SK Insurance - Interim / Quarterly Report 2022

2850

ShinKong Insurance Co., Ltd.

Financial Statements and Independent Auditor's Review Report

For the First Quarter of 2022 and 2021

The reader is advised that these financial statements have been prepared originally in Chinese. These financial statements do not include additional disclosure information that is required for Chinese-language reports under the Regulations Governing the Preparation of Financial Reports by Insurance Enterprises. If there is any conflict between these financial statements and the Chinese version or any difference in the interpretation of the two versions, the Chinese language financial statements shall prevail.

Company address: 11F., NO.13, Chienkuo N.Rd., Sec.2 Taipei,

Taiwan, R.O.C. Tel. No.: (02)2507-5335 TEL: (02)2507-5335

Financial reports Table of Contents

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Item Page
1. Cover 1
2. Table of Contents 2
3. Review report of independent auditors 3
4. Balance Sheet 4~5
5. Statement of Comprehensive Income 6
6. Statement of Changes in Shareholders’ Equity 7
7. Statement of Cash Flows 8
8. Notes to Financial Statement
(1) History and Business scope of the Company 9~10
(2) Date and procedures of authorization of financial statements for issue 11
(3) Application of New Standards, Amendments and Interpretations 11~13
(4) Summary of significant accounting policies 13~34
(5) Critical accounting judgments, estimates and key sources of assumption
34~36
uncertainty
(6) Descriptions of major accounts 36~61
(7) Risk management information of insurance contracts and financial instruments 62~92
(8) Related party transactions 93~94
(9) Collateralized assets 95
(10) Significant contingent liabilities and unrecognized contractual commitments 95
(11) Significant subsequent events 95
(12) Losses due to major disasters 95
(13) Major litigation pending or concluded 95
(14) The signing, completion, voidance, or lapse of major contracts 95
(15) Employee pension related information 95
(16) Information on discontinued operations 96
(17) Major operations, assets and liabilities assigned to or assumed from other
96
insurance companies
(18) The sharing method of revenue, cost, expense and profit (loss) between the
insurance enterprise and the financial holding company and other subsidiaries in
96
terms of business or trading activities, joint business promotions, sharing of
information, and sharing of facilities or premises.
(19) Investment Trust Operations 96
(20) Information on private securities 96
(21) Major organizational adjustments and significant management reforms 96
(22) Material effects of changes in government laws and regulations 96
(23) Others 97~102
(24) Property insurance related information 102
(25) Additional Disclosures 103
(26) Unqualified reinsurance reserve 104~105
9. Tables related to insurance business 106~109
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Review report of independent auditors

To: ShinKong Insurance Co., Ltd.

Foreword

We have reviewed the accompanying balance sheet of ShinKong Insurance Co., Ltd. as of March 31, 2022 and 2021 and the related statements of income, retained earnings, cash flows and notes (including the summary of major accounting policies) to the financial statements for the years then ended. These financial statements to be prepared in accordance with “Regulations Governing the Preparation of Financial Reports by Insurance Enterprises” and the International Accounting Standards (IAS) 34 “Interim Financial Reporting” that was recognized and announced with effect by the Financial Supervisory Commission are the responsibility of the company’s management. Our responsibility is to make a conclusion on these financial statements based on our review.

Scope

We conducted our review in accordance with Generally Accepted Accounting Standards (GAAS) No.65 “Review of Financial Statements.” Those standards require that we perform inquiries (mainly to the personnel in charge of finance and accounting matters), analytical procedures, and other review procedures. The scope of a review is apparently not to the extent of an audit; therefore, we would not be able to detect all identifiable matters through an audit, and we could not issue an audit opinion.

Conclusion

In our conclusion, the financial statements referred to above present fairly, in all material respects, the financial position of ShinKong Insurance Co., Ltd. as of March 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in conformity with the “Regulations Governing the Preparation of Financial Reports by Insurance Enterprises” and the International Accounting Standards (IAS) 34 “Interim Financial Reporting” that was recognized and announced with effect by the Financial Supervisory Commission.

Ernst & Young Global Limited

The competent authorities approved the processing of financial reports of the public company

Auditing and Certification No.: (93) Chin-Kuan-Certificate-Zi No. 0930133943 Chin-Kuan-Cheng-Shen-Zi No. 1030025503

Hsu Daniel

CPA:

Chang Bob

April 15, 2022

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd

Balance Sheet

As at March 31, 2022, December 31, 2021 and March 31, 2021

(31 March 2022 and 2021 reviewed only, not audited in accordance with the generally accepted auditing standards)

Unit: NTD thousands

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Assets March 31, 2022 December 31, 2021 March 31, 2021
Code Account titles Note Amount % Amount % Amount %
11000 Cash and cash equivalents 4, 6 and 7 $11,700,717 26 $11,766,660 27 $10,849,810 26
12000 Accounts receivable 4, 6 and 7 1,761,020 4 1,945,038 4 1,831,499 4
14110 Financial assets at fair value through profit or loss 4, 6 and 7 8,918,423 20 8,823,185 20 8,534,732 20
14145 Financial assets at amortized cost 4, 6 and 7 7,373,540 17 6,941,041 16 6,066,347 15
14190 Financial assets at fair value through other comprehensive income 4, 6 and 7 1,525,428 3 1,388,344 3 1,284,115 3
14200 Investment property 4 and 6 2,413,907 5 2,408,457 5 2,661,665 6
15000 Reinsurance contract assets 4 and 6 8,207,281 19 8,246,645 19 8,163,083 20
16000 Property, plant, and equipment 4 and 6 1,292,627 3 1,308,643 3 1,075,461 3
16700 Right-of-use assets 4 and 6 33,060 - 34,394 - 33,650 -
17000 Intangible assets 4 and 6 22,754 - 27,455 - 16,458 -
17800 Deferred income tax assets 4 and 6 254,797 1 262,673 1 234,679 1
18000 Other assets 6 715,692 2 732,945 2 772,992 2
1XXXX Total assets $44,219,246 100 $43,885,480 100 $41,524,491 100
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(Please refer to Notes to the Financial Statements)

Chairman: WU, HSIN-HUNG

President: HO, YING-LAN Accounting Supervisor: TSENG, YA-FANG

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd

Balance Sheet (continued)

As at March 31, 2022, December 31, 2021 and March 31, 2021

(31 March 2022 and 2021 reviewed only, not audited in accordance with the generally accepted auditing standards)

Unit: NTD thousands

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Liabilities and equity March 31, 2022 December 31, 2021 March 31, 2021
Code Account titles Note Amount % Amount % Amount %
21000 Accounts Payables 6 and 7 $2,342,470 5 $2,894,222 7 $2,692,815 7
21700 Current income tax liabilities 4 and 6 366,547 1 275,164 1 239,602 1
23200 Financial liabilities at fair value through profit or loss 4, 6 and 7 91,657 - - - 11,992 -
23800 Lease liabilities 4 and 6 33,693 - 34,924 - 34,201 -
24000 Insurance liability 4 and 6 25,507,459 58 25,067,097 57 24,368,077 59
27000 Reserve for liabilities 4 and 6 99,087 - 119,280 - 125,826 -
28000 Deferred tax liabilities 4 and 6 16,386 - 34,389 - 27,361 -
25000 Others 148,133 - 203,172 - 125,666 -
2XXXX Total liabilities 28,605,432 64 28,628,248 65 27,625,540 67
31000 Capital stock 6 3,159,633 8 3,159,633 8 3,159,633 8
32000 Capital reserves 4 and 6 64,800 - 64,800 - 64,800 -
33000 Retained earnings
33100 Legal reserve 4 3,200,891 7 3,200,891 7 2,873,498 7
33200 Special reserve 4 5,669,201 13 5,669,201 13 4,881,819 12
33300 Undistributed earnings 6 2,034,239 5 1,466,970 3 1,419,153 3
34000 Other equity 1,485,050 3 1,695,737 4 1,500,048 3
3XXXX Total equity 15,613,814 36 15,257,232 35 13,898,951 33
Total Liabilities and Equity $44,219,246 100 $43,885,480 100 $41,524,491 100
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(Please refer to Notes to the Financial Statements)

Chairman: WU, HSIN-HUNG

President: HO, YING-LAN Accounting Supervisor: TSENG, YA-FANG

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd.

Statement of Comprehensive Income January 1 to March 31, 2022 and 2021

(Reviewed only, not audited in accordance with the generally accepted auditing standards)

(Expressed in Thousands of New Taiwan dollars, except for Earnings Per Share)

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Unit: NTD thousands
From January 1 to From January 1 to
March 31, 2022 March 31, 2021
Code Account titles Note Amount % Amount %
41000 Operating revenues:
41110 Written premiums 4 and 7 $5,709,911 122 $5,420,239 121
41120 Reinsurance premium income 4 and 7 189,740 4 192,079 4
41100 Premium revenues 5,899,651 126 5,612,318 125
51100 Less: Reinsurance premiums expense 4 and 7 (1,169,283) (25) (1,243,496) (28)
51310 Net changes in unearned premium reserve 4 and 7 (371,860) (8) (420,044) (9)
41130 Retained earned premium 4,358,508 93 3,948,778 88
41300 Reinsurance commission income 7 75,700 2 112,158 3
41400 Handling fees earned 11,551 - 11,201 -
41500 Net gain(loss) from investment 223,029 5 400,311 9
41510 Interest revenue 85,351 2 82,739 2
41521 Gain (loss) on financial assets and liabilities at fair value through profit or loss (218,729) (4) 499,962 11
41526 Net gains from derecognition of financial assets at amortized cost 5,386 - - -
41527 Realized gain on financial assets at fair value through other - - 41 -
comprehensive income
41550 Profit or loss from foreign exchange 174,673 4 (3,469) -
41570 Profit or loss from investment property 19,607 - 20,513 1
41585 Expected credit impairment losses and gains on reversal of investments (2,432) - 5,837 -
41600 (Losses) gains from adoption of overlay approach 159,173 3 (205,312) (5)
41800 Other operating revenue 5,384 - 6,179 -
Total operating revenues 4,674,172 100 4,478,627 100
51000 Operating cost:
51200 Insurance claims and benefits (2,713,701) (58) (2,479,263) (55)
41200 Less: Benefits & Claims Recovered from reinsurers 653,677 14 473,523 11
51260 Retained claims and benefits (2,060,024) (44) (2,005,740) (44)
51300 Other insurance liabilities net change (289,983) (6) (302,145) (7)
51500 Commission expense 7 (753,743) (16) (727,099) (16)
51800 Other operating cost (21,671) (1) (31,600) (1)
Total operating cost (3,125,421) (67) (3,066,584) (68)
58000 Operating expenses:
58100 Business expense 6 (793,491) (17) (770,777) (18)
58200 Administrative expenses 6 (98,945) (2) (91,870) (2)
58300 Employee training expense (303) - (4,024) -
58400 Expected credit impairment losses and gains on reversal of non-investments 2,177 - (5,034) -
Total operating expenses (890,562) (19) (871,705) (20)
61000 Operating revenues 658,189 14 540,338 12
59000 Non-operating revenues and expenses 1,566 - 2,606 -
62000 Income from continuing operations before tax 659,755 14 542,944 12
63000 Income tax expense 4 and 6 (92,486) (2) (70,655) (2)
66000 Net income 567,269 12 472,289 10
83000 Other comprehensive income 6
83100 Items that are not re-classified as profit or loss
83190 Gains (losses) on equity instruments at fair value through other (9,881) - 14,062 -
comprehensive income
83200 Items that are or may be reclassified subsequently to profit or loss
83290 Gains (losses) on debt instruments at fair value through (52,057) - (41,586) (1)
other comprehensive income
83295 Other comprehensive income (loss) from adoption (159,173) (3) 205,312 5
of overlay approach
83280 Income taxes relating to items that are or may be reclassified 10,424 - 25,174 1
subsequently to profit or loss
Other Comprehensive income in current period (net after tax) (210,687) (3) 202,962 5
85000 Total comprehensive income in current period $356,582 9 $675,251 15
Earnings per share
97500 Basic earnings per share (denominated in New Taiwan dollars) 6 $1.80 $1.49
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(Please refer to Notes to the Financial Statements)

Chairman: WU, HSIN-HUNG

President: HO, YING-LAN Accounting Supervisor: TSENG, YA-FANG

(English Translation of Financial Statements Originally Issued in Chinese)

ShinKong Insurance Co., Ltd.

Statement of Changes in Equity

January 1 to March 31, 2022 and 2021

(Reviewed only, not audited in accordance with the generally accepted auditing standards)

Unit: NTD thousands

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Retained earnings Other equity
Unrealized gain on Other
financial assets comprehensive
Capital Capital
Item Legal Special Undistributed measured at fair income Total equity
stock reserves
reserve reserve earnings value through other reclassified using
comprehensive the overlay
profit or loss approach
Balance as of January 1, 2021 $3,159,633 $64,800 $2,873,498 $4,881,819 $946,864 $77,583 $1,219,503 $13,223,700
Net income in January 1 to March 31, 2021 - - - - 472,289 - - 472,289
Other comprehensive income in January 1 to March 31, 2021 - - - - - (19,263) 222,225 202,962
Total comprehensive income in current period - - - - 472,289 (19,263) 222,225 675,251
Balance as of March 31, 2021 $3,159,633 $64,800 $2,873,498 $4,881,819 $1,419,153 $58,320 $1,441,728 $13,898,951
Balance as of January 1, 2022 $3,159,633 $64,800 $3,200,891 $5,669,201 $1,466,970 $90,869 $1,604,868 $15,257,232
Net income in January 1 to March 31, 2022 - - - - 567,269 - - 567,269
Other comprehensive income in January 1 to March 31, 2022 - - - - - (51,514) (159,173) (210,687)
Total comprehensive income in current period - - - - 567,269 (51,514) (159,173) 356,582
Balance as of March 31, 2022 $3,159,633 $64,800 $3,200,891 $5,669,201 $2,034,239 $39,355 $1,445,695 $15,613,814
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(Please refer to Notes to the Financial Statements)

Chairman: WU, HSIN-HUNG

President: HO,YING-LAN

Accounting Supervisor: TSE

(English Translation of Financial Statements Originally Issued in Chinese)

ShinKong Insurance Co., Ltd.

Statements of Cash Flows

January 1 to March 31, 2022 and 2021

(Reviewed only, not audited in accordance with the generally accepted auditing standards)

Unit: NTD thousands

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From January 1 to From January 1 to
Item
March 31, 2022 March 31, 2021
Cash flow from operating activities:
Income from continuing operations before tax $659,755 $542,944
Adjusted Items:
Revenue, expense and loss
Depreciation expenses 20,623 19,555
Amortization expenses 7,361 6,170
Net losses (gains) on financial assets and liabilities at fair value
218,729 (499,962)
through profit or loss
Net losses (gains) on financial assets at fair value through other
- (41)
comprehensive income
Interest expenses 186 191
Interest income (5,386) -
Net changes in insurance liabilities (85,351) (82,739)
Expected credit impairment losses (reversal gains) of investments 661,843 722,189
Expected credit impairment losses of (reversal gains) non-investments 2,432 (5,837)
Losses (gains) from adoption of overlay approach (159,173) 205,312
(Gains) losses on disposal or scrapping of property and equipment 13 (212)
Changes in operating assets and liabilities
Decrease in accounts receivable 206,124 34,778
Increase in financial assets at fair value through profit or loss (247,220) (861,203)
Decrease (increase) in financial assets at fair value through other
(199,083) 7,222
comprehensive income
Increase in financial assets at amortized cost (429,822) (283,144)
Decrease (increase) of reinsurance contracts assets (182,117) 40,021
(Increase) decrease of other assets 14,932 (14,495)
Increase (decrease) of payables (551,752) 254,226
Increase of financial liabilities at fair value through profit or loss - 8,161
Decrease of provisions (20,193) (1,720)
Decrease of other liabilities (55,039) (69,884)
Cash inflow from operating activities (145,315) 26,566
Interest received 69,608 71,434
Dividend received 20,723 1,766
Interest paid (26) (28)
Income tax paid (806) (560)
Net cash provided by (used in) operating activities (55,816) 99,178
Cash flows from investment activities
Acquisition of property and equipment (5,764) (7,933)
Disposal of property and equipment - 450
Acqusition of investment property - (213,631)
Acquisition of intangible assets - (93)
Net cash used in investing activities (5,764) (221,207)
Cash flows from financing activities:
Principle repayment of lease liabilities (4,363) (3,929)
Net cash used in financing activities (4,363) (3,929)
Increase (decrease) of cash and cash equivalents in current period (65,943) (125,958)
Balance of cash and cash equivalents at the beginning of period 11,766,660 10,975,768
Balance of cash and cash equivalents at the ending of period $11,700,717 $10,849,810
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(Please refer to Notes to the Financial Statements)

Chairman: WU, HSIN-HUNG

President: HO,YING-LAN Accounting Supervisor: TSENG, YA-FANG

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements January 1 to March 31, 2022 and January 1 to March 31, 2021

(Reviewed only, not audited in accordance with the generally accepted auditing standards) (Expressed in thousands of New Taiwan dollars, unless otherwise stated)

1. Company history and business scope

Shin Kong Insurance Co., Ltd. (hereinafter referred to as the Company) held a founding shareholders’ meeting on March 20, 1963, and officially started the business on May 1 of the same year. With the main business of property insurance, the Company was initially settled at No. 43 Guanqian Road, Taipei City, and later moved to No. 35, Section 1, Wuchang Street, Taipei City on April 24, 1965 to meet the business expansion, and then moved to No. 34, Baoqing Road, Taipei City on January 30, 1973, and then again moved to the new corporate building at No. 15, Section 2, Jianguo North Road on January 20, 1983 for business expansion and restructuring. Capital: Initially NT$ 32,000 thousand in 1963, and increased to NT$ 54,400 thousand in 1977. Through the years of capital increase, as of March 31, 2022, the paid-in capital amounted to NT$ 3,159,633 thousand.

Organization:

The Company has a total of 25 branches, including offices in Banqiao, Taoyuan, Hsinchu, Miaoli, Taichung, Shalu, Changhua, Yunlin, Chiayi, Tainan, Kaohsiung, Pingtung, Shilin, Xinying, Yuanlin, Fengshan, Nantou, Zhongli, Lanyang, Xizhi, Shuanghe, Neihu, Fengyuan, Xinzhuang, and international insurance businesses. The branches have a total of 5 communications offices, with service posts established all over Taiwan.

Head office: 11F., No. 15, Sec. 2, Jianguo N. Rd., Taipei City Tel: (02) 2507-5335 (pilot)

Branches:

(1) Banqiao Branch: 15F, No. 266, Section 1, Wenhua Road, Banqiao District, New Taipei City TEL: (02) 2254-5568 (2) Taoyuan Branch: 21F, Building A, No. 205, Fuxing Road, Taoyuan City Tel: (03) 338-4003 (3) Hsinchu Branch: 5F, No. 192 Minsheng Road, Hsinchu City TEL: (03) 533-9121 (4) Miaoli Branch: 4F, No. 462, Zhongzheng Road, Miaoli City TEL: (037) 352-311 (5) Taichung branch: 12F, No. 340, Section 2, Taiwan Boulevard, North District, Taichung City Tel: (04) 2322-1158 (6) Shalu Branch: No. 609, Section 2, Zhonghua Road, Wuqi District, Taichung City Tel: (04) 2662-0099

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(7) Changhua Branch: No. 326, Section 2, Zhongshan Road, Changhua City Tel: (04) 724-2147
(8) Yunlin Branch: 3F, No. 148, Xinsheng Road, Huwei Town, Yunlin County
Tel: (05) 632-1389
(9) Chiayi Branch: 5F, No. 427, Minquan Road, Chiayi City Tel: (05) 225-3190
(10) Tainan Branch: 12F, No. 32, Section 1, Yonghua Road, West Central District, Tainan City Tel: (06) 227-1313
(11) Kaohsiung Branch: 12F, No. 154, Zhongzheng 3rd Road, Xinxing District, Kaohsiung City Tel: (07) 235-3197
(12) Pingtung Branch: Suite 1-2, 8F, No. 450, Ziyou Road, Pingtung City Tel: (08) 738-2000
(13) Shilin Branch: 2F, No. 222, Wenlin North Road, Beitou District, Taipei City Tel: (02) 2828-7010
(14) Xinying Branch: 5F, No. 10, Zhongzheng Road, Xinying District, Tainan City Tel: (06) 635-6569
(15) Yuanlin Branch: 2F, No. 2, Section 2, Datong Road, Yuanlin Township, Changhua County Tel: (04) 835-5151
(16) Fengshan Branch: Suite 1, 10F, No. 224, Ziyou Road, Fengshan District, Kaohsiung City Tel: (07) 745-6131
(17) Nantou Branch: No. 24, Datong South Street, Nantou City, Nantou County Tel: (049) 224-5747
(18) Zhongli Branch: Suite A, 9F, No. 121, Huanxi Road, Zhongli City, Taoyuan County Tel: (03) 491-1808
(19) Lanyang Branch: 1F, No. 398, Gongzheng Road, Luodong Town, Yilan County Tel: (03) 955-2640
(20) Xizhi Branch: 13F, Building D, No. 82, Section 1, Xintai 5th Road, Xizhi District, New Taipei City Tel: (02) 2696-0606
(21) Shuanghe Branch: 14F, No. 2, Jianba Road, Zhonghe District, New Taipei City Tel: (02) 8226-2620
(22) Neihu Branch: 6F, No. 295 Ruiguang Road, Neihu District, Taipei City
Tel: (02) 2627-2026
(23) Fengyuan Branch: 6F, No. 23 Yuanhuan West Road, Fengyuan District, Taichung City Tel: (04) 2529-0748
(24) Xinzhuang Branch: 4F, No.149, Zhongzheng Road, Xinzhuang District, New Taipei City Tel: (02) 2277-0903
(25) International Insurance Branch: 10F, No. 15, Section 2, Jianguo North Road, Taipei City Tel: (02) 2507-5335

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

2. Financial Reporting Date and Procedures

This financial report was approved by the Board of Directors and released on April 15, 2022.

3. Application of New and Revised Standards and Interpretation

Changes in accounting policies resulting from the first application of International Financial Reporting Standards (IFRS)

The Company has adopted the International Financial Reporting Standards, International Accounting Standards, International Financial Reporting Interpretations or Interpretation Announcements that have been approved by the Financial Supervisory Committee (FSC) and applicable for fiscal years beginning after January 1, 2022. The first application of the new standards and amendments does not have significant impact on the Company.

The company did not adopt the following new/amended/revised standards and interpretations that are issued by IASB but not yet recognized by the FSC as of the financial report publication date:

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The IASB’s issuance
is effective for the
No. New/amended/revised standards and interpretation
years after the
following dates
1 Amendments to IFRS 10 “Consolidated Financial Statements” and To be determined by
IAS 28 “Investment in Associates and Joint Ventures” – Assets sales IASB
or investment of investors and their associates or joint ventures
2 IFRS 17 “Insurance contracts” January 1, 2023
3 Classification of liabilities as current or non-current and postpone of January 1, 2023
effective date (amendments to IAS 1)
4 Disclosure Initiative – Accounting policy (amendments to IAS 1) January 1, 2023
5 Definition of accounting estimates (amendments to IAS 8) January 1, 2023
6 Deferred tax related to assets and liabilities arising from a single January 1, 2023
transaction (amendments to IAS 12)
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(1)Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investment in Associates and Joint Ventures” – Assets sales or investment of investors and their associates or joint ventures

This plan is to handle the inconsistency between IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investment in Associates and Joint Ventures” regarding the loss of control by investing in associates or joint ventures at the cost of the subsidiary. According to IAS 28, the profit or loss amount should be eliminated in accordance with the downstream transaction when exchange non-monetary assets for the equity of the associates or joint ventures. According to IFRS 10, the entire profit and loss should be recognized at the time of losing the control over the subsidiary. This amendment restricts the aforementioned provisions of IAS 28. The profit or loss arising from the sales or investment of business assets that meet the definition in IFRS 3 shall be fully recognized.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued) (Expressed in thousands of New Taiwan dollars, unless otherwise stated)

According to this amendment to IFRS 10, the sales or investment between the investors and associates or joint ventures for the subsidiary that does not meet the definition in IFRS 3, the profit or loss incurred shall be recognized for the amount that is not attributable to the investors.

(2)IFRS 17 “Insurance Contracts”

IFRS 17 provides a comprehensive model of insurance contracts, including all accounting-related matters (recognition, measurement, presentation, and disclosure principles). The core of IFRS 17 is a general model. Under this model, the original recognition is based on the sum of the fulfillment cash flow and contractual service margin to measure the insurance contracts, of which, the fulfillment cash flows include:

A. Estimated value of future cash flows
B. Discount rate: reflect the adjustment to the time value of money and the financial risks (to the extent when financial risks are not included in the estimated value of future cash flows) related to the future cash flows; and
C. Adjustments to non-financial risks

The book amount of the insurance contract group at the end of each reporting period is the sum of the remaining coverage liabilities and the incurred claims liabilities.

In addition to the general model, it also provides:

A. Specific applicable methods (variable fee approach) for contracts with direct participation characteristics
B. Simplified method (premium allocation approach) for short-term contracts

Upon the initial application of the standards, enterprises adopted IFRS9 may re-designate and reclassify the financial assets that comply with the requirements of the standards. Enterprises are not required to re-prepare the comparison information to reflect the changes in the classification of such assets; the differences between the former carrying amount and the carrying amount on the date of initial application shall be recognized in the opening retained earnings or other equity as at the date of initial application. When an enterprise has restated its comparison information, the comparison information shal reflects the requirements of IFRS9 on such financial assets being affected. In addition, for financial assets derecognized during the comparison period after the date of initial application of the standards, enterprises may elect the applicable overlay approach based on the individual financial assets, as if such assets have been re-classified according to the redesignation requirements under the standards during the comparison period.

This standard was announced in May of 2017 and amended in June 2020. This amendment, except for having the effective date postponed for 2 years (that is, postponed from January 1, 2021 to January 1, 2023) in the transitional clause with additional exemptions provided; also, reducing the cost of adopting this standard by simplifying some regulations and amend some regulations to make some situations easier to interpret. This standard in effect will replace the transitional standard (that is, IFRS 4 “Insurance Contracts”).

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(3)Classification of liabilities as current or noncurrent (Amendments to IAS 1)

This is to amend the classification of liabilities as current or noncurrent in paragraphs 69 to 76 of IAS 1 “Presentation of Financial Statements.”

(4)Disclosure Initiative – Accounting Policy (Amendments to IAS 1)

This amendment is to improve the disclosure of accounting policies in order to provide more useful information to investors and other main users of financial statements.

(5)Definition of Accounting Estimates (Amendments to IAS 8)

This amendment directly defines accounting estimates and makes other amendments to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in order to help companies classify changes in accounting policies and accounting estimates.

(6) Deferred tax related to assets and liabilities arising from a single transaction (amendments to IAS 12)

The amendments restrict the scope of the exemption of recognition deferred tax in paragraphs 15 and 24 of IAS 12 — Income Taxes; therefore, the exemption does not apply to the same taxable amount upon initial recognition and the deductible temporary differences.

The aforementioned standards and explanations issued by IASB but not yet recognized by the FSC are applicable on the date determined by the FSC. The company is currently assessing the potential impact of the new/amended standards and explanations in (2) and is not yet able to reasonably estimate the impact of the aforementioned standards or interpretations on the company; however, the other new/amended standards and explanations have no significant impact on the company.

4. Summary of Significant Accounting Policies

1. Compliance Statement

The financial statements are prepared in accordance with “Regulations Governing the Preparation of Financial Reports by Insurance Enterprises” and IAS 34 “Interim Financial Reporting” that was recognized and announced with effect by the Financial Supervisory Commission.

2. Basis of preparation

The financial statements are prepared on the basis of historical costs, except for financial instruments measured at fair value and the net defined benefit liabilities recognized by deducting the present values of defined benefit obligations from the fair value of plan assets. Unless otherwise specified, amounts in financial statements are expressed in thousand NT dollars.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

3. Cash and cash equivalents

Cash and cash equivalents include cash on hand, demand deposits, and time deposits or investments that are short-term, highly liquid, convertible to fixed amounts of cash at any time with little risk of value changes (including time deposits within 12 months of contractual period).

4. Transactions in foreign currencies

The Company’s financial statements are expressed in NT dollars, which is the Company’s functional currency. Transactions in foreign currencies are converted to the functional currency based on the exchange rate on the transaction date. At the end of each reporting period, monetary items in foreign currencies are converted at the closing exchange rate of that day; non-monetary items in foreign currencies measured at fair value are converted at the exchange rate on the day that the fair value is determined; non-monetary items in foreign currencies measured at historical cost are converted at the exchange rate of the transaction day.

Except for the following, the exchange differences arising from the delivery or conversion of monetary items are recognized as gains or losses of the current period:

(1) If the exchange differences from foreign currencies borrowed to obtain qualified assets are regarded as adjustments to interest costs, becoming part of the borrowing costs, they are capitalized as the costs of the assets.
(2) Foreign currencies applicable to IFRS 9 “Financial Instruments” are treated in accordance with the accounting policies of financial instruments.
(3) For monetary items that form part of the reporting entity’s net investment in foreign institutions, the exchange differences resulting from initial recognition are recognized as other comprehensive income, and reclassified from equity to gains and losses when the net investment is disposed.

When the profits and losses of non-monetary items are recognized as other comprehensive income, any components of the conversion of the profits and losses are recognized as other comprehensive income. When the profits and losses of non-monetary items are recognized as gains and losses, any components of the conversion of the profits and losses are recognized as gains and losses.

5. Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual terms of the financial instrument.

Financial assets and financial liabilities applicable to IFRS 9 “Financial Instruments” are measured at fair value on initial recognition, and are directly attributable to the transaction cost of acquisition or issuance of the financial assets and financial liabilities (except for those measured at fair value through profit or loss), to be deducted from or added to the fair values of the financial assets and financial liabilities.

(1) Recognition and measurement of financial assets

All the recognition and delisting of financial assets through the Company’s normal trade practice are accounted for on the transaction day.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

The Company classifies financial assets into the following categories: those subsequently measured at amortized cost, those measured at fair value through other comprehensive income, and those measured at fair value through profit or loss, based on the following features:

A. Operating models
B. Contractual cash flows

Financial assets at amortized cost

Financial assets that meet the following two conditions are measured at amortized cost and listed on the balance sheet as financial assets and other assets measured at accounts receivable and amortized cost:

A. Operating models: holding financial assets to collect contractual cash flows
B. Contractual cash flows: cash flows entirely for paying principals and interests on the principals in circulation

Such financial assets (excluding those involved in hedging) are subsequently measured at amortized cost [the amount measured on initial recognition, minus the principal paid, plus or minus the accumulated amortization of the difference between the original amount and the maturity amount (using the effective interest method), and adjustment of allowance for losses]. Upon derecognition, through amortization or recognition of impaired profits or losses, the profits or losses are recognized as gains and losses.

The interests calculated by the effective interest method (multiplying the effective interest rate by the total book value of the financial asset) or based on following conditions are recognized as gains and losses:

A. For purchased or originated credit-impaired financial assets, it is calculated as the credit-adjusted effective interest rate multiplied by the amortized cost.
B. For financial assets other than the aforementioned, but subsequently become credit impairment, it is calculated as the effective interest rate multiplied by the amortized cost.

Financial assets at fair value through other comprehensive income

Financial assets that meet the following two conditions are measured at fair value through other comprehensive income, and are listed on the balance sheet as financial assets at fair value through other comprehensive income:

A. Operating model: collecting contractual cash flows and selling financial assets.
B. Contractual cash flows: cash flows entirely for paying principals and interests on the principals in circulation

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued) (Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Recognition of gains and losses related to such financial assets are explained as follows:

A. Before derecognition or reclassification, except for impaired profits or losses and foreign exchange profits or losses that are recognized as gains and losses, the profits and losses of the financial assets are recognized as other comprehensive income.
B. Upon derecognition, the cumulative profits or losses previously recognized as other comprehensive income are reclassified from equity to gains or losses for adjustment.
C. The interests calculated by the effective interest method (multiplying the effective interest rate by the total book value of the financial asset) or based on following conditions are recognized as gains and losses:
(a) For POCI financial assets, it is calculated as the credit-adjusted effective interest rate multiplied by the amortized cost.
(b) For financial assets other than the aforementioned, but subsequently become credit impairment, it is calculated as the effective interest rate multiplied by the amortized cost.

In addition, for equity instruments applicable for IFRS 9 and are neither held for trading, nor recognized as contingent consideration by the acquirer in a merger under IFRS 3, and on initial recognition, it is optional (irrevocably) to list its subsequent fair value changes as other comprehensive income. The amount listed as other comprehensive income shall not subsequently be transferred to gains and loss (when disposing such equity instruments, the cumulative amount listed as other equity are directly transferred to retained earnings), and shall be listed on the balance sheet as financial assets at fair value through other comprehensive income. Dividends from investments are recognized as gains or losses, unless the dividends clearly represent part of the recovery of investment costs.

Financial assets at fair value through profit or loss

Except for the measurement by amortized cost under specific conditions as mentioned above or at fair value through other comprehensive income, financial assets are measured at fair value through profit or loss, and are listed on the balance sheet as financial assets and accounts receivable measured at fair value through profit or loss.

The profits or losses generated from remeasurement of such financial assets measured at fair value are recognized as gains and losses, whose profits or losses include any and all dividends or interests generated from the financial assets.

(2) Impairment of financial assets

The Company’s debt instruments measured at fair value through other comprehensive income and financial assets measured at amortized cost are recognized as expected credit losses to measure allowance for losses. For the debt instruments measured at fair value through other comprehensive income, the allowance for losses is recognized as other comprehensive income, without reducing the book value of the investment.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

The Company measures expected credit losses to reflect the following:

A. unbiased and probability-weighted amounts determined by evaluating all possible outcomes.
B. Time value of money
C. Reasonable and supportable information related to past events, current conditions and forecasts of future economic conditions (that can be obtained without excessive costs or investment on the balance sheet date)

Measurement of allowance for losses is explained as follows:

A. It is measured by the amount of 12-month expected credit losses: including financial assets whose credit risk has not significantly increased since initial recognition, or those that are determined to be low in credit risk at the balance sheet date. In addition, it also includes the allowance for losses which are measured at lifetime expected credit losses in the duration of previous financial reports, but on the current balance sheet day no longer meets the criteria for a significant increase in credit risk since initial recognition.
B. Measurement of lifetime expected credit losses: including financial assets with credit risk significantly increased since initial recognition, or POCI financial assets.
C. For accounts receivable or contract assets arising from transactions under IFRS 15, the Company uses lifetime expected credit losses to measure allowance for losses.
D. For lease receivables arising from transactions under IFRS 16, the Company uses lifetime expected credit losses to measure allowance for losses.

In addition to the above assessments, the Company has also provided adequate allowance for bad debts in accordance with the “Guidelines for Handling Assessment of Assets, Overdue and Non-Performing Loans and Bad Debts by Insurance Enterprises,” and the amount shall not be lower than the following standards: (1) 0.5% of the 1st type loan assets after deducting from life insurance loans, advanced premiums, and the balance of claims to government agencies, and 2%, 10%, 50%, respectively, of the balances of claims of loan assets from 2nd to 5th types (attention required, recovery expected, recovery difficult, and recovery hopeless), as well as the total of all the balances. 2. 1% of the total of the 1st to 5th types of loan assets after deducting from life insurance loans, advanced premiums and the balance of claims to government agencies. 3. Overdue and non-performing loans that have been reasonably assessed as free of secured claims. 4. If the sum of the minimum allowances for bad debts assessed in accordance with the criteria stated above in the 1st to 3rd subparagraphs is lower than the amount required by generally accepted accounting principles, the latter shall prevail. If the competent authority requires that the allowance for bad debts of specific loan assets be increased in accordance with its standards and deadlines in order to strengthen the capacity for losses of the specific loan assets, the Company shall comply.

On each balance sheet day, the Company compares the changes in the default risk of financial instruments from the initial recognition day, in order to assess whether the credit risk of the financial instruments has increased significantly after the initial recognition. For further information about the credit risks, please see Note 7.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(3) Derecognition of financial assets

The Company’s financial assets are derecognized when one of the following conditions is met:

A. The contractual rights from the cash flows of financial assets are terminated.
B. The financial assets have been transferred and almost all the risks and rewards from the ownership of the assets have been transferred to others.
C. Almost all risks and rewards of asset ownership have neither been transferred nor retained, but control of the assets has been transferred.

When a financial asset is derecognized as a whole, the difference between its book value and the received or receivable consideration plus any cumulative profits or losses recognized as other comprehensive income is recognized as gains and loss.

(4) Financial liabilities and equity instruments

Classification of liabilities or equity

The liabilities and equity instruments issued by the Company are classified as financial liabilities or equity based on the substance of the contractual agreement and the definitions of financial liabilities and equity instruments.

Equity instruments

The Company’s equity instruments refer to any contract with remaining equity after deducting all liabilities from assets. Equity instruments issued by the Company are recognized with the amount received deducting the cost of direct issuance.

Financial liabilities

Financial liabilities applicable to IFRS 9 are classified on initial recognition as financial liabilities at fair value through profit or loss or financial liabilities at amortized cost.

Financial liabilities at fair value through profit and loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated to be measured at fair value through profit or loss.

When one of the following conditions is met, financial liabilities are classified as held for trading:

A. The main purpose of acquisition is to sell them in a short time;
B. on initial recognition, it is a part of the portfolio of identifiable financial instruments under merger management, and there is evidence that the portfolio is to be operated for short-term profits in the near future; or
C. Derivative instruments (except for financial guarantee contracts or designated derivatives that are effective hedging instruments).

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

For a contract containing one or more embedded derivatives, the overall hybrid (combined) contract can be designated as a financial liability measured at fair value through profit and loss; when one of the following factors is met to provide more relevant information, the hybrid contract can be designated on initial recognition as measured at fair value through profit and loss:

A. The designation can eliminate or significantly reduce inconsistencies in measurement or recognition; or
B. A group of financial liabilities or a group of financial assets and financial liabilities are managed and evaluated on the fair value basis, based on written risk management or investment strategies, and the information on the investment portfolio provided to the management within the consolidated company is also based on fair value.

The profits or losses out of remeasurement of such financial liabilities are recognized as gains and losses, including any interests paid for the financial liabilities.

Financial liabilities measured at mortized cost

Financial liabilities measured at amortized cost include payables and lease liabilities, which are measured by the effective interest method after initial recognition. When financial liabilities are derecognized and amortized by the effective interest method, the related profit or loss and amortization are recognized as gains and losses.

The calculation of the amortized cost considers the discount or premium at the time of acquisition and transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when its obligation is discharged, cancelled or invalidated.

When the Company and creditors exchange debt instruments with materially different terms, or make major changes to all or part of the terms of existing financial liabilities (whether or not due to financial difficulties), the original liabilities are derecognized and new ones recognized, and when the financial liabilities are derecognized, the difference between their book values and the total considerations paid or payable (including transferred non-cash assets or liabilities assumed) is recognized as gains and losses.

(5) Offset of financial assets and liabilities

Financial assets and financial liabilities can be offset and listed on the balance sheet as a net amount only when the recognized amount currently has legal exercise rights of mutual offsetting and is intended to settle on a net amount or to realize assets and liquidate liabilities at the same time.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(6) Derivative instruments

The derivative instruments signed by the Company include forward foreign exchange contracts and exchange contracts, mainly for managing the risk of changes in exchange rates. The initial recognition and subsequent measurement of such derivatives are based on fair value, and when the fair value is positive, the derivatives are recognized as assets, otherwise recognized as liabilities.

(7) Overlay approach for financial assets

When the Company applied IFRS 9 for the first time, the overlay approach described in IFRS 4 “Insurance Contracts” was adopted, and for the designated financial assets, an amount was reclassified between gains and losses and other comprehensive income, making the gains and losses of the designated assets at the closing day of the reporting period equal to the gains and losses of such financial assets if designated to comply with IAS 39. Accordingly, the reclassified amount is the difference between the following two items:

A. Gains and losses of the designated financial assets applicable to IFRS 9; and
B. Gains and losses of such financial assets if designated to comply with IAS 39.

A financial asset meets the specific requirements of the overlay approach only when the following conditions are met:

A. The financial asset is applicable to IFRS 9 through gains and losses measured at fair value, but if IAS 39 is applied, it will not be measured at fair value through gains or losses as a whole; and
B. The financial asset is not held for activities linked to contracts within the scope of IFRS 4 “Insurance Contracts.”

Thereafter, a financial asset is designated as qualified for overlay approach only when one of the following conditions is met:

A. The asset is initially recognized; or
B. The asset is newly qualified for being held for activities linked to the contract within the scope of the IFRS 4 “Insurance Contracts,” but previously did not meet the requirements.

The overlay approach should continue to be applied to the designated financial asset until it is derecognized; however, when the financial asset no longer meets the requirements of being held for activities linked to contracts within the scope of IFRS 4 “Insurance Contracts,” it should be de-designated; also, on the beginning day of any annual period, designations of financial assets to the overlay approach may all be ceased, and when such an act occurs, IAS 8 “Accounting Policy Changes” should be applied.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

6. Measurement at fair value

Fair value refers to the price under which an amount is received from selling an asset or paid for transferring a liability in an orderly transaction among market participants on the measurement day. The measurement of fair value assumes that the sale of assets or transfer of liabilities takes place in one of the following markets:

(1) The main market for such assets or liabilities, or

(2) If there is no such a main market, the most favorable market shall apply.

The main market or the most favorable market must be accessible by the market participants.

The fair value of an asset or a liability is assumed by the market participants to price the asset or liability, and it is assumed that the market participants are acting in their best economic interests.

The measurement at fair value of a non-financial asset takes into account the efficacy that the buyer will take the asset to its highest and best use or the seller will sell the asset to the counterpart who will take the asset to its highest and best use, in order to generate economic benefits.

The Company adopts evaluation techniques which allow collection of appropriate and sufficient information under relevant circumstances so as to measure fair values, as well as maximize the use of observable input values and minimize the use of unobservable input values.

7. Property, plant, and equipment

Property, plant, and equipment are recognized based on the acquisition costs, and are listed after deducting accumulated depreciation and accumulated impairment. The said costs include the costs of dismantling and removing the property, plant and equipment and restoring the venue, as well as the necessary interests incurred out of unfinished projects. Significant components of the property, plant, and equipment are depreciated separately. Significant components of the property, plant and equipment that need to be periodically replaced are treated as individual assets, recognized based on their individual service life and depreciated separately. The book value of the replacement cost is derecognized in accordance with IAS 16 “Property, Plant and Equipment.” A major maintenance cost qualified for recognition is regarded as replacement cost and recognized as part of the book value of the equipment, while other repair and maintenance expenses are recognized as gains and losses.

Depreciation of the following assets is accrued using the straight-line method, based on the estimated service life:

Buildings and structures 5–50 years Miscellaneous equipment 5 years

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

The property, plant and equipment or any of its significant components after initial recognition that are disposed of or not expected to generate inflow of economic benefits from future use or disposal are derecognized into gains and losses.

The residual value, service life and depreciation method of the property, plant and equipment are assessed at the end of each fiscal year, and if the expected value is different from the previous estimate, the change is regarded as a change in accounting estimates.

8. Investment property

The company’s own investment property is measured at the original cost, including the acquisition cost. The book value of investment property includes the cost of repairing or adding new investment to the property if only the cost is recognizable; however, the maintenance expenses incurred from day to day are not regarded as part of the cost. After initial recognition, the investment property, except for being qualified as a non-current asset held for sale (or included in the disposal group of being held for sale) according to IFRS 5 “Non-current Assets held for Sale and Discontinued Operations,” the measurement of investment property is based on the cost model in accordance with IAS 16 “Property, Plant and Equipment”; however, if it is held by the lessee as a right-of-use asset and regarded as not being held for sale according to IFRS 5, the stipulations of IFRS 16 are applied.

Depreciation of the following assets is accrued using the straight-line method, based on the estimated service life:

Buildings and structures 30–50 years

Investment property is derecognized into gains and losses when it is disposed of or will no longer be used and economic benefits out of future disposal are not expected.

Assets are transferred into or out of investment property based on their actual use.

When a property either meets or no longer meets the definition of investment property and evidence shows change of use, the property is either transferred into or out of investment property, accordingly.

9. Leases

On the execution date, a contract is assessed whether it is attributed to, or includes, leasing. If a contract has transferred control of use of identified assets for a period of time in exchange for consideration, it is (or includes) a lease. Whether a contract has transferred control of use of identified assets for a period of time is determined on the basis of the following two factors over the entire period of use:

(1) Obtaining the right to almost all economic benefits from the use of the identified assets; and
(2) The right to direct the use of the identified assets.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

For a contract that is attributed to (or includes) a lease, the lease components in the contract are regarded as individual ones and are treated separately from the non-lease components. For a contract that includes one lease component and one or more additional lease or nonlease components, the consideration is allocated to the lease components, based on the relative stand-alone price of each lease component and the aggregate of stand-alone prices of the non-lease components. The relative stand-alone prices of lease and non-lease components are determined on the basis of the prices charged by the lesser (or similar suppliers) separately for the components (or similar components). If the observable standalone price is not readily available, the maximized observable information is used to estimate the stand-alone price.

The Company as a lessee

In addition to compliance and selection of short-term leases or leases of low-value target assets, when the Company is the lessee of the lease contract, all the leases are recognized using the right-of-use assets and lease liabilities.

The lease liabilities are measured at present value of the lease payment not yet paid on the commencement date. If the lease implied interest rate is easy to determine, the lease payment is discounted at the said implied interest rate. If it is not, the interest rate for the lessee’s incremental borrowing is used. On the commencement date, the lease payments included in the lease liabilities include the following due payments related to the right-to-use assets during the lease period but not yet paid on that date:

(1) Fixed payments (including substantive fixed payments), minus any collectable lease incentives;
(2) Lease payments that vary depending on changes in an index or rate (initial measurement by the index or rate on the commencement date);
(3) The amount expected to be paid by the lessee under the residual value guarantee;
(4) The price of exercising the purchase option, if exercising the option is reasonably assured; and
(5) The penalty payable for the termination of the lease, if in the lease period it shows that the lessee will exercise the option to terminate the lease.

After the commencement date, the lease liabilities are measured at amortized cost, and the effective interest rate method is used to increases the book value of the lease liabilities to reflect the interests on lease liabilities; fulfilled lease payments reduce the book value of lease liabilities.

On the commencement date, the right-of-use asset is measured by the costs, which include:

(1) The amount from initial measurement of the lease liabilities;
(2) Any lease payments paid on or before the commencement date, minus any lease incentives received;
(3) Any initial direct costs incurred by the lessee; and
(4) The estimated cost for the lessee to dismantle and remove the target asset and restore the venue, or restore the target asset to the state required by the lease terms and conditions.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

The right-of-use asset is subsequently measured by deducting the accumulated depreciation and accumulated impairment loss from the cost, i.e. using the cost model to measure the right-of-use asset.

If the ownership of the target asset is transferred to the Company, or if the cost of the rightof-use asset reflects that the company will exercise the purchase option, when the lease period expires, the right-of-use asset is depreciated from the commencement date till the end of the service life of the target asset. Otherwise, the right-of-use asset is depreciated from the commencement date till the end of the service life of the right-of-use asset or till the expiration of the lease period, whichever is earlier.

The Company applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and deal with any identified impairment losses accordingly.

In addition to compliance and selection of short-term leases or leases of low-value target assets, the right-of-use assets and lease liabilities are listed in the balance sheet, and the leaserelated depreciation and interests are listed in the consolidated income statement.

For short-term leases and leases of low-value target assets, the lease payments are recognized as expenses on a straight-line basis or another systematic basis during the lease period.

The Company as a lesser

The leases are classified into operating and financial ones on the date of contract establishment. A lease transferring almost all the risks and rewards attached to the ownership of the target asset is classified as a financial lease; otherwise, as an operating lease. On the commencement date, the assets held under the financial leases are listed in the balance sheet as financial lease payments receivable based on the net lease investment.

For contracts including lease and non-lease components, the consideration in the contract is allocated in accordance with IFRS 15.

The lease payments out of operating leases are recognized as rental income on a straight-line basis or another systematic basis. Variable lease payments of operating leases that are not dependent on a certain index or rate are recognized as rental income when they occur.

10. Intangible assets

Intangible assets acquired separately are initially recognized at cost. The cost of an intangible asset acquired through a merger is the fair value on the acquisition date. An intangible asset after being initially recognized has its book value based on its cost minus accumulated amortization and accumulated impairment losses. An internally generated intangible asset not qualified for recognition is not capitalized; instead, it is recognized as gains and losses when it occurs.

The service life of intangible assets is assessed as limited.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

The intangible asset with a limited service life is amortized over its service life, and an impairment test is performed when a sign of impairment appears. The amortization period and amortization method of intangible assets with limited service life are reviewed at least at the end of each fiscal year. If the estimated service life of an asset is different from the previous estimate or the expected pattern of future economic benefit consumption has changed, the amortization method or amortization period are adjusted and considered as changes in accounting estimates.

The profit or loss arising from derecognition of intangible assets is recognized as gains and losses.

11. Impairment of non-financial assets

On the closing date of each reporting period, assets applicable to IAS 36 are assessed for signs of impairment. If an asset has signs of impairment or is scheduled for an annual impairment test, the asset or the cash-generating unit of the asset is the test target. If the book value of the tested asset or its cash-generating unit is greater than its recoverable amount, an impairment loss is recognized. The recoverable amount is the net fair value or use value, whichever is greater.

At the end of each reporting period, assets other than goodwill are assessed for signs that the impairment loss previously recognized is reduced or no longer exists. If such signs appear, the recoverable amount of the asset or its cash-generating unit is assessed. If the recoverable amount increases due to changes in the estimated service potential of the asset, the impairment loss is reversed. However, if the book value after the reversal does not exceed the value before the impairment loss was recognized, the accrued depreciation or amortization is deducted from the book value.

The impairment loss and the number of reversals of continuing operations are recognized as gains and losses.

12. Segmentation requirements for specific assets

The Company’s business of compulsory automobile liability insurance (hereinafter referred to as the Insurance) is based on Article 4 of the “Regulations for the Accounting Arrangement and Procedure of Submitting Business and Financial Reports of Compulsory Automobile Liability Insurance” stipulated in Article 47, Paragraph 3 of the “Compulsory Automobile Liability Insurance Act” for the insurance-related accounting.

The special reserve fund for the Insurance in accordance with Article 5 of the “Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance” is used for purchase of treasury bills or time deposits in financial institutions. However, funds approved by the competent authority may be used to purchase the following domestic securities:

(1) Non-exchangeable government bonds;
(2) Financial bonds, negotiable certificates of deposit, bank acceptance drafts, commercial promissory notes guaranteed by financial institutions. However, financial bonds are limited to general financial bonds.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

The amount of the purchased treasure bills and the time deposits in financial institutions shall not be less than 30% of the total retained pure premiums earned that has been certified by a CPA in the most recent period, and the competent authority may also consider the Company’s operations to appropriately increase the lower limit of loan-deposit ratio of the time deposits.

If the balance of the special reserve fund has not reached 30% of the retained pure premiums earned that has been certified by a CPA in the most recent period, the reserve shall be fully used to purchase treasure bills or for time deposits in financial institutions.

In accordance with Article 6 of the “Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance,” the funds (various reserves, payables, temporary credits and pending transfers) held for the Insurance, except for special reserves as stipulated above, shall be used for demand deposits and time deposits in financial institutions. However, funds approved by the competent authority may be used to purchase the following domestic securities:

(1) Treasury bills;
(2) Negotiable certificates of deposit, bank acceptance drafts, and commercial promissory notes guaranteed by financial institutions;
(3) Repurchase government bonds.

The above demand deposits in financial institutions shall neither be less than 45% of the funds held by the Company for the Insurance after deducting the special reserve and nor be less than 30% of the retained pure premiums earned that has been certified by a CPA in the most recent period, and the competent authority may appropriately increase the loan-deposit ratio of the demand deposits based on the Company’s operating conditions.

If the total amount of unearned premium reserve and claims reserve of the Insurance is less than 30% of the retained pure premiums earned that has been certified by a CPA in the most recent period, the funds held for the Insurance shall be fully used for demand deposits in financial institutions.

In accordance with Article 11 of the “Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance,” when the property insurance business ceases to operate or ceases to deal with the aforementioned insurance, the various reserves of such insurance shall be transferred and merged into the various reserves of other insurers undertaking such insurance. If there is no other insurer to undertake such insurance, and the liability for the Insurance is over and the special reserve has a positive balance, the asset corresponding to the special reserve shall be transferred to the Motor Vehicle Accident Compensation Fund.

When the property insurance business is ordered to suspend operations for liquidation, or ordered to dissolve, or its license for the Insurance is revoked, if no other insurer undertakes the Insurance, and the liability for the Insurance is over and the special reserve has a positive balance, the asset corresponding to the special reserve shall be transferred to the Motor Vehicle Accident Compensation Fund.

13.Classification of insurance contracts

An insurance contract refers to an agreement in which the insurer accepts the transfer of significant insurance risks from the policyholder, and agrees to compensate the policyholder when an uncertain event (insurance event) occurs in the future and causes damage to the policyholder. The significant insurance risks refer to the occurrence of any insurance event that causes the Company to pay

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

significant amounts of additional benefits.

An insurance contract with a financial product nature refers to a contract that transfers significant financial risks. The financial risk refers to the risk that one or more specific interest rates, financial product prices, commodity prices, exchange rates, price indices, rate indices, credit ratings, credit indices or other variables may change in the future. If any of the above variables is non-financial, it is not regarded as held by a party to the contract.

An insurance policy that meets the definition of an insurance contract at initial judgment remains an insurance contract before all its rights and obligations disappear or expire, even if the insurance risks it undertakes during the policy period has been significantly reduced. However, if an insurance contract with a financial product nature transfers significant insurance risks to the Company after its renewal, it is reclassified as an insurance contract.

14. Insurance liability

The insurance liability reserve provided for insurance contracts is based on the “Regulations on Insurance Companies Various Reserves,” “Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance,” “Risk Spreading Mechanism of Residential Earthquake Insurance,” “Regulations on Property Insurance Companies Various Reserves for Energy Insurance,” “Property Insurance Companies Reserves for Commercial Earthquake Insurance and Typhoon Flood Insurance,” and “Notes on Strengthening Property Insurance Companies Reserves for Natural Disaster Insurances (Commercial Earthquake Insurance and Typhoon Flood Insurance),” and certified by an FSC-licensed actuary. The insurance liability reserves are provided as follows: (1) Unearned premium reserve

For valid contracts not yet expired or underwriting risks not yet terminated during the insurance period, the unearned premium reserve is set aside based on calculated unexpired risks of individual insurances.

(2) Loss reserve

The loss reserve is calculated based on the insurance types and past claims experience and expenses by actuarial principles, and provided in accordance with the reported but not settled (outstanding loss) and unreported claims, while the outstanding loss are calculated on a case-by-case basis by the insurance types.

(3) Special reserves

Special reserves are divided into “Special Reserves for catastrophic event” and “Special Reserves for fluctuation of risk,” and in accordance with IAS 12 “Income Taxes,” the annually added provisions are deducted by the income taxes and listed in the special surplus reserve under equity. The amount to be written down or recovered as required by statutory regulations and deducted by income tax in accordance with IAS 12 can be carried out from the appropriated retained earnings of the special surplus reserve under equity.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

On January 1, 2013, the special reserves initially set aside under insurance liabilities, including special reserves for catastrophic event and special reserves for fluctuation of risk for insurance types other than compulsory automobile liability insurance, nuclear energy insurance, policy-based basic residential earthquake insurance, commercial earthquake insurance, and typhoon flood insurance , have the highest priority to supplement the special reserves for catastrophic event and special reserves for fluctuation of risk to full level, listed under liabilities, and in accordance with IAS 12, the special reserves for catastrophic event and special reserves for fluctuation of risk of other insurance types are deducted by income taxes and listed in the special surplus reserve under equity.

Special reserves for catastrophic event

The reserve for each insurance type is set aside in accordance with the ratio of special reserve for catastrophic event as stipulated by the competent authority.

For an accident qualified for the major disaster conditions issued by the authority, where the total amount of individual company’s accumulated retained claims for each insurance type amounts to $30,000, and the total amount of the overall property insurance industry’s claims payable for each insurance type exceeds $2,000,000, the claims can be written down from the special reserve for the catastrophic event.

Catastrophic event special reserves for commercial earthquake insurance and typhoon flood insurance provided for more than 30 years can be withdrawn; catastrophic event reserves for other insurance types provided for more than 15 years can have a withdrawal mechanism established by an actuary and sent to the competent authority for reference.

Special reserves for fluctuation of risk

When the balance of the actual indemnity of an insurance written down from the insurance’s catastrophic event special reserve exceeds the expected indemnity, if it is a commercial earthquake insurance or a typhoon flood insurance, a special reserve for fluctuation of risk equal to 75% of the difference is set aside, and for the other insurance types, the special reserve is 15% of the difference.

When the balance of the actual indemnity of an insurance written down from its special reserve for catastrophic event exceeds the expected indemnity, the excess may be written down from the special reserve for fluctuation of risk. If the special reserve for fluctuation of risk is insufficient to write down the indemnity, special reserves for fluctuation of risk provided for other insurance types may be used for the write-down, and the insurance types as well as the amounts of the substitute write-down should comply with relevant regulations set by the competent authority and sent to the authority for reference.

When the accumulated special reserve for the fluctuation of risk in commercial earthquake insurance exceeds 18 times its current year’s retained premiums earned, or such a reserve for the typhoon flood insurance exceeds 8 times its current year’s retained premiums earned, or such a reserve for the accident insurance or the health insurance exceeds 30% of its current year’s retained premiums earned, or such a reserve for other type insurance exceeds 30% of its current year’s retained earned premium, the excess is withdrawn.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(4) Premium deficiency reserve

The unexpired contracts or undertaken risks during the insurance period are assessed for possible claims and expenses in the future, and if the assessment exceeds the unearned premium reserve and expected future premium revenues, the premium deficiency reserve is provided.

(5) Policy reserve

The minimum Policy reserve of a health insurance with a period of more than one year is regularly revised on an annual basis. The Policy reserve for a health insurance with special features is determined by the competent authority.

15. Liability adequacy test

In accordance with Article 24-1 of the “Regulations on Insurance Companies Various Reserves” to test an insurance contract for its liability adequacy required by IFRS 4, the insurance’s future cash flow is assessed based on the current information on each balance sheet date to test the adequacy of recognized insurance liabilities, and a reserve for the inadequacy is provided based on the principle of actuarial practice.

16. Treasury stock

Treasury stocks are recognized at the acquisition cost and listed as a deduction of equity. The trading spread of treasury stocks is recognized under equity.

17. Share-based payment transactions

The cost of stock-based payment transactions between the Company and employees for equity delivery is measured at fair value of the equity instrument on the date of grant, and the fair value is measured by an appropriate pricing model. The date that the subscription price and the number of shares are confirmed is the grant date, on which the expenses are recognized at the fair value of the equity instruments, and the equity is increased accordingly.

18. Insurance premium revenues and acquisition costs

The insurance premium revenues of the direct underwriting business are recognized based on all the insurance policies undertaken and approved in the current period; the ceded-in reinsurance premium revenues are regularly booked on the bill arrival date, and on the balance sheet date the unreached reinsurance premium revenues are assessed with a reasonable and systematic method. The related acquisition costs (such as commission expenses, agency fees, handling fees and reinsurance commissions) are recognized in the same period without being deferred.

The unearned premium reserve is set aside for valid insurance contracts not expired or with undertaking risks not yet terminated during the insurance period, and the unearned premiums are calculated based on the unexpired risks of individual insurances, for which the reserves are set aside by the insurance categories.

The unearned premium reserve for the compulsory automobile liability insurance is set aside in accordance with the provisions of the “Regulations for the Various Reserves for Compulsory Automobile Liability Insurance.”

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

The unearned premium reserve for the residential earthquake insurance is set aside in accordance with the “Enforcement Rules for the Risk Spreading Mechanism of Residential Earthquake Insurance.”

The unearned premium reserve for the nuclear energy insurance is set aside in accordance with the “Regulations on Property Insurance Companies Various Reserves for Energy Insurance” (Jinguanbaocai Zi No. 10102517091).

Unless otherwise stipulated by laws, provision for the unearned premium reserve is decided by an actuary based on the insurance attributes, and the amount (no change permitted unless approved by the competent authority) is certified by a certified actuary.

Taxes related to insurance business incomes are recognized on an accrual basis in accordance with the laws of value-added taxes, non-value-added taxes and stamp taxes.

19. Costs of insurance claims

Insurance claims of direct underwriting are recognized based on the reported and settled claims (including indemnity expense) incurred and accepted in the current period, and if the claims department has determined the amount of the claims while the accounting and financial department has not yet performed the payment procedure, or if the claims department has not yet determined the amount of the claims, the claims are estimated according to actual data on a case-by-case basis by insurance category, and recognized as a net change in reserve for RBNS claims.

The reinsurance claims of ceded-in reinsurance are booked on the bill arrival date, and on the balance sheet date, unreached reinsurance claims are estimated with a reasonable and systematic method and recognized as a net change in the claims reserve.

Unreported insurance claims of ceded-in reinsurance and direct underwriting are calculated based on past claims experience and expenses by the insurance type, in accordance with actuarial principles, and are recognized as a net change in the reserve for unreported claims.

The claims recoverable from reinsurers (including claim expenses) of a ceded reinsurance contract, if already paid, are recognized as claims recovered from reinsurers; if they are Outstanding loss or unreported (including claim expenses), they are recognized as a net change in the Loss reserve.

The Loss reserve is not calculated by discount.

Claims reserve for the compulsory automobile liability insurance is set aside in accordance with the “Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance.”

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Claims reserve for the residential earthquake insurance is set aside in accordance with the “Risk Spreading Mechanism of Residential Earthquake Insurance.”

Claims reserve for the nuclear energy insurance is set aside in accordance with the “Regulations on Property Insurance Companies Various Reserves for Energy Insurance” (Jinguanbaocai Zi No. 10102517091).

20. Undertaking remnants and subrogation rights

The remnants of the direct underwriting business that are accepted by law as a result of the claims settlement are recognized at fair value; for the right of recovery of the equity of an underwriting object obtained by law, if the actual recovery situation is clear (likely future inflow of economic benefits) and the amount can be reliably measured, it is recognized.

21. Reinsurance

In order to limit the amount of losses that may be caused by certain risk exposure events, the Company operates the reinsurance business in accordance with the business needs and relevant insurance laws and regulations. For the ceded reinsurance, the Company shall not refuse to perform its obligations to the insured on the grounds that the reinsurer has failed to perform its obligations.

The ceded reinsurance business is recognized as reinsurance expenses by ceded reinsurance contracts. Its financial report includes considerations for the deadline and should be consistent with the premium revenues. On the balance sheet date, unreached reinsurance expenses are estimated with a reasonable and systematic method. Its related income (e.g. reinsurance commission income) are recognized in the same period. The relevant reinsurance gains and losses are not deferred.

Reinsurance reserves include: ceded unearned premium reserve, ceded Claims reserve, ceded policy reserve, ceded premium deficiency reserve, and ceded liabilities adequacy reserve, which are the rights to the reinsurer in accordance with the “Regulations on Insurance Companies Various Reserves” and the reinsurance contracts.

The Company’s rights to the reinsurer are reinsurance contract assets, including reinsurance reserve assets, claims recoverable from reinsurers, and net due from reinsurers and ceding companies, which are regularly assessed to determine whether they have been impaired or cannot be recovered. When objective evidence shows that events that occurred after the initial recognition of the reinsurance contract assets may make it impossible to recover all of the receivables specified in the contract, and the impact on the amounts recoverable from the reinsurer can be reliably measured, the portion of the recoverable amounts less than the book value of the reinsurance contract assets is recognized as impairment losses. The reinsurance contracts are classified by determining whether they transfer significant insurance risks to the reinsurer, and if not, the contracts are measured and recognized by deposit accounting.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

22. Co-insurance organization, co-insurance and guarantee fund agreement

The Company has entered into a “Compulsory Automobile Liability Insurance Co-Insurance Contract” with all member companies that have been approved by the competent authority to operate compulsory automobile liability insurance, agreeing that all the underwritten business is included in the co-insurance, and violators must pay liquidated damages, and the co-insurance organization may audit the business. The underwritten co-insurance business is calculated based on pure premiums, which are allocated according to the agreed co-insurance ratio. Any member company participating in the co-insurance shall not arbitrarily withdraw from the business, except for liquidation or closure. Ceasing to operate the automobile liability insurance business spells withdrawal from the coinsurance at the same time, and the natural maturity mechanism is applied to the unexpired liabilities.

The company has entered into a “Travel Agency Performance Bond Co-Insurance Contract” with property insurance companies in the underlying business and reinsurance companies, agreeing that all the underwritten business is included in the co-insurance, and violators must pay liquidated damages, and the co-insurance organization may audit the business. The underwritten co-insurance business is calculated based on the inclusion of co-insurance premiums (i.e. risk premiums), and each member company bears its own co-insurance liabilities according to its underwriting portion, and is not jointly liable. A member company may notify the co-insurance organization in writing to withdraw from the co-insurance three months before the beginning of the following year; its initial co-insurance underwriting portion remains till the end of the current year, and it continues to be responsible for the unfulfilled liabilities till their natural maturity.

23.Stability fund

To protect the basic rights and interests of the insured and maintain financial stability according to Article 143-1 of the Insurance Law, a stability fund is established, of which a fund for compulsory insurance is set aside with the contribution rate based on Article 44 of the Compulsory Automobile Insurance Act, and another fund for non-compulsory insurance is also set aside according to the “Life Insurance and Property Insurance Stability Fund Contribution Standard,” both of which are deposited in the Property Insurance Stability Fund, and booked under the account of Stability Fund Expenditure.

24.Retirement Benefits Plan

The Company’s employee retirement plan is applicable to all employees who are officially employed, and a retirement fund is fully set aside for the management by the Supervisory Committee of Business Entities’ Labor Retirement Reserve and deposited into a dedicated pension fund account; since the retirement fund is deposited in the name of the committee, it is completely separated from the Company, and therefore not included in the above financial statements.

For the post-retirement benefit plan of the defined contribution plan, the monthly pension contribution rate shall not be less than 6% of the employee’s monthly salary, and the amount allocated is recognized as current expenses.

The post-retirement benefit plan of the defined benefit plan is listed based on an actuarial report with the projected unit credit method on the closing date of the reporting period. The remeasurement of the net defined benefit liability (asset) includes any changes in the return of plan assets and the impact of the asset ceiling, minus the net interest of the net defined benefit liability (asset), and actuarial gains and losses. When the remeasurement of the net defined benefit liability (asset) occurs, it is listed under other comprehensive income, and immediately recognized in retained surplus. The service cost of previous period is the amount of change in the present value of the defined benefit obligation caused by the planned revision or reduction, and is recognized as an expense on the earlier date of the following two:

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(1) When the planned revision or reduction occurs; and
(2) When the related restructuring costs or resignation benefits are recognized.

The net interest of the net definite benefit liability (asset) is determined by multiplying the net defined benefit liability (asset) by the discount rate, both of which are determined at the beginning of the annual reporting period, and then in consideration of any change in the net defined benefit liability (asset) due to the appropriated amount and benefit payment. When the loss is recognized as gains and losses, any exchange component of the profit or loss is recognized as gains and losses.

25. Taxation

The income tax expense (benefit) refers to the aggregate amount related to the current income tax and deferred income tax included in the current gains and losses.

Income tax expenses in the current period

The current income tax liability (asset) related to the current and previous periods is measured by the tax rate and tax laws that have been legislated or substantively legislated at the end of the reporting period. The current income tax and those recognized as other comprehensive income or directly recognized as equity are respectively recognized as other comprehensive income other than gains and losses.

The additional profit-making enterprise income tax on the undistributed surplus is recognized as income tax expense on the day when the shareholders’ meeting decides the surplus distribution.

Deferred tax

The deferred income tax is calculated based on the temporary difference between the tax basis of assets and liabilities and the book value on the balance sheet at the end of the reporting period.

Except for the following two, all the taxable temporary differences are recognized as deferred income tax liabilities:

(1) The initial recognition of goodwill; or the initially recognized assets or liabilities that are not generated by a business merger and does not affect accounting profits at the time of the transaction, nor does it affect the taxable incomes (losses);
(2) Taxable temporary differences arising from investment in subsidiaries, affiliates and joint agreement equity, whose reversal timing is controllable and is unlikely to be reversed in the foreseeable future.

Except for the following two, deductible temporary differences, unused tax losses and deferred income tax assets arising from unused tax deductions are recognized within the range of possible future taxable incomes:

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(1) Deductible temporary differences related to the initially recognized assets or liabilities from nonmerger transactions that neither affect accounting profits nor taxable incomes (losses) at the time of the transaction;
(2) Deductible temporary differences related to investment in subsidiaries, affiliates, and joint agreement equity that are likely to be reversed only in the foreseeable future, and recognized with sufficient taxable income at the time of reversal for use by the temporary differences.

Deferred income tax assets and liabilities are measured by the tax rate for the period in which the assets are expected to be realized or the liabilities settled, and the tax rate is based on the tax rate and tax law that has been legislated or substantively legislated at the end of the reporting period. The measurement of deferred income tax assets and liabilities reflects the tax consequences arising from the book value of the assets expected to be recovered or the liabilities to be settled at the end of the reporting period. The deferred income tax related to items not recognized as gains and losses is not recognized as gains and losses; instead, it is recognized as other comprehensive income or directly as equity depending on it transaction. Deferred income tax assets are reviewed and recognized at the end of the reporting period.

The deferred income tax assets and liabilities have the statutory enforcement power to offset only the current income tax assets and liabilities, where the deferred income tax belongs to the same taxpayer and levied by the same tax authority.

The interim income tax expenses are accrued and disclosed at the tax rate applicable to the expected total earnings of the current year, that is, the estimated annual average effective tax rate is applied to the net income before tax of the interim period. The estimated annual average effective tax rate only includes the current income tax expense. The deferred income tax is consistent with the annual financial report and is recognized and measured in accordance with the provisions of IAS 12 “Income Tax.” When there is change in tax rate during the interim period, the impact of the change in tax rate on the deferred income tax shall be entirely recognized in the profit and loss, other comprehensive profit and loss, or directly recognized in the equity.

5. Main Source of Significant Accounting Judgment, Estimates and Assumptions Uncertainty

The preparation of the Company’s financial statements requires the corporate management to make judgments, estimates and assumptions at the end of the reporting period, which affects the disclosure of revenues, expenses, and assets and liabilities as well as contingent liabilities. However, the uncertainties in these major assumptions and estimates may result in significant future adjustments to the book value of the assets or liabilities.

1. Judgments

In the process of adopting the Company’s accounting policies, the corporate management makes the following judgments that have a significant impact on the amounts recognized in the financial statements:

(1) The level of significance of insurance risk transfer measured based on the risk ratio of the initial insurance policy.

Insurance policy risk ratio

= (Amount paid by the insurance company under the scenario of an insured accident/Amount paid by the insurance company under the scenario of a non-insured accident-1)×100%

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

The initial insurance policy that meets one of the following conditions is recognized as an insurance contract:

A. The insurance period is greater than or equal to 5 years, and at least 5 policy years with the risk ratio greater than 10% (or 5%);
B. The insurance period is less than 5 years, and more than half of the policy years with the risk ratio greater than 10% (or 5%).

The formula to calculate the insurance risk ratio shows that apparently property insurance policies usually meet the conditions for transferring significant insurance risks, and therefore insurers can often directly recognize most property insurance policies as insurance contracts without calculating the risk ratio of the initial insurance policy.

(2) Use the risk ratio of the reinsurance policy to measure the level of significance of the insurance risk transfer.

The reinsurance policy risk ratio = (Σ present value of the net loss incurred by the ceded-in reinsurer × probability of occurrence/present value of the expected premium of the ceded-in reinsurer) × 100%

The reinsurance policy with risk ratio greater than 1% is recognized as a reinsurance contract.

2. Estimates and assumptions

The main information source of uncertainty about the future estimates and assumptions made at the end of the reporting period has a significant risk of causing significant adjustments in the book value of assets and liabilities in the next fiscal year. It is described as follows:

(1) Fair value of financial instruments

When the fair value of financial assets and financial liabilities recognized on the balance sheet cannot be obtained from the active market, the fair value is determined using valuation techniques, including income approach (such as discounted cash flow model) or market approach, whose assumed changes will affect the fair value of the reported financial instruments. Please see Note 7 for details.

(2) Insurance liabilities

The insurance liabilities are measured in accordance with the “Regulations on Insurance Companies Various Reserves”

The unearned premium reserve is calculated based on the unexpired risks by risk types, and the reserves are set aside in accordance with the risk characteristics determined by the actuary.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

The Claims reserve is estimated based on the past claim experiences and settlement expenses and actuarial principles. The main assumptions are the loss development factor and the expected claim rate, leading to the final indemnity cost. The loss development factors and expected claim rates are based on the Company’s historical claim experiences, taking into account adjustments to the Company’s policies such as fee rates and claims management.

The estimation of the liability adequacy reserve complies with the “Actuarial Standards of Practice of Promulgation 40 - Contract Classification and Liability Adequacy Test” promulgated by the Actuarial Association of Chinese Taipei. When the liability adequacy reserve is assessed, the current estimate of the insurance contract future cash flow is based on reasonable estimation of future insurance benefits, premium revenues and related expenses.

The professional judgment used in the above liability assessment affects the net change in insurance liabilities and the insurance liabilities recognized in the financial statements.

(3) Reinsurance reserve asset

It includes ceded unearned premium reserve, ceded claims reserve, ceded liability reserve, ceded premium deficiency reserve, and ceded liability adequacy reserve. The reserves are estimated in accordance with the “Regulations on Insurance Companies Various Reserves” and by the terms of the reinsurance contracts.

(4) Post-retirement benefit plan

The pension costs of the post-retirement benefit plan and the present value of the defined benefit obligations are decided by the actuarial valuation. The actuarial valuation involves a variety of assumptions, including: determined discount rates as well as increases in future wages, mortality and pension payments. For detailed descriptions of the assumptions used to measure the pension costs and the defined benefit obligations, please see Note 6.

6. Major accounting items described

1. Cash and cash equivalents

(1) This item is detailed as follows:

==> picture [420 x 143] intentionally omitted <==

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

Item 2022.3.31 2021.12.31 2021.3.31
Cash on hand $8,656 $10,396 $9,437
Working capital 1,608 1,623 2,003
Check deposit 31,732 62,666 27,941
Demand deposits 2,013,174 2,027,204 2,068,361
Time deposits 9,295,110 9,310,166 8,692,068
Cash equivalents － RP - - 50,000
-
Cash equivalents – Short-term notes 350,437 354,605
Total $11,700,717 $11,766,660 $10,849,810
----- End of picture text -----

(2) For the guarantee provided with the Company’s bank deposits, please see Note 9.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

2. Accounts receivable

(1) This item is detailed as follows:

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

Item 2022.3.31 2021.12.31 2021.3.31
Notes receivable $260,490 $270,908 $315,827
Notes receivable- Non-performing 170 - -
loans
Less: Allowance for losses (2,775) (2,709) (3,158)
Net amount $257,885 $268,199 $312,669
Insurance premium receivable $1,001,417 $1,253,962 $1,016,759
Insurance premium receivable – 203,161 139,299 122,780
Non-performing loans
Less: Allowance for losses (19,170) (28,372) (21,342)
Net amount $1,185,408 $1,364,889 $1,118,197
Other receivables $318,964 $313,469 $401,720
Other receivable- Non-performing 95 220 148
loans
Less: Allowance for losses (1,332) (1,739) (1,235)
Net amount $317,727 $311,950 $400,633
(2) The aging analysis of accounts receivable:
Item 2022.3.31 2021.12.31 2021.3.31
Notes receivable
Less than 90 days $260,660 $270,908 $315,827
- - -
91–365 days
- - -
More than 366 days
Total $260,660 $270,908 $315,827
Insurance premium receivable
Less than 90 days $1,001,417 $1,253,962 $1,016,759
91–365 days 199,083 133,043 116,751
More than 366 days 4,078 6,256 6,029
Total $1,204,578 $1,393,261 $1,139,539
Other receivables
Less than 90 days $318,964 $269,976 $401,720
91–365 days 73 43,615 130
More than 366 days 22 98 18
合計 $319,059 $313,689 $401,868
----- End of picture text -----

(2) The aging analysis of accounts receivable:

(3) The Impairment is assessed according to the “Guidelines for Handling Assessment of Assets, Overdue and Non-Performing Loans and Bad Debts by Insurance Enterprises” and IFRS 9. For the details of allowance for losses, please see Note 7.

Financial assets and financial liabilities at fair value through profit or loss

(1) This item is detailed as follows:

Item	2022.3.31	2021.12.31	2021.3.31
Financial assets mandatorily measured at fair value through profit or loss: Fund Stock Financial bonds Asset securities Derivatives Total Item	$2,489,944 5,345,486 51,133 1,031,860 - $8,918,423 2022.3.31	$2,468,560 5,295,282 51,137 960,234 47,972 $8,823,185 2021.12.31	$1,986,907 5,464,852 51,121 972,549 59,303 $8,534,732 2021.3.31
Financial liabilities mandatorily measured at fair value through profit or loss: Derivatives	$91,657	$-	$11,992

(2) No guarantee provided for the financial assets at fair value through profit or loss.
(3) For the details of derivatives, please see Note 23.2.
(4) Since the application of IFRS 9, the Company has also adopted the overlay approach of IFRS 4 “ Insurance Contracts ” to express profit or loss of the designated financial assets. The financial assets related to the invested insurance contracts and designated to the overlay approach are as follows:

Financial assets mandatorily measured at fair value through profit or loss: Fund Stock Asset securities Total	2022.3.31	2021.12.31	2021.3.31
	$2,489,944 5,345,486 1,031,860 $8,867,290	$2,468,560 5,295,282 960,234 $8,724,076	$1,986,907 5,464,852 972,549 $8,424,308

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(5) During January 1 to March 31, 2022 and January 1 to March 31, 2021, respectively, the amounts of reclassification between profit or loss and other comprehensive income of such financial assets designated to the overlay approach are as follows:

Gains (losses) due to applying IFRS 9 to profit or loss (Gains) losses if applying IAS 39 to profit or loss Gains (losses) on reclassification using overlay approach	2022.1.1- 2022.3.31	2021.1.1- 2021.3.31
	$(76,713) (82,460) $(159,173)	$536,609 (331,297) $205,312

Due to the adoption of overlay approach, profits from financial assets at fair value through profits or loss are decreased from NT$218,729 thousand to NT$59,556 thousand and loss are decreased from NT$499,962 thousand to NT$294,650 thousand during January 1 to March 31, 2022 and January 1 to March 31, 2021, respectively.

4. Financial assets at fair value through other comprehensive income

(1) This item is detailed as follows:

==> picture [430 x 152] intentionally omitted <==

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

Item 2022.3.31 2021.12.31 2021.3.31
Equity instruments measured at fair value
through other comprehensive income:
Unlisted stocks (including OTC) $267,200 $270,647 $298,554
Preference shares 912,145 730,767 614,373
Debt instruments measured at fair value
through other comprehensive income:
Corporate bonds 346,083 386,930 371,188
Total $1,525,428 $1,388,344 $1,284,115
----- End of picture text -----

(2) The Company’s dividend income related to equity instrument investments measured at fair value through other comprehensive income during January 1 to March 31, 2022 and January 1 to March 31, 2021, are as follows:

Investments still held on the balance sheet date Realized gain on investment related Dividends recognized in the current period	2022.1.1- 2022.3.31	2021.1.1- 2021.3.31
	$- - $-	$- 41 $41

(3) No guarantee provided for the financial assets measured at fair value through other comprehensive income. For details of relevant credit risks, please see Note 7.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

5. Financial assets at amortized cost

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

Item 2022.3.31 2021.12.31 2021.3.31
Government bonds $528,881 $529,856 $532,824
Corporate bonds 6,536,836 6,105,924 5,386,747
Financial bonds 848,785 844,489 683,494
Less: Refundable deposits (528,818) (529,455) (532,393)
Less: Allowance for losses (12,144) (9,773) (4,325)
Total $7,373,540 $6,941,041 $6,066,347
----- End of picture text -----

The Company recorded disposal gains of NT$5,386 thousand from January 1 to Marche 31, 2022, due to the disposal of its partial corporate bonds in advance in response to the increase in credit risks. From January 1 to Marche 31, 2022, there was no disposal of financial asset at amortized costs.

The Refundable deposit takes the government bonds as its collateral and re-recognized as a refundable deposit. Please see Note 9 for more information. For information about the credit risks, please see Note 7.

6. Reinsurance assets

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

Item 2022.3.31 2021.12.31 2021.3.31
Claims Recoverable from Reinsurers - net $253,511 $279,531 $313,432
Claims Recoverable from Reinsurers – Non- - - 307
Performing Loans
Less: Allowance for losses (2,536) (2,795) (3,214)
Net amount $250,975 $276,736 $310,525
Due from Reinsurers & Ceding Companies $823,257 $603,361 $396,062
Due from Reinsurers & Ceding Companies – 39,202 43,595 79,225
Non-Performing Loans
Less: Allowance for losses (25,012) (17,387) (41,359)
Net amount $837,447 $629,569 $433,928
Reinsurance reserve assets
Ceded unearned premium reserve $2,976,862 $3,042,421 $2,718,342
Ceded Claims reserve 4,141,997 4,297,919 4,700,288
Total $7,118,859 $7,340,340 $7,418,630
----- End of picture text -----

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

7. Property, plant, and equipment

(1) This item is detailed as follows:

==> picture [434 x 559] intentionally omitted <==

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

Buildings and Miscellaneous Prepayments
Land Constructions equipment for equipment Total
Costs:
2022.1.1 $891,007 $525,973 $440,130 $23,279 $1,880,389
Additions - - 4,630 1,134 5,764
- - -
Disposals (608) (608)
Transfer (8,531) (2,984) 1,074 (1,074) (11,515)
2022.3.31 $882,476 $522,989 $445,226 $23,339 $1,874,030
2021.1.1 $687,236 $481,559 $422,407 $19,633 $1,610,835
Additions - - 1,522 6,411 7,933
- - -
Disposals (2,319) (2,319)
Transfer - - - (372) (372)
2021.3.31 $687,236 $481,559 $421,610 $25,672 $1,616,077
Depreciation &
impairment:
2022.1.1 $- $(227,980) $(343,765) $- $(571,745)
- -
Depreciation (2,130) (10,218) (12,348)
Disposals - - 595 - 595
Transfer - 2,095 - - 2,095
2022.3.31 $- $(228,015) $(353,388) $- $(581,403)
2021.1.1 $- $(212,657) $(318,143) $- $(530,800)
- -
Depreciation (1,965) (9,932) (11,897)
- - -
Disposals 2,081 2,081
2021.3.31 $- $(214,622) $(325,994) $- $(540,616)
Carrying amount:
2022.3.31 $882,476 $294,974 $91,838 $23,339 $1,292,627
2021.12.31 $891,007 $297,993 $96,365 $23,279 $1,308,644
2021.3.31 $687,236 $266,937 $95,616 $25,672 $1,075,461
----- End of picture text -----

(2) The above assets were not pledged to others as collateral.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

8. Investment property

(1) This item is detailed as follows:

Buildings and Constructions	Prepayments for buildings $- - - $- $114,698 - (114,698) $-	Total $2,583,552 - 11,515 $2,595,067 $2,618,106 213,631 - $2,831,737 $(175,095) (3,970) (2,095) $(181,160) $(166,202) (3,870) $(170,072) $2,413,907 $2,408,457 $2,661,665 2021.1.1- 2021.3.31
$571,132 - 2,984
$574,116
$477,193 88,655 49,698
$615,546
$(152,487) (3,970) (2,095)	$- - - $- $- - $- $- $- $- 2022.1.1- 2022.3.31
$(158,552)
$(143,594) (3,870)
$(147,464)
$415,564

	$19,607 (874) $18,733	$20,513 (694) $19,819

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(2) The above assets were not pledged to others as collateral.
(3) The investment property is not measured at fair value, but the fair value information is revealed, and the fair value is of level 3. As of March 31, 2022, December 31, 2021 and March 31, 2021, the fair values of the investment property was NT$2,538,436 thousand and NT$2,538,436 thousand and NT$2,901,157 thousand, respectively, and the fair values were evaluated by an external independent valuation expert. The fair values were determined and supported by market evidence, using at least two evaluation methods, such as comparative approach and cost approach, and estimated with the weighted score method, in which the main parameters used are:

Discount rate	2022.3.31 0.75%~3.28%	2021.12.31 0.75%~3.28%	2021.3.31 0.89%~3.36%

9. Intangible assets

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

Item 2022.3.31 2021.12.31 2021.3.31
Computer software cost $261,149 $236,865 $236,865
Increase in the current period - 8,038 93
Transfer in the current period - 16,246 372
Total $261,149 $261,149 $237,330
Computer software cost – cumulative amortization $(233,694) $(217,340) $(217,340)
Increase in the current period (4,701) (16,354) (3,532)
Total $(238,395) $(233,694) $(220,872)
Carrying amount: $22,754 $27,455 $16,458
----- End of picture text -----

10. Other assets

(1) This item is detailed as follows:

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

Item 2022.3.31 2021.12.31 2021.3.31
Prepayments $18,657 $36,866 $32,761
Refundable deposits 637,466 627,855 645,993
Other assets - others 59,569 68,224 94,238
Total $715,692 $732,945 $772,992
----- End of picture text -----

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(2) The refundable deposits are detailed as follows:

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

Item 2022.3.31 2021.12.31 2021.3.31
Insurance business deposits $528,818 $529,455 $532,393
Club deposits 37,679 37,679 37,679
Other deposits 86,448 76,200 77,400
Less: cumulative impairment loss (15,479) (15,479) (1,479)
Total $637,466 $627,855 $645,993
----- End of picture text -----

(3) In accordance with Articles 141 and 142 of the Insurance Law, bonds are deposited in the Central Bank as the insurance deposits.

11. Accounts Payables

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

Item 2022.3.31 2021.12.31 2021.3.31
Claims and benefits payable $24,260 $18,852 $98,453
Commission payable 296,406 277,969 312,337
Due to Reinsurers & Ceding Companies 1,267,503 1,559,847 1,579,997
Other payables 754,301 1,037,554 702,028
Total $2,342,470 $2,894,222 $2,692,815
----- End of picture text -----

12. Insurance liabilities

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

Item 2022.3.31 2021.12.31 2021.3.31
Unearned premium reserve $12,590,675 $12,284,374 $11,663,312
Claims reserve 10,438,795 10,318,849 10,328,905
Special reserve 2,477,788 2,463,675 2,372,130
- -
Premium deficiency reserve 3,655
Policy reserve 201 199 75
Total $25,507,459 $25,067,097 $24,368,077
----- End of picture text -----

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(1) Unearned premium reserve

Unearned premium reserve & ceded unearned premium reserve

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

2022.3.31
Unearned premium Ceded unearned
reserve premium reserve
Direct underwriting
(including ceded-in
Item reinsurance) Ceded reinsurance Retention
Fire insurance $1,998,905 $(850,171) $1,148,734
Marine insurance 475,082 (325,587) 149,495
Motor insurance 6,244,819 (727,947) 5,516,872
Engineering 1,397,446 (888,510) 508,936
insurance
Liability insurance 1,219,490 (103,876) 1,115,614
Accident & health 1,254,933 (80,771) 1,174,162
insurance
Total $12,590,675 $(2,976,862) $9,613,813
2021.12.31
Unearned premium Ceded unearned
reserve premium reserve
Direct underwriting
(including ceded-in
Item reinsurance) Ceded reinsurance Retention
Fire insurance $2,036,741 $(948,608) $1,088,133
Marine insurance 527,584 (376,026) 151,558
Motor insurance 6,180,017 (755,945) 5,424,072
Engineering insurance 1,277,805 (801,914) 475,891
Liability insurance 1,097,465 (105,498) 991,967
Accident & health 1,164,762 (54,430) 1,110,332
insurance
Total $12,284,374 $(3,042,421) $9,241,953
2021.3.31
Unearned premium Ceded unearned
reserve premium reserve
Direct underwriting
(including ceded-in
Item reinsurance) Ceded reinsurance Retention
Fire insurance $1,668,164 $(690,343) $977,821
Marine insurance 412,497 (253,666) 158,831
Motor insurance 5,910,678 (743,466) 5,167,212
Engineering insurance 1,261,376 (783,409) 477,967
Liability insurance 1,051,745 (114,630) 937,115
Accident & health 1,358,852 (132,828) 1,226,024
insurance
Total $11,663,312 $(2,718,342) $8,944,970
----- End of picture text -----

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Adjustment of changes in unearned premium reserve & ceded unearned premium reserve

Item	2022.1.1-2022.3.31	2022.1.1-2022.3.31	2021.1.1-2021.3.31	2021.1.1-2021.3.31
	Unearned premium reserve	Ceded unearned premium reserve	Unearned premium reserve	Ceded unearned premium reserve
Opening amount Current deposits Current recovery Closing amount	$12,284,374 12,590,675 (12,284,374) $12,590,675	$3,042,421 2,976,862 (3,042,421) $2,976,862	$11,189,285 11,663,312 (11,189,285) $11,663,312	$2,664,359 2,718,342 (2,664,359) $2,718,342

(2) Claims reserve
Claims reserve & Ceded Claims reserve

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

2022.3.31
Ceded Claims
Claims reserve reserve
Direct underwriting
(including ceded-in
Item reinsurance) Ceded reinsurance Retention
Outstanding losses $8,036,530 $(3,454,017) $4,582,513
IBNR 2,402,265 (687,980) 1,714,285
Total $10,438,795 $(4,141,997) $6,296,798
2021.12.31
Ceded Claims
Claims reserve reserve
Direct underwriting
(including ceded-in
Item reinsurance) Ceded reinsurance Retention
Outstanding losses $7,956,694 $(3,613,608) $4,343,086
IBNR 2,362,155 (684,311) 1,677,844
Total $10,318,849 $(4,297,919) $6,020,930
2021.3.31
Ceded Claims
Claims reserve reserve
Direct underwriting
(including ceded-in
Item reinsurance) Ceded reinsurance Retention
Outstanding losses $8,213,593 $(4,025,683) $4,187,910
IBNR 2,115,312 (674,605) 1,440,707
Total $10,328,905 $(4,700,288) $5,628,617
----- End of picture text -----

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

 Net changes in Claims reserve and Ceded Claims reserve

Item			2022.1.1-2022.3.31	2022.1.1-2022.3.31	2022.1.1-2022.3.31
	Direct underwriting (including ceded-in reinsurance)		Net change in Claims reserve	Ceded reinsurance		Net change in Ceded Claims reserve
	Deposit (1)	Recovery (2)	(3)=(1)-(2)	Deposit (4)	Recovery (5)	(6)=(4)-(5)
Outstanding losses IBNR Total	$8,036,530 2,402,265 $10,438,795	$7,956,694 2,362,155 $10,318,849	$79,836 40,110 $119,946	$3,454,017 687,980 $4,141,997	$3,613,608 684,311 $4,297,919	$(159,591) 3,669 $(155,922)

Item			2021.1.1-2021.3.31	2021.1.1-2021.3.31	2021.1.1-2021.3.31
	Direct underwriting (including ceded-in reinsurance)		Net change in Claims reserve	Ceded reinsurance		Net change in Ceded Claims reserve
	Deposit (1)	Recovery (2)	(3)=(1)-(2)	Deposit (4)	Recovery (5)	(6)=(4)-(5)
Outstanding losses IBNR Total	$8,213,593 2,115,312 $10,328,905	$7,460,902 2,174,112 $9,635,014	$752,691 (58,800) $693,891	$4,025,683 674,605 $4,700,288	$3,625,544 707,010 $4,332,554	$400,139 (32,405) $367,734

Outstanding losses and Incurred but not reported losses (IBNR) Claims reserve to
policyholders

Item		2022.3.31
		Claims reserve
	Outstanding losses	IBNR	Total
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$2,998,074 850,946 2,566,556 588,329 806,744 225,881 $8,036,530	$14,929 46,445 1,463,552 41,655 344,632 491,052 $2,402,265	$3,013,003 897,391 4,030,108 629,984 1,151,376 716,933 $10,438,795

Item		2021.12.31
		Claims reserve
	Outstanding losses	IBNR	Total
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$3,101,334 819,744 2,460,057 532,447 844,694 198,418 $7,956,694	$14,095 46,189 1,443,867 38,874 330,411 488,719 $2,362,155	$3,115,429 865,933 3,903,924 571,321 1,175,105 687,137 $10,318,849

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Item		2021.3.31
		Claims reserve
	Outstanding losses	IBNR	Total
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$3,647,189 642,900 2,433,799 482,643 818,675 188,387 $8,213,593	$7,401 73,231 1,248,166 43,648 259,661 483,205 $2,115,312	$3,654,590 716,131 3,681,965 526,291 1,078,336 671,592 $10,328,905

Reinsurance assets –Ceded Claims reserve for Outstanding losses and IBNR Claims reserve to policyholders

Item	2022.3.31	2022.3.31	2022.3.31
	Ceded Claims reserve
	Outstanding losses	IBNR	Total
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$2,041,816 653,330 216,344 235,396 279,181 27,950 $3,454,017	$1,046 25,299 464,548 5,601 119,535 71,951 $687,980	$2,042,862 678,629 680,892 240,997 398,716 99,901 $4,141,997

Item	2021.12.31	2021.12.31	2021.12.31
	Ceded Claims reserve
	Outstanding losses	IBNR	Total
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$2,247,297 627,406 231,427 190,979 293,712 22,787	$1,055 26,114 461,527 4,538 115,956 75,121	$2,248,352 653,520 692,954 195,517 409,668 97,908
	$3,613,608	$684,311	$4,297,919

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Item	2021.3.31	2021.3.31	2021.3.31
	Ceded Claims reserve
	Outstanding losses	IBNR	Total
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$2,683,703 537,303 253,456 195,649 326,401 29,171 $4,025,683	$1,582 48,856 421,945 17,425 107,363 77,434 $674,605	$2,685,285 586,159 675,401 213,074 433,764 106,605 $4,700,288

 Adjustment of changes in Claims reserve and Ceded Claims reserve

==> picture [399 x 106] intentionally omitted <==

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

2022.1.1-2022.3.31 2021.1.1-2021.3.31
Ceded Claims Ceded Claims
Claims reserve Claims reserve
Item reserve reserve
Opening amount $10,318,849 $4,297,919 $9,635,014 $4,332,554
Current deposits 10,438,795 4,141,997 10,328,905 4,700,288
Current recovery (10,318,849) (4,297,919) (9,635,014) (4,332,554)
Closing amount $10,438,795 $4,141,997 $10,328,905 $4,700,288
----- End of picture text -----

(3) Special reserves

 Special reserve – compulsory automobile liability insurance

Item	2022.1.1- 2022.3.31	2021.1.1- 2021.3.31
Opening amount Current deposits Current recovery Closing amount	$170,540 52,063 (32,105) $190,498	$80,504 20,039 (39,085) $61,458

Special reserve – non-compulsory automobile liability insurance

Item		Liabilities	Liabilities
		2022.1.1-2022.3.31
	catastrophic event	fluctuation of risk	Property appreciation	Total
Opening amount Current deposits Current recovery Closing amount	$491,038 - (5,845) $485,193	$1,576,248 - - $1,576,248	$225,849 - - $225,849	$2,293,135 - (5,845) $2,287,290

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Item		Liabilities	Liabilities
		2021.1.1-2021.3.31
	Catastrophic event	Fluctuation of risk	Property appreciation	Total
Opening amount Current deposits Current recovery Closing amount	$514,421 - (5,846) $508,575	$1,576,248 - - $1,576,248	$225,849 - - $225,849	$2,316,518 - (5,846) $2,310,672

When the company initially applied IFRSs, the property appreciation measured at fair value in the initial DAY application should be used to make up the adverse effects of other accounting items caused by the initial application, and the unrealized value added amont from the re-evaluation should be fully listed as a special reserve on the date of conversion.

According to the “Guidelines for Strengthening Property Insurance Companies Reserves for Natural Disaster Insurances (Commercial Earthquake Insurance and Typhoon Flood Insurance),” starting from January 1, 2013, property insurance companies should use the special reserves for catastrophic event and fluctuation of risk provided under liabilities before December 31, 2012 for insurances other than the compulsory automobile liability insurance, nuclear energy insurance, policy-based basic residential earthquake insurance, commercial earthquake insurance, and typhoon flood insurance, to make up with higher priority the special reserves for catastrophic event and fluctuation of risk of the commercial earthquake insurance and typhoon flood insurance to their full level, and list them under liabilities, and then deduct the taxes from the balance of the above special reserves in accordance with IAS 12 and list the remainder in the special reserve under owner’s equity.

According to Article 2 of the “Compulsory Automobile Liability Insurance Act” and paragraph 1, Article 24-2 of the “Regulations for the Provision Appropriation for the Insurance Companies” established under the authorization of paragraph 2, Article 145 and paragraph 2, Article 148-3 of the “Insurance Act,” from April 1, 2021, property insurance companies shall appropriate NT$30 from each insurance contract as the special provision based on the business expense of the insured under the compulsory automobile liability insurance business it operates. Subsequently, for the major business of the property insurance companies, when there are net losses from the insurance premium for the year, they shall use the provision hereof to make compensation first; for the insufficient part, they shall comply with Article 8 of the “Regulations for the Provision Appropriation for Compulsory Automobile Liability Insurance.”

(1) Matters to be attended and disclosed in accordance with the “Guidelines on Strengthening Property Insurance Companies Reserves for Natural Disaster Insurances (Commercial Earthquake Insurance and Typhoon Flood Insurance)” are:

The impact of not being subject to the said precaution on the net income (loss) before tax, liabilities, equity, and earnings per share in the period from January 1 to March 31, 2022 and 2021 was a decrease of NT$5,845 thousand, a decrease of NT$1,830,521 thousand, an increase of NT$1,459,741 thousand, and a decrease of NT$0.01 per share, respectively; and also a decrease of NT$5,846 thousand, a decrease of NT$1,853,904 thousand, an increase of NT$1,478,446 thousand, and a decrease of NT$0.01 per share, respectively.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd.

Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(2) Matters to be disclosed in accordance with the “Guidelines for Strengthening Reserves of Residential Earthquake Coinsurance Organization Members” are:

The impact of not being subject to the said precaution on the liabilities and equity in the period from January 1 to March 31, 2022 and 2021 was a decrease of NT$171,516 thousand and an increase of NT$137,213 thousand, respectively; also, there was no impact on the earnings per share.

  - (3) Matters to disclosed in accordance with the “Regulations on Property Insurance Companies Various Reserves for Energy Insurance” are: The impact of not being subject to the said precaution on the liabilities and equity in the period from January 1 to March 31, 2022 and 2021 was a decrease of $59,405 thousand and an increase of $47,524 thousand, respectively; also, there was no impact on the earnings per share.

(4) Premium deficiency reserve
Details of premium deficiency reserve

2022.3.31 Premium Ceded premium deficiency reserve deficiency reserve Direct underwriting (including ceded-in Item reinsurance) Ceded reinsurance Retention Marine insurance $- $- $-

2021.12.31 Premium Ceded premium deficiency reserve deficiency reserve Direct underwriting (including ceded-in Item reinsurance) Ceded reinsurance Retention Marine insurance $- $- $- 2021.3.31 Premium deficiency Ceded premium reserve deficiency reserve Direct underwriting (including ceded-in Item reinsurance) Ceded reinsurance Retention Marine insurance $3,655 $- $3,655

Recognized loss of net premium deficiency reserve – net change in premium deficiency reserve and net change in ceded premium deficiency reserve

2022.1.1-2022.3.31

Net change Net change in in ceded Current recognized Direct underwriting premium premium loss (profit) of net (including ceded-in deficiency deficiency premium reinsurance) reserve Ceded reinsurance reserve deficiency reserve Deposit Recovery Deposit Recovery Item (1) (2) (3)=(1)-(2) (4) (5) (6)=(4)-(5) (7)=(3)-(6)

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

==> picture [451 x 192] intentionally omitted <==

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

Marine
insurance $- $- $- $- $- $- $-
2021.1.1-2021.3.31
Net change
Net change in in ceded Current recognized
Direct underwriting premium premium loss (profit) of net
(including ceded-in deficiency deficiency premium
reinsurance) reserve Ceded reinsurance reserve deficiency reserve
Deposit Recovery Deposit Recovery
Item (1) (2) (3)=(1)-(2) (4) (5) (6)=(4)-(5) (7)=(3)-(6)
Marine
insurance $3,655 $2,829 $826 $- $- $- $826
----- End of picture text -----

 Adjustment of changes in premium deficiency reserve and ceded premium deficiency reserve

Item	2022.1.1-2022.3.31	2022.1.1-2022.3.31	2021.1.1-2021.3.31	2021.1.1-2021.3.31
	premium deficiency reserve	Ceded premium deficiency reserve	premium deficiency reserve	Ceded premium deficiency reserve
Opening amount Current deposits Current recovery Closing amount	$- - - $-	$- - - $-	$2,829 3,655 (2,829) $3,655	$- - - $-

Impact of changes in estimates and assumptions

The premium deficiency reserve is estimated by anticipated cost approach, where the anticipated final loss rate is based on the Company’s loss experience in the past five years, taking into account the impact of large claims on the loss rate, while the anticipated maintenance cost takes reference to expense items such as salaries and information expenses listed in the Insurance Expense Exhibit for the past six years. However, the estimates and assumptions are uncertain, so the anticipation estimates may not match the actual ones in the future.

(5) Policy reserve
Details of Policy reserve

==> picture [409 x 173] intentionally omitted <==

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

2022.3.31
Policy reserve Ceded policy reserve
Direct underwriting
(including ceded-in
Item reinsurance) Ceded reinsurance Retention
Accident & health insurance $201 $- $201
2021.12.31
Policy reserve Ceded policy reserve
Direct underwriting
(including ceded-in
Item reinsurance) Ceded reinsurance Retention
Accident & health insurance $199 $- $199
----- End of picture text -----

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Item Accident & health insurance		2021.3.31
	Policy reserve	Ceded policy reserve	Retention $75
	Direct underwriting (including ceded-in reinsurance) $75	Ceded reinsurance $-

 Net change in Policy reserve and net change in Ceded policy reserve

		2022.1.1-2022.3.31	2022.1.1-2022.3.31	2022.1.1-2022.3.31	Net change in Ceded policy reserve (6)=(4)-(5) $-
Direct underwriting (including ceded-in reinsurance)		Net change in Policy reserve	Cededreinsurance
Deposit (1) $201	Recovery (2) $199	(3)=(1)-(2) Deposit (4) $2 $- 2021.1.1-2021.3.31		Recovery (5) $-
Direct underwriting (including ceded-in reinsurance)		Net change in Policy reserve	Cededreinsurance		Net change in Ceded policy reserve
Deposit (1) $75	Recovery (2) $21	(3)=(1)-(2) $54	Deposit (4) $-	Recovery (5) $-	(6)=(4)-(5) $-

 Adjustment of changes in Policy reserve and Ceded policy reserve

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2022.1.1-2022.3.31 2021.1.1-2021.3.31
Item Policy reserve Ceded policy reserve Policy reserve Ceded policy reserve
Opening amount $199 $- $21 $-
Current deposits 201 - 75 -
- -
Current recovery (199) (21)
Closing amount $201 $- $75 $-
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13. Retirement benefits plan

Defined contribution pension plan

The Company’s “Labor Pension Regulations” set forth in accordance with the “Labor Pension Act” is a defined contribution pension plan. According to the Act, the Company’s monthly labor pension contribution rate shall not be less than 6% of the employee’s monthly salary. Based on the “Labor Pension Regulations,” 6% of the employee’s salary is contributed to the individual retirement account established in the Bureau of Labor Insurance on a monthly basis.

The amounts of expenses on the defined contribution pension plan recognized from January 1 to March 31, 2022 and 2021 were NT$11,921 thousand and NT$12,282 thousand, respectively.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Defined benefit plan

The Company’s “Labor Pension Regulations” set for in accordance with the “Labor Standards Act” is a define benefit plan, where the employee retirement pension is calculated based on the number of service years as the basis points and the monthly average salary at the time when the retirement is approved. Employees with 15 years (or less) of service are given 2 basis points for every full service year, and for every full service year after the 15 years are given 1 basis point, till 45 basis points topped. In accordance with the “Labor Standards Act,” the Company allocates a certain percentage of the total salary on a monthly basis, and deposits it in a dedicated account in the Bank of Taiwan in the name of the Supervisory Committee of Business Entities’ Labor Retirement Reserve. In addition, before the end of each year, the Company estimates the balance of the dedicated account based on the above calculation, and if the balance is not enough to pay the pension amount for the estimated number of workers illegible for retirement in the next year, the difference will be allocated by the end of March of the next year.

The company had recognized the defined benefit plan expense for an amount of NT$1,017 thousand and NT$1,192 thousand for the period from January 1 to March 31, 2022 and 2021, respectively.

14. Common stock

As of March 31, 2022, December 31, 2021 and March 31, 2021, All the Company’s authorized capital was NT$3,500,000 thousand and the paid-up capital was NT$3,159,633 thousand, and the par value per share was NT$10, consisting of 315,963,300 shares.

15. Capital reserve

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Item 2022.3.31 2021.12.31 2021.3.31
Share premium $50,355 $50,355 $50,355
Treasury stock trade 14,213 14,213 14,213
Others 232 232 232
Total $64,800 $64,800 $64,800
----- End of picture text -----

According to the statutory regulations, the capital reserve shall be used only to make up for corporate losses, and in the case of no business losses, the capital reserve from the surplus of shares issued in excess of the par value as well as donations can be appropriated to the capital by a fixed ratio of the paid-in capital, while the capital surplus may also be distributed in cash in proportion to the shareholders’ initial shares.

16. Earnings distribution and dividend policy

(1) According to The Articles of Incorporation, if there is a surplus in the annual final accounts, it shall be distributed in the following order:
A. Withholding for taxes
B. Make-up for losses
C. 20% of the surplus deposited as the Legal reserve.
D. Provision or reversal of special reserve in accordance with other statutory regulations or orders from the competent authority.
E. For the remaining surplus, setting up a surplus distribution plan by the Board of Directors in accordance with the dividend policy and submitting it to the shareholders’ meeting.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(2) The Company’s dividend policy must be based on the current and future corporate investment environment, capital needs, domestic and foreign competitions, capital budgets, among other factors, taking into account the interests of shareholders, balance between dividends and the corporate long-term financial planning, etc., by which the surplus distribution plan is set by the Board of Directors in compliance with relevant statutory regulations on an annual basis, and submitted to the shareholders’ meeting.
(3) The Board of Directors proposes a distribution plan for the distributable surplus, and submits it to the shareholders’ meeting for resolution, and the relevant information of which is available from the Public Information Observatory.
(4) According to the Company Act, Legal reserve shall be allocated until its total amount has reached the total capital. Legal reserve can be used to make up for the business losses. If there is no business loss, the part of the Legal reserve exceeding 25% of the paid-in capital can be used to issue new shares or distribute cash in proportion to the initial shares subscribed by shareholders. However, according to the Interpretation Decree No. 10202501991 of Jinguanbaocai Zi, cash distribution can be made according to Article 241 of the Company Act on conditions that the Legal reserve must be allocated until its total amount has reached the total paid-in capital according to Article 145-1 of the Insurance Law and other requirements listed in the Decree are also met, before the application for cash distribution from the Legal reserve according to Article 241 of the Company Art is sent to the competent authority for approval.
(5) According to Regulations for the Provision of Reserves of Insurance Companies, the Company added the amount of provision annually for the special reserves regarding material accidents and crisis and changes for the insurance industry. The Company accounts for the provision of special surplus reserve at the end of the year, and the part of the earnings shall not be distributed or used otherwise. On March 31, 2022, December 31, 2021, and March 31, 2021, the amount of cumulative reserve was NT$5,667,272 thousand, NT$5,667,272 thousand, and NT$4,881,819 thousand, respectively.
(6) According to Letter Jin-guan-bao-cai-zi No. 10904939031 on October 29, 2020, to optimize the financial structure of the insurance industry, at the end of each fiscal year, the Company shall provide, in accordance with the “Table for the Standard Rates Paid for Accidental Death and Disability of Individual Travel Insurance,” appropriate the balances to the special surplus reserve under the equity of owners after deducting the nominal tax rate of 20% according to 10% of the total premium income based on the amount of insurance policy sold for accidental death and disability of individual travel insurance sold for the year. On March 31, 2022, and December 31, 2021, the amount of the cumulative reserve was NT$1,929 thousand and NT$1,929 thousand, respectively.

The Company’s shareholders’ meetings on March 09, 2022 and July 13, 2021, respectively, resolved the 2021 and 2020 proposals on distribution of retained earnings and dividends per share, which are listed as follows:

Legal reserve Special reserve Common stock cash dividends	Distributionof retained earnings	Distributionof retained earnings	Dividend pershare (NTD)	Dividend pershare (NTD)
	2021	2020	2021	2020
	$450,202 787,382 1,011,083	$327,393 700,034 616,128	$- - 3.20	$- - 1.95

Please refer to Note 6.17 for the details of the assessment basis and recognized amounts of the remunerations for employees and directors.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Summary of employee benefits, depreciation and amortization expenses by functions

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2022.1.1-2022.3.31 2021.1.1-2021.3.31
By functions
Allocated as Allocated as
Operating operating Operating operating
By attributes
costs expenses Total costs expenses Total
Employee benefits
Salaries and wages $166,495 $318,104 $484,599 $143,036 $336,314 $479,350
Labor insurance and - 46,186 46,186 - 29,381 29,381
national health
insurance
Pension expenses - 12,938 12,938 - 13,474 13,474
Remuneration to - 20,395 20,395 - 16,144 16,144
directors
Depreciation expenses - 20,623 20,623 - 19,555 19,555
Amortization expenses - 7,361 7,361 - 6,170 6,170
----- End of picture text -----

The number of employees of the Company in March 31,2022, December 31,2021 and March 31, 2021 were 1688 ,1681 and 1696, respectively, and among them 10 were directors who did not serve as working employees.

In accordance with The Articles of Incorporation, no less than 1% of the business profits, if any, shall be appropriated for the employees’ remunerations, and no more than 2% for the directors’ remunerations. The profits, however, shall be used to make up for the accumulated business losses, if any. The above employee remunerations are paid in stock or cash, depending on the resolution by the Board of Directors, with more than two-thirds of the directors present and approved by more than half of the attending directors, and the resolution is reported in the shareholders’ meeting. For more information about the employee and director remunerations approved by the Board of Directors, please visit the “Public Information Observatory” website of the Taiwan Stock Exchange.

The company has appropriated 5.00% and 1.13% of the earnings generated in the period from January 1 to March 31, 2022 as remuneration to employees and directors for an amount of NT$ 35,355 thousand and NT$ 8,005 thousand, respectively. The company has appropriated 5.4% and 1.2% of the earnings generated in the period from January 1 to March 31, 2021 as remuneration to employees and directors for an amount of NT$ 27,331 and NT$ 6,074, respectively, which is booked in the “salary expense” account. If there is a discrepancy between the estimated amount and the distribution amount resolved by the board of directors, it will be recognized as profit and loss in the following year.

The company’s board of directors resolved on March 9, 2022 to pay NT$ 141,421 thousand and NT$ 32,019 thousand in cash as remuneration to employees and directors of 2021, respectively. There is no difference between the amount paid and the amount stated in the expense account of the 2021 financial report.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued) (Expressed in thousands of New Taiwan dollars, unless otherwise stated)

18. Components of other comprehensive income

The components of other comprehensive income from January 1 to March 31, 2022 are:

Items not reclassified to profit or loss: Unrealized valuation gains (losses) on equity instruments measured at fair value through other comprehensive income Items that may be subsequently reclassified to profit or loss: Unrealized valuation gains (losses) on debt instruments measured at fair value through other comprehensive income Other comprehensive income from adoption of overlay approach Total	Arising during the period	Current reclassification adjustment	Other comprehensive income	Income tax benefits (expenses)	After-tax amount
	$(9,881) (52,057) (159,173) $(221,111)	$- - - $-	$(9,881) (52,057) (159,173) $(221,111)	$- 10,424 - $10,424	$(9,881) (41,633) (159,173) $(210,687)

The components of other comprehensive income from January 1 to March 31, 2021 are:

Items not reclassified to profit or loss: Unrealized valuation gains (losses) on equity instruments measured at fair value through other comprehensive income Items that may be subsequently reclassified to profit or loss: Unrealized valuation gains (losses) on debt instruments measured at fair value through other comprehensive income Other comprehensive income from adoption of overlay approach Total	Arising during the period	Current reclassification adjustment	Other comprehensive income	Income tax benefit (expense)	After-tax amount
	$14,062 (41,586) 205,312 $177,788	$- - - $-	$14,062 (41,586) 205,312 $177,788	$- 8,261 16,913 $25,174	$14,062 (33,325) 222,225 $202,962

19. Income tax

Components of income tax:

Income tax recognized as profit or loss

Income tax recognized as profit or loss
Current income tax expense (benefit): Current income tax payable Current year adjustment of previous years’ current income taxes Deferred income tax expense (benefit): Deferred tax expense (benefit) relating to origination and reversal of temporary differences Income tax expense	2022.1.1- 2022.3.31	2021.1.1- 2021.3.31
	$92,189 - 297 $92,486	$78,776 (341) (7,780) $70,655

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Income tax expense recognized in other comprehensive income

Deferred tax expense (benefit): Unrealized valuation gains (losses) on debt instruments measured at fair value through other comprehensive income Other comprehensive income from adoption of overlay approach Income tax expense (benefit) relating to components of other comprehensive income	2022.1.1- 2022.3.31	2021.1.1- 2021.3.31
	$(10,424) - $(10,424)	$(8,261) (16,913) $(25,174)

Approval of income tax declaration

As of March 31, 2022, the Company’s declaration of the income tax returns has been approved up to the fiscal year 2019.

20. Earnings per share

The basic earnings per shares is calculated through dividing net profits after tax for the period by the weighter average number of outstanding ordinary shares.

As the Company has not issued any potential ordinary shares with diluted effects, the Company is not required to make dilution adjustment to the amount of basic earnings per share.

Earnings per share in the period from January 1 to March 31, 2022 and 2021 are as follows:

Item	2022.1.1- 2022.3.31	2021.1.1- 2021.3.31
Continuing operations Weighted average number of common shares (in thousands) of basic earnings per share Basic earnings per share (NTD)	$567,269	$472,289
	315,963 $1.80	315,963 $1.49

After the reporting period and before the financial statements were approved for release, there were no other transactions that materially changed the number of common shares outstanding or the number of potential common shares at the end of the period.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd.

Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

21. Expected Credit Losses (Profits)

Total operating revenues- Expected credit impairment loss and reversal gain on investment Financial assets at fair value through other comprehensive profit or loss Financial assets based on cost after amortization subtotal Operating expenses: -Expected credit impairment reversal from non-investments Receivalbe Insurance premium receivable Other receivables Claims Recoverable from Reinsurance Due from Reinsurer &Ceding companies Other subtotal Total	2022.1.1- 2022.3.31 $61 2,371 2,432 66 (9,202) (407) (259) 7,625 - (2,177) $255	2021.1.1- 2021.3.31 $(283) (5,554) (5,837) (14) (3,138) (1,059) (753) 13,594 (3,596) 5,034 $(803)

For information about the credit risks, please see Note 7.

22. Lease

(1) The company as a lessee

The Company leases a number of different assets, including property (houses and buildings) and other equipment. The lease periods of various contracts are from 1 year to 6 years.

The impact of the leasing business on the Company’s financial status, financial performance and cash flow is described as follows:

A. Amounts recognized in the balance sheet

(a) Right-of-use assets

Book values of right-of-use assets

Buildings and structures Other equipment Total	2022.3.31 $17,161 15,899 $33,060	2021.12.31 $16,919 17,474 $34,393	2021.3.31
			$22,052 11,598 $33,650

During January 1 to March 31, 2022 and January 1 to March 31, 2021, the right-of-use assets increased NT$ 2,972 thousand and NT$ 3,073 thousand, respectively.

(b) Lease liabilities

Lease liabilitie	2022.3.31 $33,693	2021.12.31 $34,924	2021.3.31 $34,201

During January 1 to March 31, 2022 and January 1 to March 31, 2021, the interest expenses of the lease liabilities recognized were NT$ 160 thousand and NT$ 163 thousand, respectively.

As of March 31, 2022, December 31, 2021 and March 31, 2021, the maturities of lease liabilities are analyzed as follows:

March 31, 2022

March 31, 2022
Less than one year Lease liabilitie $14,268 December 31, 2021 Less than one year Lease liabilitie $14,892 March 31, 2021 Less than one year Lease liabilitie $14,967		Maturity period
		One to five years Over five years $19,696 $- Maturity period		Total $33,964
	Less than one year $14,892	One to five years Over five years $20,870 $- Maturity period		Total $35,762
	Less than one year $14,967	One to five years $20,008	Over five years $111	Total $35,086

The above table shows the cash outflow analysis of the Company’s lease liabilities based on the remaining period from the balance sheet date to the contract maturity date. The amounts disclosed in the table are based on contractual cash flows, so the amounts disclosed will not correspond to relevant items on the balance sheet.

B. Amounts recognized in the consolidated income statement

Depreciation of right-of-use assets

Buildings and structures Other equipment Total	2022.1.1- 2022.3.31	2021.1.1- 2021.3.31
	$2,730 1,575 $4,305	$2,680 1,108 $3,788

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

C. The lessee’s income and expenses related to leasing activities

Short-term leasing expenses	2022.1.1- 2022.3.31 $2,837	2021.1.1- 2021.3.31 $9,058

D. The lessee’s cash outflows related to leasing activities

The total cash outflows during January 1 to March 31, 2022 and January 1 to March 31, 2021, were NT$7,200 thousand and NT$12,897 thousand, respectively.

(2) The Company as a lessor

The Company owned investment properties are disclosed in Note 6.8. The Company owned investment properties are classified as operating leases because almost all the risks and rewards attached to the ownership of the underlying assets have not been transferred.

Lease income recognized under operating lease Fixed lease payments	2022.1.1 -2022.3.31 $19,607	2021.1.1 -2021.3.31
		$20,513

The lease contracts with undiscounted lease payments received and total amounts for remaining years ranged on March 31, 2022, December 31, 2021 and March 31, 2021 were:

no more than 1 year over 1 year but no more than 2 years over 2 years but no more than 3 years over 3 years but no more than 4 years over 4 years but no more than 5 years over 5 years Total	2022.3.31	2021.12.31	2021.3.31
	$68,778 54,555 26,701 9,125 2,096 2,811 $164,066	$69,726 53,062 32,363 10,303 2,754 3,335 $171,543	$85,603 65,121 48,497 22,696 8,847 5,027 $235,791

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

7. Risk management of insurance contracts and financial instruments

1. The objectives, policies, procedures and methods of risk management:

(1) The structure, organization, and accountability and empowerment
A. Board of Directors
- a. The Board of Directors is the Company’s highest decision-making body on risk management and undertakes the ultimate responsibility for the company’s overall risk management.
- b. The Board of Directors resolves the overall risk management policy and risk appetite in accordance with the corporate overall operating strategy and environment.
B. Risk Management Committee

To meet the legal requirements of internal control and audit, the Committee is established to set up a complete internal risk control management structure for effective formulation, implementation, and tracking of the overall risk management policies and related affairs, to prevent potential risks affecting the Company’s operating stability, and create substantive values from it.

C. Risk Management Department

The department assists the Board of Directors in formulating and implementing risk management policies and driving the practices by consolidating the risk management in individual departments for an integrated operation.

D. Business Department
a. The department performs daily risk management affairs and provides feedback on risk information to the Risk Management Department.
b. The department has a risk management person working as a window to the Risk Management Department and handles risk management business under the instructions from the department head.

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Board of Directors
Chairman Chief Auditor
Audit Committee Risk Management Committee President Auditing
office
Remuneration
Committee Chief Risk
Vice President
Officer
Risk
Management
Support unit Department Insurance units Business units
Risk management Risk management Risk management
staff staff staff
----- End of picture text -----

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(2) The scope and features of the risk reporting and measurement system of the property insurance industry
A. Risk reporting
- a. The business unit regularly sends risk information to the risk management unit for monitoring, and when the risk limit is exceeded, proposes an over-limit handling report along with corresponding measures.
- b. The risk management unit summarizes the risk information received from the business unit, to review and track the use of major risk limits, and report to the Chairman every quarter for regular monitoring.
B. The scope and features of the market risk measurement system

The Company’s market risk measurement is based on the Bloomberg Algor Model, expressed with the market risk value VaR, which covers the risk of changes in exchange rates and interest rates, where the information system is shared by the Investment Department and the Risk Management Department, while the measurement is performed by the Middle Platform of the Risk Management Department.

(3) Procedures for the property insurance industry to undertake, measure, supervise and control insurance risks, and underwriting policies to ensure appropriate risk classification and premium levels

The Company’s Risk Management Department is responsible for monitoring and integrating the corporate insurance risks, and requires relevant departments to set up risk indicators and management mechanisms as the basis for the Risk Management Department to monitor, while all the relevant departments manage the underlying insurance risks, and regularly provide implementation status to the Risk Management Department in accordance with the statutory regulations, internal regulations, and their professional knowledge and experience, and the Risk Management Department submits quarterly risk management reports to the Board of Directors.

(4) Assessment of insurance risks and scope of insurance risk management

The Company’s insurance risk management covers product design and pricing, underwriting, reinsurance, catastrophes, and risks related to claims and reserves, for which appropriate management mechanisms are established and implemented.

(5) Approaches used by the property insurance industry to limit exposure to insurance risks and avoid concentration risks:

When an insurance business is introduced, the Company’s underwriters evaluate the business quality based on the underwriting standards of the insurance types to determine whether to undertake it, in order to appropriately avoid and control risks for lower level of exposure.

The Company operates ceded-in/out retention and reinsurance based on the “ Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms” for which a risk retention mechanism is established, and a reinsurance risk management plan is also established based on the risk undertaking capacity, while the limit of the risk retention is set according to individual risk units by insurance types. The risk retention

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

limits of individual risk units by insurance types are disclosed as follows:

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Insurance types 2022 2021
----- End of picture text -----

Insurance types	2022	2021
A. Fire insurance	$500,000	$500,000
B. Marine insurance
a. Cargo insurance	300,000	300,000
b. Hull insurance	300,000	300,000
c. Fishing vessel insurance	300,000	300,000
C. Casualty Insurance
a. Engineering insurance	1,000,000	1,000,000
b. Liability insurance	660,000	660,000
c. Accident insurance	1,300,000	1,300,000
d. Health insurance	5,000	5,000
D. Motor insurance
a. Damage insurance	60,000	60,000
b. Third-party liability insurance	400,000	400,000

2. Management of assets and liabilities

Based on the business features, the Company regularly measures various reserves to ensure that the current capital allocation and asset investment liquidity are sufficient to cover possible future claims. Cash flow management is carried out on a daily basis by a fund dispatch unit independent of the trading unit, and the dispatch and management of the funds takes into account the fund demands and schedules of individual departments.

Also, the Company has established the Operational Crisis Response Guidelines based on the “Key Attributes for Handling Financial Institutions’ Operational Crisis” set by the FSC, and in the event of a huge loss of funds or s severe liquidity shortage, a crisis taskforce will be established immediately to quickly assess the impact on the fund liquidity and the amount needed to fill the fund gap as well as the funding schedule and efficacy, to protect the interests of the policyholders and the Company.

The procedure for managing, monitoring and controlling commitments on liabilities or additional investment in owner’s equity to be undertaken by insurance companies when a specific event occurs.

The Company has established a capital adequacy management mechanism, which includes a capital adequacy index to facilitate regular reviews and preparation of capital adequacy reports biannually.

If the capital adequacy ratio exceeds the risk limit, or an abnormality occurs, the cause of the event will be explored and responses be set forth to evaluate the impact on the capital adequacy

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

4. Receivables (payables) of insurance contracts

(1) Receivables of insurance contacts

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Notes receivable (note)
Item 2022.3.31 2021.12.31 2021.3.31
Fire insurance $20,835 $22,169 $20,678
Marine insurance 50,394 53,401 54,335
Motor insurance 81,078 91,367 78,468
Engineering insurance 33,830 41,666 88,931
Liability insurance 36,029 20,266 21,294
Accident & health insurance 6,394 7,409 8,734
Others 31,930 34,630 43,387
Total 260,490 270,908 315,827
Add: non-performing loans 170 - -
Less: Allowance for losses (2,775) (2,709) (3,158)
Net amount $257,885 $268,199 $312,669
----- End of picture text -----

Note: As of March 31, 2022, December 31, 2021 and March 31, 2021, the notes receivable included non-performing loans of NT$170 thousand , NT$0 thousand and NT$ 0 thousand, respectively, and accordingly allowances for losses of NT$170 thousand, NT$ 0 thousand and NT$0 thousand were provided respectively.

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Premiums receivable (note)
Item 2022.3.31 2021.12.31 2021.3.31
Fire insurance $255,362 $559,048 $306,191
Marine insurance 251,450 273,790 211,769
Motor insurance 66,184 92,095 69,656
Engineering insurance 199,934 91,122 136,329
Liability insurance 131,882 152,212 159,410
Accident & health insurance 96,605 85,695 133,404
Total 1,001,417 1,253,962 1,016,759
plus: non-performing loans 203,161 139,299 122,780
Less: Allowance for losses (19,170) (28,372) (21,342)
Net amount $1,185,408 $1,364,889 $1,118,197
----- End of picture text -----

Note: The insurance premiums receivable on March 31, 2022, December 31, 2021, and March 31, 2021 included the collections of NT$203,161 thousand, NT$139,299 thousand, and NT$122,780 thousand with allowance for losses of NT$9,156 thousand, NT$15,832 thousand, and NT$11,174 thousand appropriated, respectively.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(2) Reinsurance assets – claims recoverable from reinsurers for the claims reported and settled with the policyholders

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2022.3.31 2021.12.31 2021.3.31
Item Actually paid Actually paid Actually paid
Fire insurance $46,145 $21,740 $12,984
Marine insurance 14,231 13,900 6,791
Motor insurance 150,435 178,756 225,874
Engineering insurance 8,956 23,657 13,508
Liability insurance 967 1,245 434
Accident & health insurance 32,777 40,233 53,841
Total 253,511 279,531 313,432
Add: non-performing loans 307 - -
Less: Allowance for losses (2,536) (2,795) (3,214)
Net amount $250,975 $276,736 $310,525
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(3) Commissions payable for insurance contracts

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Item 2022.3.31 2021.12.31 2021.3.31
Fire insurance $55,886 $33,456 $60,144
Marine insurance 25,278 26,437 26,811
Motor insurance 90,660 102,368 92,644
Engineering insurance 19,128 15,879 15,350
Liability insurance 54,593 45,297 53,378
Accident & health insurance 50,861 54,532 64,010
Total $296,406 $277,969 $312,337
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(4) Due from (to) Reinsurers & Ceding Companies – holding reinsurance

2022.3.31

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Due from Reinsurers & Due to Reinsurers &
Item
Ceding Companies (note) Ceding Companies
The Non-Life Insurance Association $98,796 $141,495
AON 115,267 57,815
COS 62,193 1,649
CRC 110,662 25,211
JOH 103,064 80,615
SWH 156,793 90,916
WIT 34,079 181,662
Others 142,403 688,140
Subtotal 823,257 1,267,503
plus: non-performing loans 39,202 -
Less: Allowance for losses (25,012) -
Net amount $837,447 $1,267,503
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----- Start of picture text -----

2021.12.31
Due from Reinsurers & Due to Reinsurers &
Item
Ceding Companies (note) Ceding Companies
The Non-Life Insurance Association $97,958 $165,945
AON 48,965 23,864
CRC 97,229 29,005
JOH 111,891 284,679
SWH 93,384 56,389
WIT 32,659 108,970
Others 121,275 890,995
Subtotal 603,361 1,559,847
plus: non-performing loans 43,595 -
Less: Allowance for losses (17,387) -
Net amount $629,569 $1,559,847
----- End of picture text -----

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

2021.3.31
Due from Reinsurers & Due to Reinsurers &
Item
Ceding Companies (note) Ceding Companies
The Non-Life Insurance Association $98,492 $149,847
AON 32,064 87,759
CRC 30,695 50,171
JOH 66,576 64,168
PIB 44,596 55,943
SWH 72,610 297,518
WIL 25,244 23,182
WIT 14,587 111,791
Others 11,198 739,618
Subtotal 396,062 1,579,997
plus: non-performing loans 79,225 -
Less: Allowance for losses (41,359) -
Net amount $433,928 $1,579,997
----- End of picture text -----

Note:The reinsurance accounts receivable on March 31, 2022, December 31, 2021, and March

31, 2021 included the collections of NT$39,220 thousand, NT$43,595 thousand, and NT$79,225 thousand with the allowance for losses of NT$17,539 thousand, NT$12,358 thousand, and NT$37,976 thousand appropriated, respectively.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(5) The notes receivable, premiums receivable, other receivables, claims recoverable from reinsurers, and due from reinsurers and ceding companies are grouped based on the counterparty’s credit rating, region and industry, and the allowances for losses measured with the provision matrix are as follows:

		2022.3.31
0–90 days	91–180 days	181–365 days	over 366 days	Total
0%-1% $2,348,771 (20,368)	1%-100% $440,712 (6,371)	2%-100% $79,196 (3,616)	50%-100% $31,588 (20,470)	$2,900,267 (50,825)
$2,328,403	$434,341	$75,580	$11,118	$2,849,442

Expected credit loss Total book value Allowance for loss (expected credit loss) Total			2021.12.31
	0–90 days	91–180 days	181–365 days	over 366 days	Total
	0%-1% $2,557,277 (23,155) $2,534,122	1%-100% $184,182 (2,805) $181,377	2%-100% $136,531 (10,688) $125,843	50%-100% $26,355 (16,354) $10,001	$2,904,345 (53,002) $2,851,343

Expected credit loss Total book value Allowance for loss (expected credit loss) Total			2021.3.31
	0–90 days	91–180 days	181–365 days	over 366 days	Total
	0%-1% $2,330,428 (19,389) $2,311,039	1%-100% $164,864 (2,644) $162,220	2%-100% $81,134 (5,792) $75,342	50%-100% $69,834 (42,483) $27,351	$2,646,260 (70,308) $2,575,952

The company does not hold any collateral for the balance of such receivables.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

5. Information related to business performance

(1) Insurance contract acquisition cost

Item		2022.1.1-2022.3.31	2022.1.1-2022.3.31	2022.1.1-2022.3.31
	Commission expense	Agency expense	Handling fee expense	Reinsurance commission expense	Total
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$59,252 19,128 378,012 25,063 79,806 110,189 $671,450	$- - - - - - $-	$5,277 - 76,496 - - - $81,773	$484 18 - 18 - - $520	$65,013 19,146 454,508 25,081 79,806 110,189 $753,743

Item		2021.1.1-2021.3.31	2021.1.1-2021.3.31	2021.1.1-2021.3.31
	Commission expense	Agency expense	Handling fee expense	Reinsurance commission expense	Total
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$62,653 18,614 354,176 19,297 70,054 115,324 $640,118	$- - - - - - $-	$5,060 - 79,676 - - - $84,736	$2,186 38 - 21 - - $2,245	$69,899 18,652 433,852 19,318 70,054 115,324 $727,099

(2) Analysis of insurance profit and loss

A. Analysis of the profit and loss of the underwriting and ceded-in reinsurance

Item				2022.1.1-2022.3.31	2022.1.1-2022.3.31
	Premium revenues	Reinsurance premium income	Net changes in unearned premium reserve	Insurance contract acquisition cost	Insurance claims (including indemnity expense)	Reinsurance claims	Net change in Claims reserve	Insurance profit (loss)
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$974,432 218,536 2,897,199 428,938 557,451 633,355 $5,709,911	$28,275 778 157,209 76 1,303 2,099 $189,740	$37,836 52,502 (64,802) (119,641) (122,025) (90,171) $(306,301)	$(65,013) (19,146) (454,508) (25,081) (79,806) (110,189) $(753,743)	$(373,358) (144,975) (1,528,834) (53,511) (138,724) (319,071) $(2,558,473)	$(1,015) (2) (153,527) (108) (7) (569) $(155,228)	$102,426 (31,458) (126,184) (58,663) 23,729 (29,796) $(119,946)	$703,583 76,235 726,553 172,010 241,921 85,658 $2,005,960

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Item				2021.1.1-2021.3.31	2021.1.1-2021.3.31
	Premium revenues	Reinsurance premium income	Net changes in unearned premium reserve	Insurance contract acquisition cost	Insurance claims (including indemnity expense)	Reinsurance claims	Net change in Claims reserve	Insurance profit (loss)
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$819,078 284,086 2,780,733 324,688 543,816 667,838 $5,420,239	$38,437 521 151,922 101 522 576 $192,079	$33,408 18,104 (108,834) (87,614) (176,041) (153,050) $(474,027)	$(69,899) (18,652) (433,852) (19,318) (70,054) (115,324) $(727,099)	$(75,130) (48,289) (1,672,322) (88,582) (121,520) (327,789) $(2,333,632)	$(749) 40 (143,991) (25) (752) (154) $(145,631)	$(634,639) (33,035) (42,005) 18,139 8,267 (10,618) $(693,891)	$110,506 202,775 531,651 147,389 184,238 61,479 $1,238,038

B. Current profit and loss recognized for purchased reinsurance contracts

2022.1.1-2022.3.31

Item	Reinsurance premiums ceded	Net change in ceded unearned premium reserve	Reinsurance commission income	Claims recovered from reinsurers	Net change in ceded Claims reserve	Ceded reinsurance profit (loss)
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$(426,929) (123,998) (288,547) (223,606) (42,734) (63,469)	$(98,437) (50,439) (27,998) 86,596 (1,622) 26,341	$13,307 19,113 26,231 9,024 4,184 3,841	$288,644 53,799 254,072 9,512 12,182 35,468	$(205,490) 25,109 (12,062) 45,480 (10,952) 1,993	$(428,905) (76,416) (48,304) (72,994) (38,942) 4,174
	$(1,169,283)	$(65,559)	$75,700	$653,677	$(155,922)	$(661,387)

2021.1.1-2021.3.31

Item	Reinsurance premiums ceded	Net change in ceded unearned premium reserve	Reinsurance commission income	Claims recovered from reinsurers	Net change in ceded Claims reserve	Ceded reinsurance profit (loss)
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$(435,370) (170,239) (307,219) (176,249) (58,166) (96,253) $(1,243,496)	$(49,670) (32,146) (1,548) 82,136 9,698 45,513 $53,983	$31,674 18,501 31,170 18,873 5,533 6,407 $112,158	$39,124 12,463 334,051 31,915 6,957 49,013 $473,523	$353,866 52,393 (35,130) (15,884) 2,356 10,133 $367,734	$(60,376) (119,028) 21,324 (59,209) (33,622) 14,813 $(236,098)

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

6. Sensitivity of insurance risks

Insurance contract type	Premium revenues	Expected loss rate	Expected impact on profit or loss with5%increase of lossrate	Expected impact on profit or loss with5%increase of lossrate
			Before holding reinsurance	After holding reinsurance
Fire insurance Marine insurance Land and air insurance Liability insurance Engineering Guarantee Insurance Other property insurance Accident insurance Health insurance Automobile liability insurance Total	$974,453 219,780 2,375,731 420,445 437,506 128,438 629,104 4,252 520,223 $5,709,932	70.42% 70.14% 65.60% 71.22% 68.02% 62.29% 63.45% 63.22% Not applicable	$48,723 10,989 118,786 21,022 21,875 6,422 31,455 213 Not applicable $259,485	$27,376 4,727 115,198 19,754 10,651 5,598 28,287 207 Not applicable $211,798

Note: The data period is from January to March 2022; fire insurance premiums are not covered in long-term fire insurance.

According to the data from January to March 2022, although the assumed increase of expected loss rate by 5% have a certain degree of impact on the profit or loss, with the reinsurance arrangement, however, the impact from the change in expected loss rate can be reduced, thereby spreading the risks, and the sensitivity can be maintained within a reasonable range.

7. Explanation of concentrated insurance risks

(1) Circumstances that may lead to concentrated insurance risks:
A. Proportion of premiums for underwriting and ceded-in reinsurance

The insurance contracts underwritten by the company are spread across different types of insurance without concentration on a single type of insurance, and the highest proportion is attributed to automobile insurance, which accounted for 51.77% and 52.25% of the total underwriting during January 1 to March 31, 2022 and January 1 to March 31, 2021, respectively. Although the proportion is higher than that of other insurances, experiences show the relevant loss is stable and the risk variation is not significant; other insurance types do not have risk concentration either.

Proportion of premiums for underwriting and ceded-in reinsurance:

==> picture [409 x 133] intentionally omitted <==

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

2022.1.1-2022.3.31 2021.1.1-2021.3.31
Item Amount Percentage. Amount Percentage.
Fire insurance $1,002,707 17.00% $857,515 15.28%
Marine insurance 219,314 3.72% 284,607 5.07%
Motor insurance 3,054,408 51.77% 2,932,655 52.25%
Engineering insurance 429,014 7.27% 324,789 5.79%
Liability insurance 558,754 9.47% 544,338 9.70%
Accident & health 635,454 10.77% 668,414 11.91%
insurance
Total $5,899,651 $5,612,318
----- End of picture text -----

B. Retention ratios

The car insurance has the highest retention ratios, which accounted for 58.47% and 60.09% of its total premiums during January 1 to March 31, 2022 and January 1 to March 31, 2021, respectively, and in consideration of the possibility of significant cumulative losses, reinsurance is arranged to spread the risks, and therefore no risk concentration present.

Also considered are insurances related to natural disasters (e.g. earthquakes and typhoon floods) that may lead to significant cumulative losses, as well as insurances that may result in cumulative losses including property related insurances (fire insurance, engineering insurance), marine insurance and accident insurance, and to avoid concentrated underwriting risks, catastrophe reinsurance contacts are purchased to spread the risks.

Premiums retention ratios:

==> picture [406 x 140] intentionally omitted <==

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

2022.1.1-2022.3.31 2021.1.1-2021.3.31
Item Amount Percentage. Amount Percentage.
Fire insurance $575,778 12.17% $422,145 9.66%
Marine insurance 95,316 2.02% 114,368 2.62%
Motor insurance 2,765,861 58.47% 2,625,436 60.09%
Engineering insurance 205,408 4.34% 148,540 3.40%
Liability insurance 516,020 10.91% 486,172 11.13%
Accident & health
insurance 571,985 12.09% 572,161 13.10%
Total $4,730,368 $4,368,822
----- End of picture text -----

C. The following table shows the concentrated risks of different insurance types before and after reinsurances:

Item		2022.1.1-2022.3.31	2022.1.1-2022.3.31
	Premium revenues	Reinsurance premium income	Reinsurance premiums ceded	Net premium revenues
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$974,432 218,536 2,897,199 428,938 557,451 633,355 $5,709,911	$28,275 778 157,209 76 1,303 2,099 $189,740	$(426,929) (123,998) (288,547) (223,606) (42,734) (63,469) $(1,169,283)	$575,778 95,316 2,765,861 205,408 516,020 571,985 $4,730,368

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Item		2021.1.1-2021.3.31	2021.1.1-2021.3.31
	Premium revenues	Reinsurance premium income	Reinsurance premiums ceded	Net premium revenues
Fire insurance Marine insurance Motor insurance Engineering insurance Liability insurance Accident & health insurance Total	$819,078 284,086 2,780,733 324,688 543,816 667,838 $5,420,239	$38,437 521 151,922 101 522 576 $192,079	$(435,370) (170,239) (307,219) (176,249) (58,166) (96,253) $(1,243,496)	$422,145 114,368 2,625,436 148,540 486,172 572,161 $4,368,822

8. Claims development trend

This table discloses the IBNR reserves for the insurance types based on the “Loss Development Triangles.”

◎ Claims development trend:

A. Cumulative reported claims

Accident Year		Assessment date	Assessment date	Assessment date		2022.3.31 Cumulative settled claims	Outstanding claims	IBNR claims	Claims reserve
	2018.12.31	2019.12.31	2020.12.31	2021.12.31	2022.3.31
≦2017 2018 2019 2020 2021 2022 Total	$7,005,283	$7,378,153 8,069,856	$7,256,705 8,686,669 9,736,071	$7,244,168 8,618,981 10,213,567 8,570,248	$7,243,300 8,621,541 10,248,775 8,932,657 1,925,171	$7,120,234 8,035,855 8,089,660 6,244,954 427,222	$443,794 123,066 585,686 2,159,115 2,687,703 1,497,949 $7,497,313	$1,317,821	$8,815,134

Accident Year		Assessment date	Assessment date	Assessment date		2021.12.31 Cumulative settled claims	Outstanding claims	IBNR claims	Claims reserve
	2017.12.31	2018.12.31	2019.12.31	2020.12.31	2021.12.31
≦2016 2017 2018 2019 2020 2021 Total	$6,409,289	$6,589,715 7,005,283	$6,537,614 7,378,153 8,069,856	$6,531,323 7,256,705 8,686,669 9,736,071	$6,557,063 7,244,168 8,618,981 10,213,567 8,570,248	$6,480,591 7,110,430 7,984,530 7,651,271 4,968,283	$377,920 76,472 133,738 634,451 2,562,296 3,601,965 $7,386,842	$1,289,214	$8,676,056

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued) (Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Accident Year		Assessment date	Assessment date	Assessment date		2021.3.31 Cumulative settled claims	Outstanding claims	IBNR claims	Claims reserve
	2017.12.31	2018.12.31	2019.12.31	2020.12.31	2021.3.31
≦2016 2017 2018 2019 2020 2021 Total	$6,409,289	$6,589,715 7,005,283	$6,537,614 7,378,153 8,069,856	$6,531,323 7,256,705 8,686,669 9,736,071	$6,545,562 7,245,374 8,682,563 10,369,421 1,936,059	$6,448,295 6,933,884 7,702,660 6,047,316 396,020	$424,892 97,267 311,490 979,903 4,322,105 1,540,039 $7,675,696	$1,092,345	$8,768,041

B. Cumulative reported claims

Accident Year		Assessment date	Assessment date	Assessment date		2022.3.31 Cumulative settled claims	Outstanding claims	IBNR claims	Claims reserve
	2018.12.31	2019.12.31	2020.12.31	2021.12.31	2022.3.31
≦2017 2018 2019 2020 2021 2022 Total	$5,824,992	$6,079,736 6,383,975	$6,030,322 6,586,879 6,976,044	$5,976,778 6,575,205 7,297,107 7,164,861	$5,975,561 6,576,498 7,318,258 7,415,844 1,749,417	$5,894,913 6,436,063 6,763,086 5,521,853 400,021	$161,620 80,648 140,435 555,172 1,893,991 1,349,396 $4,181,262	$1,078,040	$5,259,302

Accident Year		Assessment date	Assessment date	Assessment date		2021.12.31 Cumulative settled claims	Outstanding claims	IBNR claims	Claims reserve
	2017.12.31	2018.12.31	2019.12.31	2020.12.31	2021.12.31
≦2016 2017 2018 2019 2020 2021 Total	$5,383,242	$5,476,366 5,824,992	$5,441,622 6,079,736 6,383,975	$5,441,978 6,030,322 6,586,879 6,976,044	$5,471,478 5,976,778 6,575,205 7,297,107 7,164,861	$5,415,708 5,886,007 6,401,285 6,606,252 4,366,240	$115,952 55,770 90,771 173,920 690,855 2,798,621 $3,925,889	$1,050,561	$4,976,450

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Accident Year		Assessment date	Assessment date	Assessment date		2021.3.31 Cumulative settled claims	Outstanding claims	IBNR claims	Claims reserve
	2017.12.31	2018.12.31	2019.12.31	2020.12.31	2021.3.31
≦2016 2017 2018 2019 2020 2021 Total	$5,383,242	$5,476,366 5,824,992	$5,441,622 6,079,736 6,383,975	$5,441,978 6,030,322 6,586,879 6,976,044	$5,455,151 6,027,656 6,582,497 7,355,762 1,592,185	$5,385,242 5,847,824 6,239,641 5,452,083 362,133	$115,060 69,909 179,832 342,856 1,903,679 1,230,052 $3,841,388	$834,086	$4,675,474

Note: The above figures do not include policy-based insurances (i.e. automobile compulsory insurance, residential earthquake insurance, nuclear energy insurance) and the insurances with IBNR reserves not provided based on the “Loss Development Triangles.”

9. Types of financial instruments

==> picture [441 x 410] intentionally omitted <==

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

Financial instruments 2022.3.31 2021.12.31 2021.3.31
Financial assets
Financial assets at fair value through profit or
loss:
Mandatorily measured at fair value through $8,918,423 $8,823,185 $8,534,732
profit or loss
Financial assets at fair value through other 1,525,428 1,388,344 1,284,115
comprehensive income
Financial assets at amortized cost:
Cash and cash equivalents (excluding cash 11,690,453 11,754,641 10,838,370
on hand and working capital)
Financial assets at amortized cost 7,373,540 6,941,041 6,066,347
Accounts receivable 1,761,020 1,945,038 1,831,499
Refundable deposits 637,466 627,855 645,993
Subtotal 21,462,479 21,268,575 19,382,209
Total $31,906,330 $31,480,104 $29,201,056
Financial liabilities
Financial liabilities at fair value through
profit or loss:
Mandatorily measured at fair value through $91,657 $- $11,992
profit or loss
Financial liabilities at amortized cost:
Accounts Payables 2,342,470 2,894,222 2,692,815
Lease liabilitie 33,693 34,924 34,201
Subtotal 2,376,163 2,929,146 2,727,016
Total $2,467,820 $2,929,146 $2,739,008
----- End of picture text -----

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

10. Financial risk management objectives and policies

Financial instruments other than derivatives held by the Company mainly include: cash and cash equivalents, and various investments. Such financial instruments are used to adjust the flow of operating funds. The Company also holds other financial assets and liabilities, such as notes receivable, premiums receivable, claims and benefits payable, due from (to) reinsurers & ceding companies, refundable deposits, resulted from business operations.

The Company also engages in derivatives trading, mainly on forward exchange agreements, to avoid exchange rate risks out of investment activities. The Company’s policy is NOT to engage in derivative transactions for trading purposes.

The main risks of the Company’s financial instruments are market risks, credit risks and liquidity risks. The risk management policy approved by the Board of Directors is as follows:

(1) Market risk

A. Exchange rate risk

The Company is exposed to the risk of fluctuated exchange rates between the U.S. dollar and the New Taiwan dollar due to holding foreign currencies from trust investments. Since the amounts of such investment positions are significant, forward exchange agreements are carried out to hedge this part of investment activities.

The Company is also exposed to the exchange rate risk arising from reinsurance of business operations denominated in non-functional currencies. However, this type of transactions usually has a short cash collection period with less significant exchange rate fluctuation, and therefore transactions as such are usually not hedged.

The conditions for the hedging tools and for the hedged items are the same based on the Company’s self-assessment, so as to maximize the hedging efficacy.

B. Interest rate risk

The interest rate risk is a result from fluctuated fair value of financial instruments or fluctuated cash flows in the future due to changes in market interest rates, and the floating interest rate assets held by the company as well as the floating interest rate debts undertaken by the company may lead risks arising from fluctuated cash flows in the future due to the changes in the market interest rates; however, the Company’s financial instruments are all capitalguaranteed, and therefore the impact is not significant.

C. Equity price risk

The company holds domestic and foreign listed and unlisted equity securities, whose prices will be affected by the uncertainty of the future value of their invested targets. These listed and unlisted equity securities held by the Company are included in the fair value measurement through profit or loss and the fair value measurement through other comprehensive profit or loss. Investment portfolios are used to set investment limits on single and overall equity securities to manage the price risks.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(2) Credit risk
A. Credit risk management policy

The company only deals with third parties that have been recognized as having good credit and, as the corporate policy requires, a credit transaction must go through a credit confirmation procedure before being carried out, and the recovery of premiums and bills receivable are continuously surveyed and evaluated and, as a result, the Company has maintained a good status from bad debts. If the counterparty shows credibility issues, however, relevant contracts will be suspended and the related rights and obligations will not be exercised until it gets back to the transaction status.

The credit risks to which the Company’s financial transactions are exposed include issuer credit risk, counterparty credit risk and underlying asset credit risk:

a. The issuer credit risk refers to the risk of financial losses incurred by the Company due to the holding of financial debt instruments or deposits in banks for which payments or compensation obligations are not performed because of default, bankruptcy or liquidation of the issuer, guarantor or bank, in accordance with the agreed terms.
b. The counterparty credit risk refers to the risk of financial losses incurred by the Company due to the transactions of financial instruments, with which the counterparty fails to perform the delivery or payment obligations on the agreed date.
c. The underlying asset credit risk refers to the risk of losses due to the weakened credit quality, increased credit discounts, downgraded credit ratings, or breach of contract concerning the underlying asset linked to financial instruments.

The IFRS 9 is taken to assess expected credit losses, and except for receivables, for which allowance for loss is measured by the lifetime expected credit loss, the rest debt instruments not measured at fair value through profit or loss have the allowance for loss measured based on the lowest risk credit at initial procurement, and on every balance sheet date whether the credit risk is significantly increased since the initial recognition is assessed to determine the method and the loss rate for measuring the allowance for loss. The method and indicators used to assess the impairment of the debt instrument investments are described as follows:

				Loss rates
Credit risk ratings	Indicators	Expected credit loss measurement method	2022.3.31
				2021.12.31	2021.3.31
Low credit risk Credit risk increased significantly	Credit rating above Baa3 Credit rating below Ba1	12-month expected credit loss Lifetime expected credit loss	0.0118%~ 0.1030% 1.2221%~ 6.2558%	0.0012%~ 0.0895% 1.5868%~ 4.8399%	0.0190%~ 0.0885% 1.5508%~ 3.8394%

The financial assets with recovery unable to be reasonably expected (e.g. the issuer or debtor has major financial difficulties, or has gone bankrupt) are written off.

The debt instruments with increased credit risks are promptly disposed to reduce credit losses. To assess the expected credit losses based on IFRS 9, the forward-looking information (obtained without excessive cost or investment) used also includes general economic information and industry information, and the lose rate is adjusted if the information shows significant impact on the credit losses.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

B. Judgment that the credit risk has increased significantly since initial recognition
a. The financial instruments are assessed for impairment based on IFRS 9 on every reporting date, to judge whether the credit risk has significantly increased since the initial recognition. This assessment considers reasonable and supportive information (including forward-looking one) that shows a significant increase in the credit risk since the initial recognition, and the main indicators include external credit ratings, credit spreads, and other market information related to the borrowers or issuers showing a significant increase of the credit risk.
b. Low credit risk: If a financial instrument is judged as having low credit risk on the reporting date, it can be assumed that the credit risk of the financial instrument has not significantly increased since initial recognition.
C. Defaulted and credit impaired financial assets

The default of a financial asset is defined the same as with its credit impairment, and one or more of the following conditions are met, the financial asset is judged as defaulted and credit impaired:

a. Quantitative indicator: When the contract payment is overdue for more than 90 days, the financial asset is judged as defaulted and credit impaired.
b. Qualitative indicator: When evidence shows that the issuer or borrower is unable to fulfill the contract payment, or that the issuer or borrower has major financial difficulties, such as:
- (A) The issuer or borrower is bankrupt or may apply for bankruptcy or financial restructuring; or
- (B) Failure to pay the principal or interest in accordance with the agreed terms; or
- (C) The borrower’s collateral is under provisional attachment or compulsory collection; or
- (D) The borrower applies for changing the credit terms due to financial difficulties.
c. The above definitions of default and credit impairment apply to all financial assets held by the Company, and are consistent with the definitions used for financial assets at stake for internal credit risk management, and are also used in the relevant impairment assessment models.
D. Measurement of expected credit losses
a. The approach and assumption

The allowance for loss of the financial instruments with no significant increase of credit risks since initial recognition is measured by the 12-month expected credit loss; the allowance for loss of the financial instruments with significant increase of credit risk or credit impairment since initial recognition is measured by the lifetime expected credit loss.

To measure the expected credit loss, the probability of default (PD) in the next 12 months and in the lifetime of the financial instruments are considered, with the loss given default (LGD) accommodated, multiplied by the exposure at default (EAD), along with additional consideration on the influence of the time value of money, and then the expected credit loss is calculated for the 12 months and for the lifetime duration, respectively.

The PD is the probability that the issuer, guarantee agency or borrower will default, and the LGD is the loss ratio caused by the issuer, guarantee agency or borrower when the default occurs. The LGD used for the impairment assessment is based on the information regularly published by Moody’s, an international credit rating agency; the PD is based on the information regularly published by the Taiwan Ratings and Moody’s, taking into account historical data adjusted based on currently observable data and general economic information (such as GDP and economic growth rate). The EAD is measured at the amortized cost and interests receivable of financial assets.

b. Consideration of forward-looking information

The forward-looking information is taken into consideration when the expected credit loss of financial assets is measured.

E. Analysis of risk concentration
a. The following table shows the geographical distribution of the credit risk exposure of the financial assets:

March 31, 2022

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Emerging
Financial assets Taiwan Australia America market Total
and others
Cash and cash equivalents 11,690,453 - - - 11,690,453
(Note 1)
Financial assets at fair value 51,133 - - - 51,133
through profit or loss
Financial assets at fair value - - 346,083 - 346,083
through other comprehensive
income
Financial assets at amortized
cost (Note 2) 4,102,372 - 3,030,908 769,078 7,902,358
Total 15,843,958 - 3,376,991 769,078 19,990,027
Regional proportion to overall 79% 0% 17% 4% 100%
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(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

December 31, 2021

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

Emerging
Financial assets Taiwan Australia America market Total
and others
Cash and cash equivalents 11,754,641 - - - 11,754,641
(Note 1)
Financial assets at fair value 51,137 - - - 51,137
through profit or loss
Financial assets at fair value - - 386,930 - 386,930
through other comprehensive
income
Financial assets at amortized
cost (Note 2) 3,480,320 302,328 2,661,147 1,026,701 7,470,496
Total 15,286,098 302,328 3,048,077 1,026,701 19,663,204
Regional proportion to overall 78% 2% 15% 5% 100%
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March 31, 2021

March31,2021
Financial assets	Taiwan	Australia	America	Emerging market and others	Total
Cash and cash equivalents (Note1)	10,838,370	-	-	-	10,838,370
Financial assets at fair value throughprofitor loss	51,121	-	-	-	51,121
Financial assets at fair value through other comprehensive income	-	-	371,188	-	371,188
Financial assets at amortized cost(Note 2)	2,819,010	302,306	2,370,369	1,107,055	6,598,740
Total	13,708,501	302,306	2,741,557	1,107,055	17,859,419
Regionalproportion to overall	77%	2%	15%	6%	100%

Note 1: Cash and cash equivalents exclude cash on hand and working capital. Note 2: Including security deposits

b. The following table shows the industrial distribution of the credit risk exposure of the financial assets:

March 31, 2022

March31,2022
Financial assets	Finance	ManufactureCommunication &technology		Others	Total
Cash and cash equivalents (Note1)	11,690,453	-	-	-	11,690,453
Financial assets at fair value throughprofitor loss	51,133	-	-	-	51,133
Financial assets at fair value through other comprehensive income	-	-	-	346,083	346,083

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

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Financial assets at amortized
cost (Note 2) 2,889,707 199,085 1,545,815 3,267,751 7,902,358
Total 14,631,293 199,085 1,545,815 3,613,834 19,990,027
Regional proportion to overall 73% 1% 8% 18% 100%
December 31, 2021
Financial assets Finance Manufacture [Communication] Others Total
& technology
Cash and cash equivalents
(Note 1) 11,754,641 - - - 11,754,641
Financial assets at fair value
through profit or loss 51,137 - - - 51,137
Financial assets at fair value
through other comprehensive
income - - - 386,930 386,930
Financial assets at amortized
cost (Note 2) 2,887,357 192,473 929,451 3,461,215 7,470,496
Total 14,693,135 192,473 929,451 3,848,145 19,663,204
Regional proportion to overall 75% 1% 5% 19% 100%
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March 31, 2021

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Financial assets Finance Manufacture [Communication] Others Total
& technology
Cash and cash equivalents 10,838,370 - - - 10,838,370
(Note 1)
Financial assets at fair value
through profit or loss 51,121 - - - 51,121
Financial assets at fair value
through other comprehensive - - -
income 371,188 371,188
Financial assets at amortized
cost (Note 2) 2,631,634 198,256 587,116 3,181,734 6,598,740
Total 13,521,125 198,256 587,116 3,552,922 17,859,419
Regional proportion to overall 76% 1% 3% 20% 100%
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Note 1: Cash and cash equivalents exclude cash on hand and working capital. Note 2: Including security deposits

F. Analysis of credit risk quality

The following table shows the credit quality classification of the financial assets:

March 31, 2022

March 31,2022
	Normal assets
Financial assets	Investment grade	Non-investment grade	Total
Cash and cash equivalents(Note 1)	11,690,453	-	11,690,453
Financial assets at fair value throughprofit or loss	51,133	-	51,133

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd.

Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

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Financial assets at fair value
through other comprehensive
income 346,083 - 346,083
Financial assets at amortized cost
(Note 2) 7,902,358 - 7,902,358
Total 19,990,027 - 19,990,027
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December 31, 2021

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Normal assets
Financial assets Non-investment Total
Investment grade
grade
Cash and cash equivalents (Note 1) 11,754,641 - 11,754,641
Financial assets at fair value
through profit or loss 51,137 - 51,137
Financial assets at fair value
through other comprehensive
income 386,930 - 386,930
Financial assets at amortized cost
(Note 2) 7,470,496 - 7,470,496
Total 19,663,204 - 19,663,204
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March 31, 2021

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Normal assets Total
Financial assets
Investment grade Non-investment grade
Cash and cash equivalents (Note 1) 10,838,370 - 10,838,370
Financial assets at fair value
through profit or loss 51,121 - 51,121
Financial assets at fair value
through other comprehensive
income 371,188 - 371,188
Financial assets at amortized cost
(Note 2) 6,598,740 - 6,598,740
Total 17,859,419 - 17,859,419
----- End of picture text -----

Note 1: Cash and cash equivalents exclude cash on hand and working capital. Note 2: Including security deposits

Note 3: Investment grade refers to credit rating above BBB- and non-investment grade refers to BBB- or lower.

G. Maximum total book value of credit risk exposure and credit quality classification

		2022.3.31	2022.3.31
Stage 1	Stage 2	Stage 3		Total book value
12-month expected credit loss $8,098,621 382,300	Lifetime expected credit loss	Lifetime Expected credit loss	Purchased or credit-impaired financial assets
	$151,469 -	$- -	$- -	$8,250,090 382,300

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued) (Expressed in thousands of New Taiwan dollars, unless otherwise stated)

		2021.12.31	2021.12.31
Stage 1	Stage 2	Stage 3		Total book value
12-month expected credit loss $7,877,435 378,834	Lifetime expected credit loss	Lifetime Expected credit loss	Purchased or credit-impaired financial assets
	$150,822 -	$- - 2021.3.31	$- -	$8,028,257 378,834
Stage 1	Stage 2	Stage 3		Total book value
12-month expected credit loss $7,000,379 383,686	Lifetime expected credit loss	Lifetime Expected credit loss	Purchased or credit-impaired financial assets
	$40,451 -	$- -	$- -	$7,040,830 383,686

Note: Including security deposits and interests receivable of financial assets.

H. Reconciliation of allowance for loss from beginning balance to ending balance

12-month expected credit loss	12-month expected credit loss	Lifetime expected credit loss
Measured at fair value through other comprehensive income	Measured at amortized cost $3,637 (83) 378 502 $4,434 $6,673 - 166 (3,374) $3,465	Measured at amortized cost
$225 - - 61		$6,136 - - 1,574
$286		$7,710
$508 - - (283) $225		$3,206 - - (2,346) $860

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(3) Operational risk

The purpose is to avoid potential losses out of improper internal control, fraud, corruption, and negligence. The Company has established separate operating procedures and computer systems with the frontend and backend platforms and middleware according to the business features to effectively manage operational risks by way of strict internal control and auditing as well as external reviews and statutory compliance. The company has also formulated and implemented the “Operational Risk Management Mechanism” for risk assessment by each department; also, the “Guidelines for Risk Early Warning and Reporting” is set up to establish a loss experience database.

(4) Liquidity risk

A. Definition and source of liquidity risk

The liquidity risk of financial instruments can be divided as “fund liquidity risk” and “market liquidity risk.” The “fund liquidity risk” refers to the risk that necessary and sufficient funds are not available within a reasonable time and at a reasonable cost, resulting in a funding gap; the “market liquidity risk” refers to the losses incurred due to assets sold below the market price in order to acquire necessary funds.

B. Liquidity risk management

Based on the business features, the short-term cash flows are regularly assessed and monitored under a sound liquidity risk management mechanism, where the market transaction volumes and proportionality of fund positions are considered for prudent control of the market liquidity risk; also, contingency plans are drawn up to deal with major liquidity risks out of abnormal and emergent fund demands.

Stress testing analysis is to test changes in funding liquidity under various combinations of extremely abnormal and unfavorable situations to ensure safe funding liquidity. The stress scenarios assumed include major market fluctuations, occurrences of various credit events, and unexpected tightening of financial market liquidity that may generate liquidity pressures, and the test is to measure the changes in positive and negative funding gaps of the overall corporate fund supply and demand in various periods without affecting normal business operations. Aimed at the funding gaps resulted from the stress testing scenarios, contingency plans have been set up to deal with such major liquidity risks out of the assumed abnormal and emergent demands on funds.

(5) Market risk analysis

Market risk refers to the risk of reduced benefits or investment portfolio values due to changes in the market factors such as exchange rates, commodity prices, interest rates, credit spreads, and stock prices.

The market risk management tools such as Value at Risk (VaR) and stress testing are constantly used to comprehensively and effectively measure, monitor and manage the market risks.

A. Value at risk (VaR)

The VaR is used to measure the maximum potential loss incurred by investment portfolios due to changes in market risk factors during a specific period and under a certain confidence level. The Company currently take a confidence level of 99% to calculate VaR for the next two weeks.

The VaR of relevant asset positions is shown in the following table:

March 31, 2022

March 31,2022
	Equity	Bond	Domestic Assets	Foreign Assets	Total VaR
Component VaR	$737,572	$28,997	$736,486	$33,332	$745,413

December 31, 2021

	Equity	Bond	Domestic Assets	Foreign Assets	Total VaR
Component VaR	$515,535	$24,311	$516,167	$27,449	$511,950

March 31, 2021

March 31,2021
	Equity	Bond	Domestic Assets	Foreign Assets	Total VaR
Component VaR	$584,392	$25,845	$581,304	$31,918	$582,292

B. Stress testing

With the VaR model, regular stress testing is given to measure potential market risks when extremely abnormal events occur. The stress testing measures the potential impact on the value of the investment portfolio from extreme changes in a series of financial variables.

Currently a simple sensitivity analysis and a scenario simulation are regularly given to carry out the stress test on the financial positions, and the test covers loss of position caused by the change of risk factors in various historical scenarios:

a. Simple sensitivity analysis

The simple sensitivity analysis measures the changed value of the investment portfolio caused by changes in specific risk factors.

b. Scenario Analysis

The scenario analysis measures the changed total value of investment positions that occurs under hypothetical events, and the scenarios include:

i. Historical scenarios:

A period of historical events is selected, and the fluctuated risk factors in the period are added to the current investment portfolio to calculate the loss out of the historical events.

ii. Hypothetical scenarios:

With a reasonably expected hypothesis that could lead to extreme market changes in the future, its changed risk factors are added to the current investment portfolio to measure the loss out of the hypothetical events.

The Investment Department regularly carries out the stress test under hypothetical scenarios and send the resulted reports to the Risk Management Department for the corporate risk analysis, risk warning and business management.

March 31, 2022

March 31, 2022
Risk factors Equity risk (stock price index) Interest rate risk (yield rate curve) Exchange rate risk (exchange rate)	Changed value (+/-) -10% +100bp -5%	Position profit and loss (P/L)
		$(694,347) (68,524) (13,420)

December 31, 2021 Risk factors Equity risk (stock price index) Interest rate risk (yield rate curve) Exchange rate risk (exchange rate)	Changed value (+/-) -10% +100bp -5%	Position profit and loss (P/L)
		$(652,502) (76,772) (29,565)

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

March 31, 2021

March 31, 2021
Risk factors Equity risk (stock price index) Interest rate risk (yield rate curve) Exchange rate risk (exchange rate)	Changed value (+/-) -10% +100bp -5%	Position profit and loss (P/L)
		$(600,915) (55,343) (26,448)

Fair value information of financial instruments
(1) The methods and assumptions used to measure fair values are as follows:
- A. The fair values of cash and cash equivalents, receivables and payables are estimated based on their book values on the balance sheet, because such items will become mature shortly and thus their book values are a reasonable basis for measuring the fair values.
- B. The fair values of financial assets and financial liabilities that have standard terms and conditions and are traded in active markets are determined by reference to market quotes (including beneficiary certificates, listed stocks and bonds).
- C. The fair values of derivatives are based on public quotes. When public quotes are not available, the fair values of non-option derivatives are calculated with the applicable lifetime yield curve by discounted cash flow analysis, while the fair values of option derivatives are calculated by the option pricing model.
- D. The fair values of other financial assets and financial liabilities are determined based on the discounted cash flow analysis, where the assumptions such as interest rates and discount rates are mainly based on the information of similar instruments and applicable lifetime yield curves.
(2) Fair value by financial assets measured at amortized cost

Except for those listed in the following table, the book values of financial assets and financial liabilities measured by amortized cost approximate their fair values:

Financial assets Financial assets at amortized cost Refundable deposits – by government bonds		Book value
	2022.3.31	2021.12.31	2021.3.31
	$7,373,540 528,818	$6,941,041 529,455	$6,066,347 532,393

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Financial assets Financial assets at amortized cost Refundable deposits – by government bonds		Fair value
	2022.3.31	2021.12.31	2021.3.31
	$7,415,745 527,073	$7,531,580 536,134	$6,524,953 552,415

(3) Fair value recognized on balance sheet

The following table provides the analysis of financial instruments measured at fair value after initial recognition, by dividing the fair values into the following three levels:

Level 1: Public quotes (unadjusted) of the same assets or liabilities in the active market.

Level 2: Except for the Level 1 public quotes, the fair value is derived from the direct observable input values (i.e. prices) and indirect ones (i.e. derivatives from prices) of the assets or liabilities.

Level 3: The fair value is derived with the appraisal technology that is not based on input values of the assets or liabilities from the observable market data.

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Financial instruments 2022.3.31
measured at fair value Total Level 1 Level 2 Level 3
----- End of picture text -----

measured at fair value	Total	Level 1	Level 2	Level 3
Financial assets
Financial assets at fair value
through profit or loss
Stock	$6,377,346	$6,052,383	$-	$324,963
Bonds	51,133	-	-	51,133
Fund	2,489,944	2,489,944	-	-
Financial assets at fair value
through other comprehensive
income
Stock	1,179,345	912,145	-	267,200
Bonds	346,083	346,083	-	-
Financial liabilities
Financial liabilities at fair value
through profit or loss
Swap and forward exchange
contracts	91,657	-	91,657	-

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Financial instruments measured at fair value		2021.12.31	2021.12.31
	Total	Level 1	Level 2	Level 3
Financial assets Financial assets at fair value through profit or loss Stock Bonds Fund Swap and forward exchange contracts Financial assets at fair value through other comprehensive income Stock Bonds Financial instruments measured at fair value	$6,255,516 51,137 2,468,560 47,972 1,001,414 386,930	$5,930,553 $- - - 2,468,560 - - 47,972 730,767 - 386,930 - 2021.3.31		$324,963 51,137 - - 270,647 -
	Total	Level 1	Level 2	Level 3
Financial assets Financial assets at fair value through profit or loss Stock Bonds Fund Swap and forward exchange contracts Financial assets at fair value through other comprehensive income Stock Bonds Financial liabilities Financial liabilities at fair value through profit or loss Swap and forward exchange contracts	$6,437,401 51,121 1,986,907 59,303 912,927 371,188 11,992	$6,108,492 - 1,946,304 - 614,373 371,188 -	$- - - 59,303 - - 11,992	$328,909 51,121 40,603 - 298,554 - -

The assets and liabilities measured at repetitive fair value during January 1 to March 31, 2022 and January 1 to March 31, 2021, had no transfer between the Level 1 and Level 2 fair values.

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(4) Details of changes in the Level 3 repetitive fair value

From the beginning to the end of the period, the adjusted balances of the Level 3 assets and liabilities measured at repetitive fair value are as follows:

iabilities measured at repetitive fair value are as	follows:
2022.1.1 Recognized total profits (losses): Recognized as gains and losses (under “Profit or loss on Financial Assets and Liabilities at Fair Value through profit or loss”) Recognized as other comprehensive income (under “Unrealized valuation profit or loss on equity instruments measured at fair value through other comprehensive income”) 2022.3.31 2021.1.1 Recognized total profits (losses): Recognized as gains and losses (under “Profit or loss on Financial Assets and Liabilities at Fair Value through profit or loss”) Recognized as other comprehensive income (under “Unrealized valuation profit or loss on equity instruments measured at fair value through other comprehensive income”) Recognized as other comprehensive income (under “Other comprehensive income reclassified with overlay approach”) disposal/settlement 2021.3.31		Assets
	Measured at fair value through profit or loss	Measured at fair value through other comprehensive income	Total
	$376,100 (4) -	$270,647 - (3,447)	$646,747 (4) (3,447)
	$376,096	$267,200	$643,296
		Assets
	Measured at fair value through profit or loss	Measured at fair value through other comprehensive income	Total
	$418,030 40 - 2,563 - $420,633	$292,104 - 14,014 - (7,564) $298,554	$710,134 40 14,014 2,563 (7,564) $719,187

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Among the above recognized total profits (losses), those related to the assets held during January 1 to March 31, 2022 and January 1 to March 31, 2021, respectively, are as follows:

Total profits (losses) Recognized in the profit or loss Recognized in the other comprehensive income	2022.1.1 -2022.3.31	2021.1.1 -2021.3.31
	$(4) (3,447)	$40 20,794

(5) The significant unobservable input values of the Level 3 fair value

The significant unobservable input values for measuring assets at Level 3 repetitive fair value are listed in the following table:

March 31, 2022

Significant Appraisal unobservable Quantitative Relation between input value technology input values information and fair value Financial assets: Financial assets at fair value through profit or loss Unlisted stocks Income Liquidity and 0-30% The higher liquidity and approach minority share minority equity discount, the discount lower fair value estimate Bonds Note Financial assets at fair value through other comprehensive income Unlisted stocks Market Liquidity and 0-30% The higher liquidity and approach, minority share minority equity discount, the income discount lower fair value estimate approach, asset approach

Note: The present value of expected return from holding a bond investment is calculated by the discount of expected future cash flow. The significant unobservable inputs are mainly expected cash flows in the future.

December 31, 2021

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Significant
Appraisal unobservable Quantitative Relation between input value
technology input values information and fair value
----- End of picture text -----


Financial assets:
Financial assets at fair value
through profit or loss
Unlisted stocks	Income	Liquidity and	0-30%	The higher liquidity and
	approach	minority share		minority equity discount, the
		discount		lower fair value estimate
Bonds			Note
Financial assets at fair value
through other
comprehensive income
Unlisted stocks	Market	Liquidity and	0-30%	The higher liquidity and
	approach,	minority share		minority equity discount, the

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

income discount approach, asset approach

lower fair value estimate

March 31, 2021

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

Significant
Appraisal unobservable Quantitative Relation between input
technology input values information value and fair value
----- End of picture text -----


Financial assets:
Financial assets at fair value
through profit or loss
Unlisted stocks	Market	Liquidity	0-30%	The higher liquidity
	approach	discount		discount, the lower fair
				value estimate
Fund	Asset	Liquidity	0-30%	The higher liquidity
	approach	discount		discount, the lower fair
				value estimate
Bonds			Note
Financial assets at fair value
through other
comprehensive income
Unlisted stocks	Market	Liquidity	0-30%	The higher liquidity
	approach,	discount		discount, the lower fair
	income			value estimate
	approach,
	asset
	approach

(6) Measurement not at fair value with required disclosure of fair value level

	2022.3.31	2022.3.31
Total	Level 1	Level 2	Level 3
$6,524,953 552,415 2,901,157	$4,788,225 $- 552,415 - - - 2021.12.31		$1,736,728 - 2,901,157
Total	Level 1	Level 2	Level 3
$6,533,748 560,025 2,901,157	$4,798,476 560,025 -	$- - -	$1,735,272 - 2,901,157

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Assets with fair value disclosed only: Financial assets at amortized cost Refundable deposits – by government bonds Investment property (see Note 6.8)		2021.3.31	2021.3.31
	Total	Level 1	Level 2	Level 3
	$6,675,704 533,990 2,881,184	$4,725,704 533,990 -	$- - -	$1,950,000 - 2,881,184

8. Related party transactions

The transaction related parties in the Company’s financial reporting period are:

(1) Name and affiliation of the parties:

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Name Affiliation
----- End of picture text -----

Name	Affiliation
Taiwan Cement Corporation	Other related parities
Taiwan Shin Kong Security Co., Ltd.	Other related parities
Taiwan Security Co., Ltd.	Other related parities
Waibel Enterprise Inc.	Other related parities
Shin Kong Life Insurance Co., Ltd.	Other related parities
Shin Kong Mitsukoshi Department Store CO., LTD.	Other related parities
Shin Kong Synthetic Fibers Corporation	Other related parities
Shin Kong Textile Co., Ltd.	Other related parities
Shin-Po Express Co., Ltd.	Other related parities
Others	Directors supervisors chairmanpresident

Directors, supervisors, chairman,president, managers, their spouses, and the relatives within 2nd degree of kinship

(2) Major transactions with related parties:
Premium revenues

Name Other related parities Operating expenses Name Other related parities	2022.1.1-2022.3.31	2022.1.1-2022.3.31	2021.1.1-2021.3.31	2021.1.1-2021.3.31
	Amount Percentage of this item $31,734 0.56% 2022.1.1-2022.3.31		Amount Percentage of this item $39,874 0.74% 2021.1.1-2021.3.31
	Amount $2,263	Percentage of this item 0.25%	Amount $15,174	Percentage of this item 1.74%

Operating expenses
Lease

Property investment gains and losses – rental income

2022.1.1-2022.3.31

2021.1.1-2021.3.31

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

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Percentage of Percentage of
Name Amount this item Amount this item
Other related parities $75 0.38% $1,019 4.97%
Advance rent
2022.3.31 2021.12.31 2021.3.31
Percentage [Percentage ] Percentage
Name Amount of this item Amount of this item Amount of this item
Other related
$223 0.15% $297 0.15% $537 0.43%
parities
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Right-of-use assets

Name Shin Kong Life Insurance	2022.3.31	2022.3.31	2021.12.31	2021.12.31	2021.3.31	2021.3.31
	Amount $6,052	Percentage of this item 18.31%	Amount $7,263	Percentage of this item 21.12%	Amount $7,583	Percentage of this item 22.54%

Lease liabilitie

Name Shin Kong Life Insurance	2022.3.31	2022.3.31	2021.12.31	2021.12.31	2021.3.31	2021.3.31
	Amount $6,182	Percentage of this item 18.35%	Amount $7,407	Percentage of this item 21.21%	Amount $7,763	Percentage of this item 22.70%

Interest expenses

Name Other related parities	2022.1.1-2022.3.31	2022.1.1-2022.3.31	2021.1.1-2021.3.31	2021.1.1-2021.3.31
	Amount $27	Percentage of this item 0.13%	Amount $35	Percentage of this item 0.11%

The lease periods and rent collections are stipulated in the contracts. The general lease term is 1 to 5 years, mainly with monthly collection of rents.

Remunerations of key management staff:

Short-term employee benefits Retirement benefits Total	2022.1.1 -2022.3.31	2021.1.1 -2021.3.31
	$54,036 59,319 $113,355	$45,333 68,148 $113,481

9. Pledged assets

As of March 31, 2022, December 31, 2021 and March 31, 2021, respectively, the details of pledged and guarantee assets are as follows:

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Item 2022.3.31 2021.12.31 2021.3.31
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Item	2022.3.31	2021.12.31	2021.3.31
Government bonds – insurance deposits	$528,818	$529,455	$532,393
Time deposit – performance bond	28,436	28,436	25,000

10. Major contingent liabilities and unrecognized contractual commitments

No such items

11. Major events after the reporting period

No such items

12. Major disaster losses

No such items

13. Proceeding or termination of major litigation cases

No such items

14. Execution, completion, cancellation or invalidation of major contracts

No such items

15. Employee pension information

See Note 6.13.

16. Discontinued operations information

No such items

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

17. Receiving from or transferring to other insurance companies the main part of the business, assets and liabilities

No such items

Allocation of profits and losses from incomes, costs and expenses due to business transactions, collaborative promotions, information exchange, and shared business equipment or premises made with Shin Kong Financial Holdings and its subsidiaries.

No such items

19. Fund entrusted operations

The funds were fully entrusted to the securities investment trust companies for operations, and the details as of March 31, 2021, December 31, 2020 and March 31, 2020, respectively, are as follows:

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Item 2022.3.31 2021.12.31 2021.3.31
Cash and cash equivalents $589,545 $515,847 $350,095
TWSE (Taiwan Stock Exchange) 1,219,753 1,432,294 1,351,545
listed/OTC stocks
Total $1,809,298 $1,984,141 $1,701,640
Discretionary contract limit:
New Taiwan Dollars (NTD) $1,050,000 $1,050,000 $1,050,000
RMB $120,000 $120,000 $120,000
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20. Private equity information

No such items

21. Major organizational restructuring and management system reforms

No such items

22. Major impact due to changes in laws and regulations

No such items

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

23. Others

The total amount of assets and liabilities that are expected to be recovered or settled within 12 months after the balance sheet date, and the total amount to be recovered or settled more than 12 months

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2022.3.31
Recovery or Recovery or
settlement within settlement more
Item 12 months than 12 months Total
Cash and cash equivalents $11,700,717 $- $11,700,717
Accounts receivable 1,761,020 - 1,761,020
Investment 8,968,380 11,262,918 20,131,298
Reinsurance contract assets (net) - 8,207,281 8,207,281
Property and equipment (net) - 1,292,627 1,292,627
Right-of-use assets. - 33,060 33,060
Intangible assets - 22,754 22,754
Deferred income tax assets - 254,797 254,797
Other assets 21,068 694,624 715,692
Total assets $44,219,246
Accounts Payables $2,342,470 $- $2,342,470
Current income tax liabilities 366,547 - 366,547
Financial liabilities 91,657 - 91,657
Lease liabilitie 14,135 19,558 33,693
Insurance liability - 25,507,459 25,507,459
Reserve for liabilities - 99,087 99,087
Deferred tax liabilities - 16,386 16,386
Others 116,639 31,494 148,133
Total liabilities $28,605,432
2021.12.31
Recovery or Recovery or
Item settlement within settlement more
12 months than 12 months Total
Cash and cash equivalents $11,766,660 $- $11,766,660
Accounts receivable 1,945,038 - 1,945,038
Investment 9,175,468 10,385,559 19,561,027
Reinsurance contract assets (net) - 8,246,645 8,246,645
Property and equipment (net) - 1,308,644 1,308,644
Right-of-use assets. - 34,393 34,393
Intangible assets - 27,455 27,455
Deferred income tax assets - 262,673 262,673
Other assets 42,955 689,990 732,945
Total assets $43,885,480
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(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Item	2021.12.31
	Recovery or settlement within 12 months Recovery or settlement more than 12 months	Total
Accounts Payables Current income tax liabilities Lease liabilitie Insurance liability Reserve for liabilities Deferred tax liabilities Others Total liabilities	$2,894,222 $ 275,164 - 14,634 20,290 - 25,067,097 - 119,280 - 34,389 169,897 33,275	$2,894,222 275,164 34,924 25,067,097 119,280 34,389 203,172
		$28,628,248

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2021.3.31
Recovery or Recovery or
Item settlement within settlement more
12 months than 12 months Total
Cash and cash equivalents $10,849,810 $- $10,849,810
Accounts receivable 1,831,499 - 1,831,499
Investment 8,880,218 9,666,641 18,546,859
Reinsurance contract assets (net) - 8,163,083 8,163,083
Property and equipment (net) - 1,075,461 1,075,461
Right-of-use assets. - 33,650 33,650
Intangible assets - 16,458 16,458
Deferred income tax assets - 234,679 234,679
Other assets 47,616 725,376 772,992
Total assets $41,524,491
Accounts Payables $2,692,815 $- $2,692,815
Current income tax liabilities 239,602 - 239,602
Financial liabilities 11,992 - 11,992
Lease liabilitie 14,634 19,567 34,201
Insurance liability - 24,368,077 24,368,077
Reserve for liabilities - 125,826 125,826
Deferred tax liabilities - 27,361 27,361
Others 81,543 44,123 125,666
Total liabilities $27,625,540
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(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

2. Derivative instruments

As of March 31, 2022, December 31, 2021 and March 31, 2021, the derivatives not conformable to the hedge accounting and not expired yet are as follows:

SWAP and forward exchange contracts

March 31, 2022

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Contract amounts Contract
(Nominal Fair value Transaction exchange rate
Financial products principal) (NTD) date/Expiration date (NTD)
Forward exchange contracts USD 7,000 $(3,991) 110.10.27/112.04.28 27.525
Forward exchange contracts USD 7,000 (3,991) 110.10.27/112.04.28 27.525
Forward exchange contracts USD 1,000 (614) 110.08.02/111.08.04 27.95
Forward exchange contracts USD 4,000 (1,428) 110.09.28/112.09.28 27.439
Forward exchange contracts USD 4,000 (1,428) 110.09.28/112.09.28 27.439
Forward exchange contracts USD 2,000 (1,278) 110.10.25/111.10.27 27.827
Forward exchange contracts USD 8,000 (5,218) 110.10.27/112.01.31 27.656
Forward exchange contracts USD 10,000 (6,523) 110.10.27/112.01.31 27.656
Forward exchange contracts USD 2,000 (1,371) 110.11.12/111.11.16 27.751
Forward exchange contracts USD 8,000 (5,878) 110.12.10/111.12.14 27.656
Forward exchange contracts USD 10,000 (2,414) 110.04.13/111.04.15 28.381
Forward exchange contracts USD 5,000 (1,207) 110.04.13/111.04.15 28.381
Forward exchange contracts USD 4,000 (1,022) 110.08.12/112.08.16 27.571
Forward exchange contracts USD 6,000 (1,533) 110.08.12/112.08.16 27.571
Forward exchange contracts USD 5,000 (1,277) 110.08.12/112.08.16 27.571
Forward exchange contracts USD 9,000 (2,216) 110.09.13/112.09.15 27.498
Forward exchange contracts USD 1,000 (276) 110.10.21/112.10.25 27.359
Forward exchange contracts USD 10,000 (6,775) 110.10.22/111.10.26 27.786
Forward exchange contracts USD 10,000 (326) 111.03.24/111.09.28 28.473
Forward exchange contracts USD 7,000 (5,720) 110.04.29/111.05.04 27.804
Forward exchange contracts USD 5,000 (2,606) 110.07.28/111.07.29 28.049
Forward exchange contracts USD 8,000 (6,596) 111.02.11/111.08.15 27.729
Forward exchange contracts USD 2,000 (1,579) 111.01.21/112.01.30 27.522
Forward exchange contracts USD 7,000 (5,124) 111.01.26/112.01.31 27.578
Forward exchange contracts USD 10,000 (7,320) 111.01.26/112.01.31 27.578
Forward exchange contracts USD 10,000 (7,037) 110.11.15/111.11.17 27.732
Forward exchange contracts USD 6,000 (4,222) 110.11.15/111.11.17 27.732
Forward exchange contracts USD 9,000 (2,687) 110.10.20/112.10.23 27.44
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December 31, 2021

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Contract
amounts Contract
(Nominal Fair value Transaction exchange rate
Financial products principal) (NTD) date/Expiration date (NTD)
Forward exchange contracts USD 7,000 $1,053 110.10.27/112.04.28 27.525
Forward exchange contracts USD 7,000 1,053 110.10.27/112.04.28 27.525
Forward exchange contracts USD 10,000 4,355 110.01.27/111.01.28 28.127
Forward exchange contracts USD 1,000 291 110.08.02/111.08.04 27.95
Forward exchange contracts USD 4,000 843 110.09.28/112.09.28 27.439
Forward exchange contracts USD 4,000 843 110.09.28/112.09.28 27.439
Forward exchange contracts USD 2,000 417 110.10.25/111.10.27 27.827
Forward exchange contracts USD 8,000 882 110.10.27/112.01.31 27.656
Forward exchange contracts USD 10,000 1,102 110.10.27/112.01.31 27.656
Forward exchange contracts USD 2,000 290 110.11.12/111.11.16 27.751
Forward exchange contracts USD 8,000 555 110.12.10/111.12.14 27.656
Forward exchange contracts USD 10,000 7,605 110.03.24/111.03.28 28.451
Forward exchange contracts USD 10,000 6,925 110.04.13/111.04.15 28.381
Forward exchange contracts USD 5,000 3,462 110.04.13/111.04.15 28.381
Forward exchange contracts USD 4,000 1,219 110.08.12/112.08.16 27.571
Forward exchange contracts USD 6,000 1,829 110.08.12/112.08.16 27.571
Forward exchange contracts USD 5,000 1,524 110.08.12/112.08.16 27.571
Forward exchange contracts USD 9,000 2,453 110.09.13/112.09.15 27.498
Forward exchange contracts USD 1,000 188 110.10.21/112.10.25 27.359
Forward exchange contracts USD 10,000 1,689 110.10.22/111.10.26 27.786
Forward exchange contracts USD 7,000 2,314 110.04.26/111.01.28 28.022
Forward exchange contracts USD 7,000 830 110.04.29/111.05.04 27.804
Forward exchange contracts USD 5,000 1,935 110.07.28/111.07.29 28.049
Forward exchange contracts USD 10,000 1,269 110.11.15/111.11.17 27.732
Forward exchange contracts USD 6,000 761 110.11.15/111.11.17 27.732
Forward exchange contracts USD 9,000 2,285 110.10.20/112.10.23 27.44
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100

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

March 31, 2021

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Contract
amounts Contract
(Nominal Fair value Transaction exchange rate
Financial products principal) (NTD) date/Expiration date (NTD)
Forward exchange contracts USD 10,000 $3,514 109.10.28/110.10.29 28.816
Forward exchange contracts USD 7,000 2,460 109.10.28/110.10.29 28.816
Forward exchange contracts USD 7,000 2,460 109.10.28/110.10.29 28.816
Forward exchange contracts USD 8,000 2,768 109.10.27/110.10.29 28.838
Forward exchange contracts USD 2,000 572 109.11.12/110.11.16 28.772
Forward exchange contracts USD 8,000 (2,145) 109.12.10/110.12.14 28.209
Forward exchange contracts USD 4,000 (1,051) 109.12.29/110.09.30 28.238
Forward exchange contracts USD 4,000 (1,051) 109.12.29/110.09.30 28.238
Forward exchange contracts USD 10,000 (3,342) 110.01.27/111.01.28 28.127
Forward exchange contracts USD 1,000 (304) 110.02.02/110.08.04 28.208
Forward exchange contracts USD 10,000 (2,433) 110.03.11/110.09.15 28.2605
Forward exchange contracts USD 4,000 5,261 109.04.13/110.04.15 29.845
Forward exchange contracts USD 6,000 7,892 109.04.13/110.04.15 29.845
Forward exchange contracts USD 10,000 13,153 109.04.13/110.04.15 29.845
Forward exchange contracts USD 5,000 6,577 109.04.13/110.04.15 29.845
Forward exchange contracts USD 5,000 6,577 109.04.13/110.04.15 29.845
Forward exchange contracts USD 10,000 119 110.03.24/111.03.28 28.451
Forward exchange contracts USD 5,000 (1,666) 110.01.27/110.07.30 28.179
Forward exchange contracts USD 9,000 3,372 109.10.20/110.10.22 28.866
Forward exchange contracts USD 10,000 2,861 109.11.13/110.11.17 28.771
Forward exchange contracts USD 6,000 1,717 109.11.13/110.11.17 28.771
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As of March 31, 2022, December 31, 2021 and March 31, 2021, the financial assets and liabilities in foreign currencies with major impacts are as follows:

Financial assets Monetary items USD		2022.3.31
	Foreign currencies (in dollars) $178,878,795	Exchange rate 28.575	NTD (in thousands)
			$5,111,462

101

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

	2021.12.31
Foreign currencies (in dollars) $167,400,718 71,113,296	Exchange rate 27.630 4.319 2021.3.31	NTD (in thousands)
		$4,625,282 307,138
Foreign currencies (in dollars) $140,856,379 81,055,921	Exchange rate 28.485 4.319	NTD (in thousands)
		$4,012,294 350,081

With a wide variety of functional currencies, it is impossible to disclose the currency exchange gains and losses of monetary and non-monetary financial assets and financial liabilities based on currencies with major impacts. The foreign currency exchange losses during January 1 to March 31, 2022 and January 1 to March 31, 2021,were NT$174,673 thousand and NT$(3,469) thousand, respectively.

4. Capital management policy

In view that insurance companies are not allowed to raise debts, the Company constantly reviews the changes and trends of the capital adequacy ratio (RBC) under the philosophy of stability, and monitors the capital demand for business growth, and at the same time implements a long-term stable dividend policy to maintain the appropriateness of capital management.

As of March 31, 2022, December 31, 2021 and March 31, 2021, the net worth ratios from equity divided by total assets excluding investment-linked insurance accounts were 35.31%, 34.77% and 33.47%, respectively.

6. Operations information

The Company operates a property insurance business in accordance with the Insurance Law. Based on IFRS 8, the Company only provides insurance contract products, with no different channels, customer types and supervision environments, and the decision making is based on overall allocation of the corporate resources and, as a result, the Company is a single operating department as a whole.

24. Property insurance information

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No. Item Attachment
1 Retained gross premiums earned for compulsory and non-compulsory Attached table 1
insurances
2 Retained claims for compulsory and non-compulsory insurances Attached table 2
3 Assets and liabilities of compulsory automobile liability insurances Attached Table 3
4 Reserve for unqualified reinsurances Attached Table 4
5 Loans for the turnover of huge insurance payments None
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102

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

25. Note disclosure

Major transactions:
(1) The property acquisition that amounts to NT$100 million or more than 20% of the paid-in capital: Attachment 5.
(2) The property disposal that amounts NT$100 million or more than 20% of the paid-in capital: no such transactions.
(3) The transaction of core business items engaged with related parties that amounts NT$100 million or more than 20% of the paid-in capital: no such transactions.
(4) The receivable from a related party that amounts NT$100 million or more than 20% of the paid-in capital: no such transactions.
(5) Derivative transactions: See Note 23.2.
(6) Others: For business relationship and major transactions between parent and subsidiary companies, and for different accounting policies adopted by the parent company and subsidiary companies, the accounting policies should be disclosed and the amounts should be separately disclosed on the financial statements: not applicable.
Reinvestment business: no such transactions
Investment and business in Mainland China: no such transactions
Key shareholders:

shareholders:
		Unit: Share
Shares Name of Major Shareholder	Quantity	Ratio of Shareholding
Shin Kong Textile Co., Ltd.	51,539,530	16.31%
Shin Kong Life Insurance Co., Ltd.	29,700,000	9.39%
Shin Kong Co., Ltd.	16,061,515	5.08%

Note:

(1) The information shown in this table is the shareholders holding ordinary and special shares (treasury shares included) with over 5% delivered by book-entry transfers, as calculated by the Taiwan Depository and Clearing Corporation on the last business day of each quarter. The share capital reported and the actual number of shares delivered by book-entry transfers may have discrepancy due to different calculation bases.
(2) Among the above shares, the entrusted ones are disclosed separately by individual trust accounts opened by the trustees for the principals. As for the shareholder’s declaration of insider’s over 10% shareholding in conformity with the Securities and Exchange Act, the shareholding includes the person’s self-held shares plus the entrusted ones which the person has right to exercise. For more information on insider’s shareholding declaration, please visit the website of Public Information Observatory.
The global COVID-19 pandemic has made no significant impact on the Company’s business continuity, asset impairment, and financing risks.

103

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

26. Reserve for unqualified reinsurance

According to Article 7 of “Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms,” the reserve for unqualified ceded reinsurance is provided as detailed in Attachment 4.

According to Paragraph 5 of “Guidelines on Reserve for Unqualified Reinsurance,” the transactions of unqualified ceded reinsurance disclosed as attachment on the financial statements are explained as:

Abstracts and types of unqualified reinsurance contracts:

March 31, 2022

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Types of ceded reinsurance contract
Reinsurer/Reinsurance broker established
Tugu Insurance Company Limited, HK Marine hull insurance
Trust International Insurance and Accident insurance, comprehensive personal
Reinsurance CO. B.S.C. (C) Trust Re liability insurance, one-year commercial fire
insurance, inland transportation insurance,
cargo transportation insurance, fishing boat
insurance, commercial earthquake insurance,
typhoon & flood insurance
Asia Capital Reinsurance Group Pte Ltd One-year commercial fire insurance, inland
transportation insurance, cargo transportation
insurance, marine hull insurance, fishing boat
insurance, engineering insurance, commercial
earthquake insurance, typhoon & flood
insurance
Milli Reasurans T.A.S. Singapore Branch Inland transportation insurance, cargo
transportation insurance
December 31, 2021
Types of ceded reinsurance contract
Reinsurer/Reinsurance broker established
Tugu Insurance Company Limited, HK Marine hull insurance
Trust International Insurance and Accident insurance, comprehensive personal
Reinsurance CO. B.S.C. (C) Trust Re liability insurance, one-year commercial fire
insurance, inland transportation insurance,
cargo transportation insurance, fishing boat
insurance, commercial earthquake insurance,
typhoon & flood insurance
Asia Capital Reinsurance Group Pte Ltd One-year commercial fire insurance, inland
transportation insurance, cargo transportation
insurance, marine hull insurance, fishing boat
insurance, engineering insurance, commercial
earthquake insurance, typhoon & flood
insurance
Milli Reasurans T.A.S. Singapore Branch Inland transportation insurance, cargo
transportation insurance
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104

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

March 31, 2021

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Types of ceded reinsurance contract
Reinsurer/Reinsurance broker established
----- End of picture text -----

March 31, 2021 Reinsurer/Reinsurance broker	Types of ceded reinsurance contract established
Tugu Insurance Company Limited, HK	Marine hull insurance
Trust International Insurance and	Accident insurance, comprehensive personal
Reinsurance CO. B.S.C. (C) Trust Re	liability insurance, one-year commercial fire
	insurance, inland transportation insurance,
	cargo transportation insurance, fishing boat
	insurance, commercial earthquake insurance,
	typhoon & flood insurance
Asia Capital Reinsurance Group Pte Ltd	One-year commercial fire insurance, inland
	transportation insurance, cargo transportation
	insurance, marine hull insurance, fishing boat
	insurance, aviation insurance, engineering
	insurance, commercial earthquake insurance,
	typhoon & flood insurance
Milli Reasurans T.A.S. Singapore Branch	Inland transportation insurance, cargo
	transportation insurance

Unqualified reinsurance premium expenses:

The expense for the unqualified insurance of the Company on March 31, 2022 and 2021, was NT$0 and NT$0, respectively.

A summary on the principles of providing the reserve for unqualified reinsurance and its constituent items:

Ceded unearned premium reserve Settled claims recoverable from reinsurers within 9 months of overdue payment Ceded outstanding losses claims Total reserve for unqualified reinsurance	2022.3.31	2021.12.31	2021.3.31
	$- 3,637 1,230 $4,867	$- 4,138 1,230 $5,368	$- 363 20,327 $20,690

105

(English Translation of Financial Statements Originally Issued in Chinese)

ShinKong Insurance Co., Ltd.

Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Attachment 1: Information relating to retained earned gross premium of compulsory insurance and non-compulsory insurance

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Retained
Premium Reinsurance Reinsurance
premium
revenues premium income premiums ceded
revenues
Item (1) (2) (3) (4)=(1)+(2)-(3)
Compulsory
$520,223 $157,209 $215,531 $461,901
insurance
Non-
compulsory 5,189,688 32,531 953,752 4,268,467
insurance
Total $5,709,911 $189,740 $1,169,283 $4,730,368
----- End of picture text -----

Item Compulsory insurance Non- compulsory insurance Total	Allocation (5) Recovery (6) $906,184 $912,301 11,264,321 10,947,929 $12,170,505 $11,860,230 Direct underwriting unearned premium reserve	Allocation (7) Recovery (8) $346,695 $343,871 73,475 80,273 $420,170 $424,144 Assumed reinsurance unearned premium reserve	(9)=(5)-(6)+(7)-(8) $(3,293) 309,594 $306,301 Net changes in unearned premium reserve	Allocation (10) Recovery (11) $543,790 $547,453 2,433,072 2,494,968 $2,976,862 $3,042,421 Ceded reinsurance unearned premium reserve	(12)=(10)-(11) $(3,663) (61,896) $(65,559) Net change in ceded unearned premium reserve	(13)=(4)-(9)+(12) $461,531 3,896,977 $4,358,508 Retained premium

106

(English Translation of Financial Statements Originally Issued in Chinese)

ShinKong Insurance Co., Ltd.

Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Attachment 2: Information relating to retained claims of compulsory insurance and non-compulsory insurance

Item Compulsory insurance Non-compulsory insurance Total	(1) $354,111 2,204,362 $2,558,473 Insurance claims (including claim expenses)	(2) $153,527 1,701 $155,228 Reinsurance claims	(3) $205,938 447,739 $653,677 Claims recovered from reinsurers	(4)=(1)+(2)-(3) $301,700 1,758,324 $2,060,024 Retained claims

107

(English Translation of Financial Statements Originally Issued in Chinese)

ShinKong Insurance Co., Ltd.

Notes to financial statements (Continued)

(Expressed in thousands of New Taiwan dollars, unless otherwise stated)

Attachment 3: Information relating to assets and liabilities of Compulsory Automobile Liability Insurance

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Amount Amount
Item Item
Assets Current period Previous period Liabilities Current period Previous period
Cash and Bank Deposits $1,741,821 $1,641,449 Claims and benefits payable $24,260 $98,453
Due to Reinsurers & Ceding
Insurance premium receivable 1,050 1,338 141,495 149,847
Companies
Unearned premium
Notes receivable 14,590 16,767 1,252,879 1,259,643
reserve
Claims Recoverable from
101,163 175,732 Loss reserve 1,479,639 1,523,098
Reinsurers - net
Due from Reinsurers &
98,796 98,492 Special reserve 190,498 61,458
Ceding Companies
Ceded unearned premium Temporary credit and
543,790 546,553 - 3,004
reserve amount to be carried down
Ceded Reserve for Claims 586,071 607,542
Temporary debit and amount
1,490 7,630
to be carried down
Asset Total $3,088,771 $3,095,503 Liability Total $3,088,771 $3,095,503
----- End of picture text -----

Attachment 3-1: Information Relating to Revenue and Cost of Compulsory Automobile Liability Insurance

Item Current period Pure premium revenues $359,150 Reinsurance premium income 157,209 Premium revenues 516,359 Less: Reinsurance premiums ceded (215,531) Net changes in unearned premium reserve (370) Retained earned premium 300,458 Interest revenue 322 Total Operating revenues $300,780 Operating revenues	Previous period $367,947 151,922 519,869 (220,800) (1,416) 297,653 152 $297,805	Item Current period Insurance claims $354,111 Reinsurance claims 153,527 Less: Losses recovered from reinsurers (205,938) Retained claims payments 301,700 Net change in loss reserve (5,646) Special reserve net change 19,958 Total Operating Cost $316,012 Operating cost	Previous period $487,849 143,991 (283,663) 348,177 (31,326) (19,046) $297,805

108

ShinKong Insurance Co., Ltd. 2022.3.31

Attachment 4: Unqualified Reinsurance Reserve Table

Unit: NTD,%

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Reinsurer Reinsurance broker Ceded Previous Current Period
Settled claims Current Period
unearned Period Additional
recoverable Reserve for Balance of
NumberSerial Code Name AgenciesRatingCredit Creditrating relatedpartiestheyAre Code Name Arequalifiedthey Reinsurancepremiumsceded Reinsurancecommissionincome allocated forthe currentpremiumreserveperiod within 9 monthsfrom reinsurersof overduepayment outstandingclaimsceded Reinsurancereceiveddeposits ReinsuranceUnqualifiedallocatedReserve ReinsuranceUnqualifiedBalance ofallocatedReserve Provisions orReinsuranceUnqualifiedReversal ofReserve Remarks
(15)=(11)+(12)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) +(13)-(14) (16) (17) (18) (19)
Credit rating downgrade
(not meeting credit rating
29 types of insurance
1 284HKHK001 [TUGU(CPC] TANKER) A.M.Best B+ No FPM(CPCTANKER) No 0 0 0 0 50,000 0 50,000 50,000 0 standards); The allocationcalculation is 2. The including marine hullinsurance
Simple Allocation
Method.
Trust International No credit rating (not up to 29 types of insurance
Insurance and the credit rating standard); including injury
2 281BHBH001 Reinsurance CO. None None No 0 0 0 82,522 576,166 0 658,688 784,182 (125,494) The setting aside method insurance, inland
transportation insurance,
B.S.C. (C) is 2. The Simple
TRUST RE Allocation Method. cargo transportation
insurance
29 types of insurance
including one-year
commercial fire
insurance, inland
No credit rating (not up to transportation insurance,
Asia Capital the credit rating standard); cargo transportation
3 025SGSG001 Reinsurance None None No 0 0 0 3,554,111 603,542 0 4,157,653 4,533,517 (375,864) The setting aside method insurance, marine hull
Group Pte Ltd is 2. The Simple insurance, fishing vessel
Allocation Method. insurance, engineering
insurance, commercial
earthquake insurance,
typhoon and flood
insurance
MILLI Credit rating downgrade 29 types of insurance
REASURANS (not meeting credit rating including inland
4 172TRSG001 T.A.S. A.M.Best B No FP Marine No 0 0 0 244 85 0 329 329 0 standards); The allocationcalculation is 2. The transportation insurance,
SINGAPORE cargo transportation
BRANCH Simple Allocation insurance
Method.
Total 0 0 0 3,636,877 1,229,793 0 4,866,670 5,368,028 (501,358)
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109

AI assistant

SK Insurance — Interim / Quarterly Report 2022

52206_rns_2022-12-22_cd2c4de6-2dda-43d1-a4c6-3ac4fc48b143.pdf

ShinKong Insurance Co., Ltd.

Financial Statements and Independent Auditor's Review Report

Financial reports Table of Contents

Review report of independent auditors

To: ShinKong Insurance Co., Ltd.

Foreword

Scope

Conclusion

Ernst & Young Global Limited

Balance Sheet

Statement of Changes in Equity

January 1 to March 31, 2022 and 2021

ShinKong Insurance Co., Ltd.

Statements of Cash Flows

January 1 to March 31, 2022 and 2021

1. Company history and business scope

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

2. Financial Reporting Date and Procedures

3. Application of New and Revised Standards and Interpretation

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued) (Expressed in thousands of New Taiwan dollars, unless otherwise stated)

(2)IFRS 17 “Insurance Contracts”

4. Summary of Significant Accounting Policies

1. Compliance Statement

2. Basis of preparation

3. Cash and cash equivalents

4. Transactions in foreign currencies

5. Financial instruments

Financial assets at amortized cost

Financial assets at fair value through other comprehensive income

Financial assets at fair value through profit or loss

(2) Impairment of financial assets

Classification of liabilities or equity

Equity instruments

Financial liabilities

Financial liabilities at fair value through profit and loss

Financial liabilities measured at mortized cost

Derecognition of financial liabilities

(5) Offset of financial assets and liabilities

(6) Derivative instruments

(7) Overlay approach for financial assets

6. Measurement at fair value

7. Property, plant, and equipment

8. Investment property

9. Leases

The Company as a lessee

The Company as a lesser

10. Intangible assets

11. Impairment of non-financial assets

12. Segmentation requirements for specific assets

13.Classification of insurance contracts

significant amounts of additional benefits.

14. Insurance liability

(2) Loss reserve

(3) Special reserves

Special reserves for catastrophic event

Special reserves for fluctuation of risk

(4) Premium deficiency reserve

(5) Policy reserve

15. Liability adequacy test

16. Treasury stock

17. Share-based payment transactions

18. Insurance premium revenues and acquisition costs

19. Costs of insurance claims

20. Undertaking remnants and subrogation rights

21. Reinsurance

22. Co-insurance organization, co-insurance and guarantee fund agreement

23.Stability fund

24.Retirement Benefits Plan

25. Taxation

Income tax expenses in the current period

Deferred tax

(English Translation of Financial Statements Originally Issued in Chinese) ShinKong Insurance Co., Ltd. Notes to financial statements (Continued)

5. Main Source of Significant Accounting Judgment, Estimates and Assumptions Uncertainty

1. Judgments

2. Estimates and assumptions

(3) Reinsurance reserve asset

6. Major accounting items described

SK Insurance Interim / Quarterly Report 2022