28_ad7bbd46-3c85-4a5c-a074-2478f82d28f8.pdf

The First Insurance Co., Ltd.

Financial Statements and Independent Auditor’s Report For the Second Quarter of 2020 and 2019

§TABLE OF CONTENTS§

Independent Auditor’s Report

Audit opinion

Basis of audit opinion

Key audit issues

Responsibilities of the management and governing body to the financial statements

Responsibilities of the auditor when auditing financial statements

The First Insurance Co., Ltd.

The First Insurance Co., Ltd. Comprehensive Income Statement For periods from April 1 to June 30, 2020 and 2019, and from January 1 to June 30, 2020 and 2019

The First Insurance Co., Ltd. Statement of Changes in Equity From January 1 to June 30, 2020 and 2019

The First Insurance Co., Ltd. Cash Flow Statement

(Continued from previous page)

The First Insurance Co., Ltd. Notes to financial statements From January 1 to June 30, 2020 and 2019

(Continued from previous page)

Recognition

Measurement at initial recognition

Subsequent measurement

Onerous contracts

Premium allocation approach

Modification and derecognition

Transition

(1) Statement of compliance

Insurance liabilities from insurance contracts

June 30, 2020

Reinsurance accounts

Notes receivable

Premiums receivable

Claims recoverable from reinsurers and reinsurance accounts receivable

Change in loss provisions by account category:

January 1 to June 30, 2020

13. Investment property

14. Reinsurance contract assets

15. Property, plant, and equipment

(Continued from previous page)

17. Intangible assets

18. Guarantee deposits paid

19. Other assets - others

22. Retirement benefit plan

23. Other liabilities - others

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

(6) Gain/loss on foreign exchange

26. Income tax expense for continuing operations

Main components of income tax expense:

(2) Assessment of income tax return

27. Earnings per share

Current net income

Change of liabilities relating to financing activities January 1 to June 30, 2020

January 1 to June 30, 2019

29. Capital risk management

1. Fair value hierarchy June 30, 2020

June 30, 2019

Unrealized foreign currency gain/loss of material impact:

Sensitivity analysis

Sensitivity analysis

(3)

Sensitivity analysis

(4)

(5) Stress-testing

2. Credit risk

3. Liquidity risk

(2) Liquidity risk management

(Continued from previous page)

37. Risk management goals, policies, procedures and methods

Risk Management Committee

2. Details of retained claim reserve:

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

Changes in claim reserves and ceded claim reserves:

(5) Deficiency reserve Details of deficiency reserve:

June 30, 2020

June 30, 2019

(7) Retained claims

(8) Claims liabilities to policyholders

(9) Retention limits by insurance category

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

Profitability analysis for assumed reinsurance:

FIRST INS Interim / Quarterly Report 2020