TFMI - Interim / Quarterly Report 2020

Stock Code: 2832

Taiwan Fire & Marine Insurance Co., Ltd.

Financial Reports and ICPA’s Review Report First Quarter, 2020 and 2019

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Address: 8-9F., No. 49, Guanqian Rd., Taipei 100, Taiwan (R.O.C) Tel: +886 2 2382 1666

§ TABLE OF CONTENTS §

ITEM I. Cover II. Table of Contents III. Icpa’s Review Report IV. Balance Sheet V. Statement of Comprehensive Income VI. Statements of Changes in Equity VII. Statements of Cash Flows VIII. Notes to Financial Statement (I) Company Profile (II) Date and Procedure for Authorization of Financial Statements (III) Applicability of newly promulgated and amended standard rules and interpretations (IV) Summary of significant accounting policies (V) Major sources of major accounting judgments, estimate and hypotheses (VI) Important Accounting Items (VII) Related Party Transactions (VIII) Pledged Assets (IX) Major Contingent Liabilities and Commitments Made Under Unrecognized Contracts (X) Loss of Material Disaster (XI) Subsequent Events (XII) Others (XIII) Additional Disclosures 1. Information about significant transactions 2. Information related to reinvested enterprises 3. Information about investment in mainland china 4. Information about major shareholders (XIV) Information about Segment	PAGE 1 2 3 4 5 ~ 7 8 9 ~ 10 11 11 11 ~ 14 14 ~ 15 15 15 ~ 50 50 ~ 55 - - - - 55 ~ 80 80 ~ 81 81 ~ 82 81 81, 83 81	NOTE NO.
		- - - - - - - 1 2 3 4 5 6 ~ 23 24 - - - - 25 ~ 29 30 30 30 30 31

ICPA’s Review Report

To Taiwan Fire & Marine Insurance Co., Ltd.:

Prelude

We, as the CPAs, have completed the review of the balance sheets dated March 31 of 2020 and 2019 and the consolidated comprehensive income statement, consolidated statement of changes in equity, consolidated statement of cash flows, and consolidated financial statement from January 1 to March 31 of 2020 and 2019, including summaries of major accounting policies of Taiwan Fire & Marine Insurance Co., Ltd. Based on the Regulations Governing the Preparation of Financial Reports by Insurance Enterprises, and the International Accounting Standards No. 34 “Interim Financial Reporting” recognized and released by the Financial Supervisory Commission, the preparation of financial statements fairly presented is the responsibility of the management. The responsibility of the CPAs is to conclude the financial statements based on the result of review.

Scope

The CPAs have performed the review based on Statements on Auditing Standards No. 65 “reviews of financial statement.” The procedures performed during the review of financial statements include inquiries (mainly the inquiries to the personnel in charge of finance and accouting affairs), analytical procedures and other review procedures. The scope of review is apparently smaller than the scope of an audit; therefore the CPAs may not detect all the material matters that may be identifiable under audit, and thus no audit opinion may be provided. Conclusion

Based on the results of review, as CPAs, we do not find any incompliance in the preparation of the above-mentioned financial statements, in all major respects, with the Regulations Governing the Preparation of Financial Reports by Insurance Enterprises and the International Accounting Standards No. 34 “Interim Financial Reporting” recognized and released by the Financial Supervisory Commission, that may result in inability to fairly presented the financial position of Taiwan Fire & Marine Insurance Co., Ltd. as of March 31, 2020 and 2019, and the financial performance and cash flows during January 1 to March 31, 2020 and 2019.

Deloitte & Touche

CPA: Wang-Sheng Lin

CPA: Wen-Ya Hsu

Financial Supervisory Commission Approval No. Jin-Guan-Zheng-Shen-Zi No. 1060023872

Securities and Futures Commission Approval No. Tai-Cai-Zheng-Liu-Zi No. 0920123784

April 30, 2020

Taiwan Fire & Marine Insurance Co., Ltd.

Balance Sheets

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

Unit: NT$ Thousand

Code 11000 12100 12210 12500 12000 14110 14150 14180 14190 14200 14000 15100 15200 15300 15000 16000 16700 17100 17800 18300 18700 18000 1XXXX Code 21200 21400 21500 21600 21000 21700 23800 24100 24200 24400 24500 24000 27000 28000 25300 25900 25000 2XXXX 31100 32100 32200 32000 33100 33200 33300 33000 34000 3XXXX	ASSETS CASH AND CASH EQUIVALENTS (Note 6, 24) RECEIVABLES (Note 7) Notes receivable Premiums receivable Other accounts receivable Total receivables INVESTMENTS Financial assets at fair value through profit or loss (Note 8, 23) Investment under equity method (Note 11) Other financial assets - net (Note 12) Financial assets at fair value through other comprehensive income (Note 9, 10 and 23) Investment properties (Note 13) Total investments REINSURANCE CONTRACT ASSET (Note 18, 25 and 26) Claim recoverable from reinsurers - net Due from reinsurers and ceding companies Reinsurance reserve asset - net Total reinsurance contract asset PROPERTY AND EQUIPMENT (Note 14) RIGHT-OF-USE ASSETS (Note 15) INTANGIBLE ASSETS DEFERRED INCOME TAX ASSETS OTHER ASSETS Refundable deposits (Note 16) Other assets - other Total other assets TOTAL LIABILITIES AND EQUITY PAYABLES Claims payable Commissions payable Due to reinsurers and ceding companies Other payable Total payables CURRENT TAX LIABILITIES (Note 21) LEASE OBLIGATIONS (Note 15) INSURANCE LIABILITY (Note 18, 25 and 26) Unearned premium reserves Claim reserves Special reserves Premium deficiency reserves Total insurance liabilities RESERVE FOR LIABILITIES (Note 17) DEFERRED INCOME TAX LIABILITIES OTHER LIABILITIES Guarantee deposit received (Note 24) Other liabilities - other Total other liabilities Total liabilities EQUITY (Note 19) Common stock Capital surplus Issuance of common shares in excess of par Treasury stock transactions Total capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL	March 31,2020(Reviewed) Amount ％ $ 3,217,590 17 122,904 1 492,048 3 102,166 - 717,118 4 1,815,888 10 212,547 1 3,134,307 17 4,167,752 22 2,309,791 12 11,640,285 62 73,425 - 165,079 1 1,784,249 10 2,022,753 11 389,372 2 30,948 - 4,440 - 28,797 - 730,008 4 45,981 - 775,989 4 $ 18,827,292 100 $ 1,056 - 138,551 1 422,668 2 742,773 4 1,305,048 7 98,591 1 62,188 - 3,418,920 18 2,832,624 15 2,138,668 12 7,333 - 8,397,545 45 83,990 - 272,473 2 34,198 - 39,256 - 73,454 - 10,293,289 55 3,622,004 19 1,915 - 97,047 1 98,962 1 2,242,269 12 2,398,378 12 541,321 3 5,181,968 27 ( 368,931 ) ( 2 ) 8,534,003 45 $ 18,827,292 100	March 31,2020(Reviewed) Amount ％ $ 3,217,590 17 122,904 1 492,048 3 102,166 - 717,118 4 1,815,888 10 212,547 1 3,134,307 17 4,167,752 22 2,309,791 12 11,640,285 62 73,425 - 165,079 1 1,784,249 10 2,022,753 11 389,372 2 30,948 - 4,440 - 28,797 - 730,008 4 45,981 - 775,989 4 $ 18,827,292 100 $ 1,056 - 138,551 1 422,668 2 742,773 4 1,305,048 7 98,591 1 62,188 - 3,418,920 18 2,832,624 15 2,138,668 12 7,333 - 8,397,545 45 83,990 - 272,473 2 34,198 - 39,256 - 73,454 - 10,293,289 55 3,622,004 19 1,915 - 97,047 1 98,962 1 2,242,269 12 2,398,378 12 541,321 3 5,181,968 27 ( 368,931 ) ( 2 ) 8,534,003 45 $ 18,827,292 100	December 31,2019(Audited) Amount ％ $ 3,415,293 18 120,617 1 399,756 2 92,574 1 612,947 4 1,765,352 9 217,939 1 2,954,550 16 4,389,413 23 2,413,978 13 11,741,232 62 32,614 - 103,073 1 1,784,036 9 1,919,723 10 360,389 2 34,132 - 4,708 - 29,322 - 730,845 4 38,324 - 769,169 4 $ 18,886,915 100 $ 4,404 - 126,025 1 390,432 2 463,820 2 984,681 5 64,964 - 66,645 - 3,215,885 17 2,888,112 15 2,141,949 12 7,154 - 8,253,100 44 84,127 1 274,092 2 35,262 - 36,170 - 71,432 - 9,799,041 52 3,622,004 19 1,915 - 97,047 - 98,962 - 2,242,269 12 2,415,551 13 756,029 4 5,413,849 29 ( 46,941 ) - 9,087,874 48 $ 18,886,915 100	December 31,2019(Audited) Amount ％ $ 3,415,293 18 120,617 1 399,756 2 92,574 1 612,947 4 1,765,352 9 217,939 1 2,954,550 16 4,389,413 23 2,413,978 13 11,741,232 62 32,614 - 103,073 1 1,784,036 9 1,919,723 10 360,389 2 34,132 - 4,708 - 29,322 - 730,845 4 38,324 - 769,169 4 $ 18,886,915 100 $ 4,404 - 126,025 1 390,432 2 463,820 2 984,681 5 64,964 - 66,645 - 3,215,885 17 2,888,112 15 2,141,949 12 7,154 - 8,253,100 44 84,127 1 274,092 2 35,262 - 36,170 - 71,432 - 9,799,041 52 3,622,004 19 1,915 - 97,047 - 98,962 - 2,242,269 12 2,415,551 13 756,029 4 5,413,849 29 ( 46,941 ) - 9,087,874 48 $ 18,886,915 100	March 31,2019(Reviewed)	March 31,2019(Reviewed)	March 31,2019(Reviewed)
			Amount $ 3,217,590 122,904 492,048 102,166 717,118 1,815,888 212,547 3,134,307 4,167,752 2,309,791 11,640,285 73,425 165,079 1,784,249 2,022,753 389,372 30,948 4,440 28,797 730,008 45,981 775,989 $ 18,827,292 $ 1,056 138,551 422,668 742,773 1,305,048 98,591 62,188 3,418,920 2,832,624 2,138,668 7,333 8,397,545 83,990 272,473 34,198 39,256 73,454 10,293,289 3,622,004 1,915 97,047 98,962 2,242,269 2,398,378 541,321 5,181,968 368,931 ) 8,534,003 $ 18,827,292		Amount $ 3,415,293 120,617 399,756 92,574 612,947 1,765,352 217,939 2,954,550 4,389,413 2,413,978 11,741,232 32,614 103,073 1,784,036 1,919,723 360,389 34,132 4,708 29,322 730,845 38,324 769,169 $ 18,886,915 $ 4,404 126,025 390,432 463,820 984,681 64,964 66,645 3,215,885 2,888,112 2,141,949 7,154 8,253,100 84,127 274,092 35,262 36,170 71,432 9,799,041 3,622,004 1,915 97,047 98,962 2,242,269 2,415,551 756,029 5,413,849 46,941 ) 9,087,874 $ 18,886,915		Amount $ 3,432,088 122,647 513,864 79,083 715,594 1,812,508 198,794 3,164,351 3,677,233 2,386,241 11,239,127 46,959 159,061 1,745,662 1,951,682 377,214 78,622 3,288 27,037 672,578 38,197 710,775 $ 18,535,427 $ 11,512 117,865 390,551 354,802 874,730 110,434 85,004 3,200,868 2,839,387 2,206,808 9,616 8,256,679 84,783 274,092 37,354 32,653 70,007 9,755,729 3,622,004 1,915 97,047 98,962 2,130,209 2,212,059 901,426 5,243,694 184,962 ) 8,779,698 $ 18,535,427	％
		(		(		(		18 1 3 - 4 10 1 17 20 13 61 - 1 10 11 2 - - - 4 - 4 100 - 1 2 2 5 1 - 17 16 12 - 45 - 2 - - - 53 20 - - - 11 12 5 28 ( 1 ) 47 100

Subsequent notes are incorporated as part of this individual financial statement.

Chairman: Steve Lee

President: Charles Sung

Chief Accountant: Pi-Chen Wang

Taiwan Fire & Marine Insurance Co., Ltd.

Statement of Comprehensive Income

2020 and From January 1 to March 31, 2019

(Reviewed only, not audited based on the GAAS)

Unit: NT$ Thousand, but EPS is NT$

Code OPERATING REVENUE Retained earned premium 41110 Direct insurance premium income (Note 24, 25) 41120 Reinsurance premium income 41100 Premium income 51100 Less: Reinsurance premium outward 51310 Less: Net change in unearned premium reserves (Note 18, 25) 41130 Total retained earned premium 41300 Reinsurance commission earned 41400 Handing fee earned Net gains on investments 41510 Interest income 41521 Gain on financial assets and liabilities at fair value through profit or loss (Note 20) 41540 Share of loss on associates and joint ventures recognized using equity method 41550 Exchange loss - investment 41570 Gain (loss) on investment properties (Note 20, 24)	From January 1 to March 31, 2020 Amount ％ $ 1,769,236 139 95,123 7 1,864,359 146 612,947 48 99,678 8 1,151,734 90 59,530 5 14,115 1 31,096 2 ( 24,471 ) ( 2 ) ( 5,392 ) - 1,436 - 45,475 4	From January 1 to March 31, 2019	From January 1 to March 31, 2019	From January 1 to March 31, 2019
			Amount $ 1,634,949 103,210 1,738,159 571,966 78,669 1,087,524 76,253 13,270 28,995 30,601 21,145 7,839 28,237	％
				126 8 134 44 6 84 6 1 2 2 2 1 2

(To be continued)

(Continued)

Code 41585 Expected credit losses or reversal of expected credit losses of investments 41800 Other operating revenues 41000 Total operating revenues OPERATING COSTS Retained claims 51200 Claims incurred (Note 24, 25) 41200 Less: Claims recovered from reinsurers 51260 Total retained claims Movement of insurance liability (Note 18, 25) 51320 Net change in claims reserves 51340 Net change in special reserves 51350 Net change in premium deficiency reserves 51300 Total net change in insurance liability 51500 Commission expenses (Note 24, 25) 51800 Other operating cost 51000 Total operating costs 58000 OPERATING EXPENSES (Note 4, 17, 20 and 24) 61000 OPERATING INCOME 59000 NON-OPERATING INCOME AND EXPENSES	From January 1 to March 31, 2020 Amount ％ $ 67 - - - 1,273,590 100 738,125 58 200,476 16 537,649 42 47,664 4 ( 3,281 ) ( 1 ) 179 - 44,562 3 211,610 17 10,806 1 804,627 63 304,424 24 164,539 13 ( 816) -	From January 1 to March 31, 2019	From January 1 to March 31, 2019
		Amount ( $ 188 ) 1,760 1,295,436 666,530 148,143 518,387 ( 5,363 ) 18,583 956 14,176 210,427 10,081 753,071 290,653 251,712 ( 1,660)	％
			- - 100 51 11 40 - 1 - 1 16 1 58 23 19 -

(To be continued)

(Continued)

Code 62000 PROFIT BEFORE INCOME TAX 63000 INCOME TAX (Note 4 and 21) 66000 NET PROFIT OTHER COMPREHENSIVE INCOME Items that will not be reclassified subsequently to profit or loss 83190 Revaluation gains (losses) on investments in equity instruments measured at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss 83290 Realized gain and losses on debt instruments valuation at fair value through other comprehensive income 83000 Other comprehensive income, net of income tax 85000 TOTAL COMPREHENSIVE INCOME EARNINGS PER SHARE (Note 22) 97500 Basic EPS 98500 Diluted EPS	From January 1 to March 31, 2020 Amount ％ $ 163,723 13 33,403 3 130,320 10 ( 323,801 ) ( 25 ) 1,811 - ( 321,990) ( 25) ($ 191,670) ( 15) $ 0.36 $ 0.36	From January 1 to March 31, 2019	From January 1 to March 31, 2019	From January 1 to March 31, 2019
			Amount $ 250,052 43,876 206,176 151,742 8,776 160,518 $ 366,694 $ 0.57 $ 0.57	％
				19 3 16 12 - 12 28

Subsequent notes are incorporated as part of this individual financial statement.

Chairman: Steve Lee

President: Charles Sung Chief Accountant: Pi-Chen Wang

Taiwan Fire & Marine Insurance Co., Ltd.

Statements of Changes in Equity

2020 and From January 1 to March 31, 2019 (Reviewed only, not audited based on the GAAS)

Unit: NT$ Thousand

Code A1 Balance at January 1, 2019 A3 Impact from retrospective application and restatement A5 Balance after restatement on January 1, 2019 B17 Reversal of special reserve D1 Net Profit from January 1 to March 31, 2019 D3 Other comprehensive income after taxes from January 1 to March 31, 2019 D5 Total comprehensive income from January 1 to March 31, 2019 Z1 Balance at March 31, 2019 A1 Balance at January 1, 2020 Appropriation of 2019 earnings B5 Cash dividends distributed by the Company B17 Reversal of special reserve D1 Net profit from January 1 to March 31, 2020 D3 Other comprehensive income after taxes from January 1 to March 31, 2020 D5 Total comprehensive income from January 1 to March 31, 2020 Z1 Balance at March 31, 2020		Capital $ 3,622,004 - 3,622,004 - - - - $ 3,622,004 $ 3,622,004 - - - - - $ 3,622,004	Capitalsurplus $ 98,962 - 98,962 - - - - $ 98,962 $ 98,962 - - - - - $ 98,962			Retained Earnings	Unappropriated earnings $ 698,233 ( 6,053) 692,180 3,070 206,176 - 206,176 $ 901,426 $ 756,029 ( 362,201 ) 17,173 130,320 - 130,320 $ 541,321	Other Equity (Note 19) Unrealized Gain and Losses on Financial Assets at Fair Value Through Other Comprehensive Income ( $ 345,480 ) - ( 345,480 ) - - 160,518 160,518 ($ 184,962) ( $ 46,941 ) - - - ( 321,990) ( 321,990) ($ 368,931)	Stockholders’ Equity
					Legal reserve $ 2,130,209 - 2,130,209 - - - - $ 2,130,209 $ 2,242,269 - - - - - $ 2,242,269	Special reserve $ 2,215,129 - 2,215,129 ( 3,070 ) - - - $ 2,212,059 $ 2,415,551 - ( 17,173 ) - - - $ 2,398,378
									$ 8,419,057 ( 6,053) 8,413,004 - 206,176 160,518 366,694 $ 8,779,698 $ 9,087,874 ( 362,201 ) - 130,320 ( 321,990) ( 191,670) $ 8,534,003

Subsequent notes are incorporated as part of this individual financial statement.

Chairman: Steve Lee

President: Charles Sung

Chief Accountant: Pi-Chen Wang

Taiwan Fire & Marine Insurance Co., Ltd.

Statements of Cash flows

2020 and From January 1 to March 31, 2019

(Reviewed only, not audited based on the GAAS)

Unit: NT$ Thousand

Code CASH FLOWS FROM OPERATING ACTIVITIES A00010 Net Income before income tax from continuing operation A20010 Income Charges (Credits) A20100 Depreciation expense A20200 Amortization expenses A20400 Net loss (gain) on financial assets and liabilities at fair value through profit or loss A20900 Interest expense A21200 Interest income A21400 Net changes in insurance liabilities A21830 Impairment loss (reversal gain) on expected credit - investment A21850 Impairment loss (reversal gain) on expected credit - non- investment A22300 Share of loss (gain) on associates and joint ventures recognized using equity method A22700 Gain on disposal of investment property A23700 Impairment loss of reinsurance financial assets A23800 Impairment reversed benefits of reinsurance financial assets A24100 Unrealized gains on foreign currency exchange A29900 Lease Modification Gains A50000 Net changes in operating assets and liabilities A51110 (Increase) Decrease in notes receivable A51120 Premiums receivable increase A51130 (Increase) decrease in other accounts receivable A51140 Decrease (increase) in financial assets at fair value through profit or loss A51141 Increase of financial assets at fair value through other comprehensive income A51160 Increase in other financial assets	From January 1 to March 31, 2020 $ 163,723 14,866 728 24,471 420 ( 31,096 ) 144,240 ( 67 ) 1,418 5,392 ( 23,723 ) - ( 8 ) ( 1,764 ) ( 20 ) ( 2,137 ) ( 92,172 ) 4,556 ( 75,007 ) ( 98,686 ) ( 180,657 )	From January 1 to March 31, 2019
		$ 250,052 15,178 489 ( 30,601 ) 561 ( 28,995 ) 92,845 188 ( 4,892 ) ( 21,145 ) - 10 - ( 12,294 ) - 25,415 ( 42,584 ) ( 1,161 ) 464,567 ( 79,165 ) ( 340,531 )

(To be continued)

(Continued)

Code A51170 Decrease (increase) in reinsurance contract asset A51990 Increase in other assets A52120 Increase (decrease) in claims payable A52140 Increase (decrease) in commissions payable A52150 Increase in due to reinsurers and ceding companies A52160 Decrease in other payables A52200 Decrease in employees’ benefit liability A52990 Increase (Decrease) in Other Liabilities A33000 Cash inflow (outflow) from operations A33100 Interest received A33500 Income tax paid AAAA Net cash inflow (outflow) from operating activities CASH FLOWS FROM INVESTING ACTIVITIES B02700 Payments for property and equipment B03800 Decrease in refundable deposits B04500 Payments for intangible assets B05400 Payments for investment properties B05500 Proceeds from disposal of investment properties B09900 Decrease in advance receipts BBBB Net cash inflow (outflow) from investing activities CASH FLOWS FROM FINANCING ACTIVITIES C03100 Decrease in guarantee deposits received C04020 Repayment of the principal of the lease liabilities CCCC Net cash used in financing activities EEEE NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS E00100 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD E00200 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	From January 1 to March 31, 2020 ( $ 103,954 ) ( 7,657 ) ( 3,348 ) 12,387 32,236 ( 83,248 ) ( 137 ) 3,086 ( 296,158 ) 16,823 ( 870) ( 280,205) ( 290 ) 1,638 ( 460 ) ( 256 ) 90,837 - 91,469 ( 1,064 ) ( 7,903) ( 8,967) ( 197,703 ) 3,415,293 $ 3,217,590	From January 1 to March 31, 2019	From January 1 to March 31, 2019
	( ( ( ( ( ( ( ( ( ( ( ( ( ( (	( ( ( ( ( ( ( ( ( ( ( ( (	$ 3,462 9,448 ) 11,310 10,139 ) 5,975 55,641 ) 65 ) 996) 232,395 13,743 717) 245,421 4,385 ) 1,074 1,113 ) - - 36,477) 40,901) 1,654 ) 8,319) 9,973) 194,547 3,237,541 $ 3,432,088

Subsequent notes are incorporated as part of this individual financial statement.

Chairman: Steve Lee

President: Charles Sung

Chief Accountant: Pi-Chen Wang

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Taiwan Fire & Marine Insurance Co., Ltd.

Notes to Financial Statement

2020 and From January 1 to March 31, 2019 (Reviewed only, not audited based on the GAAS)

(Expressed in Thousand New Taiwan Dollars unless specified otherwise)

I. Company profile

Taiwan Fire and Marine Insurance Co., Ltd. (“Company”) was established in March 1948 as a non-life insurer. The products offered by the Company include aviation insurance, fire insurance, marine insurance, casualty insurance, automobile insurance, as well as the reinsurances for the abovementioned insurances. The headquarters is located in Taipei; ten branches, and dozens of agencies. At the establishment, the paid-up capital was 10 million Old Taiwanese Dollars. Through several capital increases, as of March 31, 2020, the paid-up capital is NT$ 3,622,004 thousand.

The shares of the Company were approved for the public listing by Securities and Futures Commission, Ministry of Finance on June 11, 1997, and on September 30 of the year started the trading.

The financial statements are presented in NT$, the functional currency of the Company.

II. Date and Procedure for Authorization of Financial Statements

The financial statements were approved by the Board of Directors on April 30, 2020.

III. Applicability of newly promulgated and amended standard rules and interpretations

(I) The amended Regulations Governing the Preparation of Financial Reports by Insurance Enterprises, as well as International Financial Reporting Standards (“IFRS”), International Accounting Standards (“IAS”), International Financial Reporting Interpretations Committee (“IFRIC”) and Standing Interpretations Committee (“SIC”) Interpretations (collectively “IFRSs”) approved and issued to be effective by the Financial Supervisory Commission, MOF are first time applied.

The applications of the amended Regulations Governing the Preparation of Financial Reports by Insurance Enterprises and IFRSs approved and issued to be effective by FSC will not cause any material changes to the accounting policies of the Company.

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(II) IFRSs issued by IASB but not yet approved and issued to be effective by FSC

Newly Issued / Amended / Revised Standards and Interpretations “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”, amendments to IFRS 10 and IAS 28. IFRS 17 “Insurance Contracts” “Classification of Liabilities as Current or Non-Current”, amendments to IAS 1	The effective date promulgated by IASB (Note 1)
	To be determined January 1, 2021 January 1, 2022

Note 1: Unless otherwise expressly remarked, the aforementioned newly promulgated/Amendment/Amended Rules or Interpretation come into effect in the reporting year starting from the specified effective dates.

IFRS 17 “Insurance Contracts”

IFRS 17 regulates the accounting treatments for insurance contracts, and will replace IFRS 4 “Insurance Contracts.” The major regulations of IFRS 17 include the followings:

Level of aggregation of insurance contracts

The Company shall identify portfolios of insurance contracts. A portfolio comprises contracts subject to similar risks and managed together. Contracts within a certain product line would be expected to have similar risks and hence would be expected to be in the same portfolio if they are managed together. The Company shall at least divide the issued insurance portfolios as:

A group of contracts that are onerous at initial recognition, if any;
A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any; and
A group of the remaining contracts in the portfolio, if any.

The Company shall only divide groups into those including only contracts issued within a year, and shall apply the rules of recognitions and measurements of IFRS 17 to these contracts decided to be issued.

Recognition

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

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

Measurement of the initial recognitions

On initial recognition, the Company shall measure a group of insurance contracts at the total of the fulfillment cash flows, and the contractual service margin. The fulfillment cash flows comprise estimates of future cash flows, an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows; and a risk adjustment for non-financial risk. The contractual service margin represents the unearned profit the entity will recognize as it provides services in the future. The Company shall measure the contractual service margin on initial recognition of a group of insurance contracts at an amount that, unless on the group of insurance contracts that are onerous contracts, results in no income or expenses arising from: (1) the initial recognition of an amount for the fulfillment cash flows; (2) the derecognition at the date of initial recognition of any asset or liability recognized for insurance acquisition cash flows; and (3) any cash flows arising from the contracts in the group at that date.

Subsequent measuring

The Company shall report the carrying amount of a group of insurance contracts at the end of each reporting period as the sum of the liability for remaining coverage and the liability for incurred claims, comprising the fulfillment cash flows related to past service allocated to the group at that date. The liability for remaining coverage comprises the fulfillment cash flows related to future service and the contractual service margin; the liability for incurred claims, comprising the fulfillment cash flows related to past service. If a group of insurance contracts becomes onerous (or increasingly onerous) when subsequently measured, the losses shall be recognized immediately.

Onerous contract

An insurance contract is onerous at the date of initial recognition if the fulfillment cash flows allocated to the contract, any previously recognized acquisition cash flows and any cash flows arising from the contract at the date of initial recognition in total are a net outflow. The Company shall recognize a loss in profit or loss for the net outflow for the group of onerous contracts, resulting in the carrying amount of the liability for the group being equal to the fulfillment cash flows and the contractual service margin of the group being zero. Before reversing

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the recognized amount of loss, no contractual service margin occurs, and no income from insurance contracts is recognized.

Premium Allocation Approach

The Company may simplify the measurement of a group of insurance contracts using the premium allocation approach if, and only if, at the inception of the group:

The Company reasonably expects that such simplification would produce a measurement of the liability for remaining coverage for the group that would not differ materially from the one that would be produced; or
The coverage period of each contract in the group is one year or less.

The criterion in abovementioned (1) is not met if at the inception of the group an entity expects significant variability in the fulfillment cash flows that would affect the measurement of the liability for remaining coverage during the period before a claim is incurred.

Using the premium allocation approach, the liability for remaining coverage on initial recognition is the premiums received at initial recognition minus any insurance acquisition cash flows. In sequential periods, the liability for remaining coverage will adjust amount of the premiums received in the period plus the amortization of insurance acquisition cash flows, and minus the amount recognized as insurance revenue for coverage provided, as well as any investment component paid or transferred to the liability for incurred claims.

Modification and derecognition

If the terms of an insurance contract are modified, and meet the certain conditions are met as substantial modification, the Company shall derecognized the original contract and recognize the modified contract as a new contract.

An entity shall recognized an insurance contract when, and only when it is extinguished or substantially modified.

Transitional Regulations

As a principle, the Company shall fully apply IFRS 17 retrospectively. However, if this is not practical, the Company may opt to apply the modified retrospective or fair value approach.

The modified retrospective approach refers to that the Company shall achieve the closest outcome to fully retrospective application possible using reasonable and supportable information available without undue cost or effort. If the reasonable and

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supportable information is not able to be obtained, it shall apply the fair value approach.

By applying the fair value approach, the Company determines the contractual service margin at the transition date as the difference between the fair value of a group of insurance contracts at that date and the fulfillment cash flows measured at that date.

Except the above mentioned effects, as of the issuing date of the Financial Statement, the Company has been evaluating the effects to the financial positions and performance from the amendments of other standards and interpretations, and these related effects are to be disclosed when such evaluations are completed.

IV. Summary of significant accounting policies

(I) Declaration in compliance

The financial statements are prepared according to the Regulations Governing the Preparation of Financial Reports by Insurance Enterprises and IAS 34 “Interim Financial Reporting” approved by FSC. This financial report does not include all the IFRS disclosures required by the annual financial statement.

(II) Other Material Accounting Policies

Other than the following notes, please refer to the aggregated descriptions of the material accounting policies in the 2019 Annual Financial Report

Defined post-employment benefits

The interim pension costs applies the pension cost rate determined via actuarial on the end date of the previous year, and are calculated based on the period from the beginning of the year to the end of the period. The adjustments will be made for the material movement of the market during the period, major plan revision, repayment, or other material one-time matters.

Income Tax

The term “income tax expenses” as set forth herein denotes total of the income tax payable in the current term and the deferred income tax. The interim income tax is evaluated based on the year; the tax rate applicable to the expected total annual earning is applied to calculate the interim pre-tax incomes. The changes of tax rate due to amendments of tax laws during the period is consistent with the accounting treatment of the transaction generated the tax consequence, and thus it is recognized in the income/loss at once during the period when it occurs.

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V. Major sources of major accounting judgments, estimate and hypotheses

Please refer to the material accounting judgement, estimates, and the major sources of uncertainties for the estimates specified in the 2019 Annual Financial Report.

VI. Cash and cash equivalents

Cash and cash equivalents
Cash on hand and working capital Bank’s notes and current deposit Cash Equivalents Commercial paper Time deposits in banks due within three (3) months in the date of initial maturity	March31,2020 $ 31,253 2,578,189 349,558 258,590 $ 3,217,590	December31,2019 $ 31,273 2,476,532 648,898 258,590 $ 3,415,293	March31,2019
				$ 31,393 2,095,067 1,048,138 257,490 $ 3,432,088

The market interest rate ranges of bank time deposits and commercial paper on the balance sheet date are as follows:

Time deposits in banks due within three (3) months in the date of initial maturity Commercial paper	March 31, 2020 0.09% ~ 0.66% 0.38% ~ 0.49%	December31,2019 0.09% ~ 0.66% 0.52% ~ 0.56%	March31,2019
			0.09% ~ 0.66% 0.46% ~ 0.51%

VII. Receivable

Receivable
Notes receivable Notes receivable - non-accrual loan Less: allowance loss Premiums receivable Premiums receivable - non-accrual loan Less: allowance loss Interest receivable Other receivable Other receivable - non-accrual loan Less: allowance loss Other accounts receivable	March31,2020 $ 124,145 - ( 1,241) $ 122,904 $ 456,671 46,455 ( 11,078) $ 492,048 $ 69,234 28,425 5,503 ( 996) $ 102,166	December31,2019 $ 121,835 173 ( 1,391) $ 120,617 $ 374,954 34,775 ( 9,973) $ 399,756 $ 54,961 34,965 3,519 ( 871) $ 92,574	March31,2019
	( ( (	( ( (	$ 123,886 385 ( 1,624) $ 122,647 $ 473,380 56,635 ( 16,151) $ 513,864 $ 59,755 16,512 3,467 ( 651) $ 79,083

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(I) Receivable

To reduce the credit risks, the management of the Company has assigned the premium section to track the overdue payment, to ensure the proper actions have been taken for the recovery of overdue receivables. Besides, on the balance sheet dates, the Company review the recoverable amount of the receivables again one by one, to ensure the unrecoverable receivables are provided for the proper allowance loss. Therefore, the management of the Company believes the credit risks of the Company is significantly reduced.

The Company recognizes the allowance loss for receivables as the higher expected credit losses between from of the “Regulations Governing the Procedures for Insurance Enterprises to Evaluate Assets and Deal with Non-performing / Non-accrual Loans” and simplified method of IFRS 9, or of the lifetime. The lifetime expected credit losses are calculated using the reserve matrix, by considering the past default records and the current financial position of clients, industrial economic situations, as well as the GDP forecast and industrial outlooks. As the credit loss history of the Company shows that there is no significant difference among the loss patterns of different client groups, the reserve matrix does not further divide the client groups, but only establish the expected credit losses based on the aging of receivables.

Where any evidence shows that the counterparties of transactions have severe financial difficulties, and the Company cannot reasonably expect the recoverable amount, e.g. the counterparty is being liquidated, the Company writes off the related receivables upon the resolution passed by the Board of Directors. However the pursuit of recovery will be continued, and the amount recovered from such pursuit will be recognized in profit/loss.

The Company recognizes the allowance loss for receivables as the higher expected credit losses between the “Regulations Governing the Procedures for Insurance Enterprises to Evaluate Assets and Deal with Non-performing/Non-accrual Loans,” or from the reserve matrix. The movement for the allowance loss for the receivables during January 1 to March 31, 2020 and 2019 are as follows:

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March 31, 2020

March 31, 2020
Balance - beginning Add: Provision (reversal) in the current period Balance - ending	12-month expected credit lossI $ 3,195 ( 1,346) $ 1,849	Lifetime expected credit lossII $ 2,735 ( 331) $ 2,404	Lifetime expected credit lossIII $ 825 29 $ 854	Impairment provided based in IFRS 9 $ 6,755 ( 1,648) $ 5,107	Impairment based on the “Regulations Governing the Procedures for Insurance Enterprises to Evaluate Assets and Deal with Non-performing / Non-accrual Loans” $ 5,480 2,728 $ 8,208		Total
	(	(		(			$ 12,235 1,080 $ 13,315

March 31, 2019

March 31, 2019
Balance - beginning Add: Provision (reversal) in the current period Balance - ending	12-month expected credit loss I $ 2,396 2,430 $ 4,826	Lifetime expected credit loss II $ 9,119 ( 2,018) $ 7,101	Lifetime expected credit loss III $ 2,153 ( 1,888) $ 265	Impairment provided based in IFRS 9 $ 13,668 ( 1,476) $ 12,192	Impairment based on the “Regulations Governing the Procedures for Insurance Enterprises to Evaluate Assets and Deal with Non-performing / Non-accrual Loans” $ 10,956 ( 4,722) $ 6,234		Total
		(	(	(	(	(	$ 24,624 6,198) $ 18,426

The allowance loss as of March 31, 2020 and 2019 increased by NT$1,080 thousand and decreased by NT$6,198 thousand, respectively, mainly as a result of the net increase of NT$13,491 thousand and net decrease of NT$12,625 thousand to the gross carrying value of receivables transferred to the non-accrual loans.

(II) Non-accrual loan and allowance for loss

For the notes receivable, premium receivable, and non-accrual loans in other receivables, the allowances have been provided as NT$0 thousand, NT$6,580 thousand, and NT$860 thousand, respectively, as of March 31, 2020.

For the notes receivable, premium receivable, and non-accrual loans in other receivables, the allowances have been provided as NT$173 thousand, NT$ 6,077 thousand, and NT$723 thousand, respectively, as of December 31, 2019.

For the notes receivable, premium receivable, and non-accrual loans in other receivables, the allowances have been provided as NT$385 thousand, NT$11,770 thousand, and NT$ 345 thousand, respectively, as of March 31, 2019.

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(III) The ageing analysis for the receivables

0 - 30 days 31 - 90 days 91 - 180 days 181 - 365 days More than 365 days Total	March 31, 2020 $ 545,873 132,613 48,060 3,033 854 $ 730,433	December 31, 2019 $ 489,692 97,206 31,894 5,565 825 $ 625,182	March 31, 2019	March 31, 2019
				$ 530,953 142,828 46,990 11,338 1,911 $ 734,020

The aging analysis is conducted based on the accounted dates.

VIII. Financial instruments measured at fair values through profit and/or loss

March31,2020 December31,2019 Held for transaction purposes - TSEC/GTSM listed shares $ 321,069 $ 255,708 - Beneficiary certificates of funds 76,719 101,131 Compulsory measurement at fair value through profit and loss - Domestic financial bonds 886,967 886,425 - Domestic corporate bonds 531,133 522,088 $ 1,815,888 $ 1,765,352 Financial assets at fair value through other comprehensive income March31,2020 December31,2019 Equity instruments at fair value through other comprehensive income $ 3,005,724 $ 3,229,435 Bond instruments measured at fair value through other comprehensive income 1,778,617 1,775,766 Deductible of refundable deposits ( 616,589) ( 615,788) $ 4,167,752 $ 4,389,413 Investments in equity instruments March31,2020 December31,2019 Domestic investment TSEC/GTSM listed shares $ 2,626,043 $ 2,863,573 Unlisted shares 379,681 365,862 $ 3,005,724 $ 3,229,435	March31,2019	March31,2019
	$ 321,144 237,582 839,611 414,171 $ 1,812,508 March31,2019
March31,2020 Equity instruments at fair value through other comprehensive income $ 3,005,724 Bond instruments measured at fair value through other comprehensive income 1,778,617 Deductible of refundable deposits ( 616,589) $ 4,167,752 Investments in equity instruments March31,2020 Domestic investment TSEC/GTSM listed shares $ 2,626,043 Unlisted shares 379,681 $ 3,005,724
	$ 2,885,645 1,341,588 ( 550,000) $ 3,677,233 March31,2019
		$ 2,409,699 475,946 $ 2,885,645

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The Company invests for the mid- and long-term strategies, and expects to gain through the long-term investments. The management of the Company believes that it is inconsistent to include the short-term fair value fluctuations of such investments in profit/loss for the said purpose of long-term investments; therefore, it opts to designate such investments as measured at FVTOCI.

(II) Investments in liability instruments

Domestic investment Government bonds Financial bonds Corporate bonds Deductible of the refundable deposits (Note 17) Subtotal Foreign investment Financial bonds Corporate bonds Subtotal	March31,2020 $ 616,589 150,166 104,552 ( 616,589) 254,718 151,000 756,310 907,310 $ 1,162,028	December31,2019 $ 615,788 150,240 104,697 ( 615,788) 254,937 150,000 755,041 905,041 $ 1,159,978	March31,2019	March31,2019
	(	(	(	$ 616,649 180,398 50,005 550,000) 297,052 153,896 340,640 494,536 $ 791,588

For the information for credit risks management and the impairment evaluation related to bond instruments measured at fair value through other comprehensive income, please refer to Note 10.

X. Credit risks management for Investments in liability instruments

Bond instruments investment accounted as financial assets at fair value through other comprehensive income:

March 31, 2020

Total of carrying amount Allowance loss Amortized cost Adjustment to fair value Deductible of refundable deposits

At fair value through other comprehensive income $ 1,717,271 ( 1,195 ) 1,716,076 62,541 1,778,617 ( 616,589 ) $ 1,162,028

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December 31, 2019

December 31, 2019
Total of Carrying Amount Allowance loss Amortized cost Adjustment to fair value Deductible of refundable deposits March 31, 2019 Total of carrying amount Allowance loss Amortized cost Adjustment to fair value Deductible of refundable deposits	At fair value through other comprehensive income
	$ 1,716,298 ( 1,262) 1,715,036 60,730 1,775,766 ( 615,788) $ 1,159,978 At fair value through other comprehensive income
	( (	$ 1,294,479 1,115) 1,293,364 48,224 1,341,588 550,000) $ 791,588

The policies applied by the Company is to only invest the bond instruments with rating of investment grade and above and low credit risk for impairment evaluation. The credit ratings are provided by independent rating agencies. The Company continuously track the external ratings to monitor the movement of the credit risk for the invested bond instruments, while reviewing other information such as the yield curves of bonds and material information of the debtors, for the purpose of evaluating if the credit risks of bond instruments increase significantly since the initial recognition.

By considering the default loss rate provided by the external rating agencies, current financial position of the debtors, and the outlook forecasts of the industries where they operates, to measure the 12-month ECLs or lifetime ECLs. The current credit risk rating mechanism of the Company is as the following:

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Credit rating Normal Abnormal Default Write Off	Definition The credit risk of the debtor is low, or not increased significantly, with sufficient solvency for the contractual cash flow The credit risk has been significantly increased since initial recognition Evidence of credit loss exists or the credit impairment loss is recognized The available proof showed that the debtor was suffering serious financial difficulties and it was impossible for the Company to expect recoverability	Basis for Recognizing ECLs
		12-month expected credit loss Lifetime expected credit loss (credit not impaired) Lifetime expected credit loss (credit impaired) Direct Write Off

The total book values of the debt instrument investments of each credit rating, and the applicable ECL rates are as the following: March 31, 2020

March 31, 2020
Credit rating Normal Abnormal Default Write off December 31, 2019 Credit rating Normal Abnormal Default Write off March 31, 2019 Credit rating Normal Abnormal Default Write off	Expected Credit Loss (ECL) 0.002% ~ 0.8996% (note) (note) (note) Expected Credit Loss (ECL) 0.00% ~ 1.04% (note) (note) (note) Expected Credit Loss (ECL) 0.00% ~ 1.04% (note) (note) (note)	March 31, 2020 Total of Carrying Amount
		$ 1,717,271 - - - December 31, 2019 Total of Carrying Amount
		$ 1,716,298 - - - March 31, 2019 Total of Carrying Amount
		$ 1,294,479 - - -

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(Note): The credit level of the bond investments as of March 31, 2020, and December 31 and March 31, 2019 were all normal and thus not applicable.

For the bond instruments measured at fair value through other comprehensive income, the movement for allowance loss is summarized by the grade of credit risks as the following:

	the following:
XI.	Normal (12-month expected credit loss) Balance at January 1, 2020 $ 1,262 Exchange rate and other movement ( 67) Balance at March 31, 2020 $ 1,195 Normal (12-month expected credit loss) Balance at January 1, 2019 $ 927 Derecognition ( 19) Exchange rate and other movement 207 Allowance loss on March 31, 2019 $ 1,115 Investment under equity method March31,2020 Investments in associates $ 212,547 Summarization About Associates With Materiality		Credit rating
		Normal (12-month expected credit loss) $ 1,262 ( 67) $ 1,195	Abnormal (Lifetime expected credit loss whose credit not impaired) $ - - $ - Credit rating	Default (Lifetime expected credit loss exists and the credit is impaired)
		(			$ - - $ -
				Default (Lifetime expected credit loss exists and the credit is impaired)
				$ - - - $ - March31,2019
	Company Name Wen-Ding Venture Capital Co., Ltd.
		March31,2020 24.75%	December31,2019 24.75%	March31,2019
				24.75%

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Shares vested in the Company Income from continuing operation net income Other comprehensive income Total comprehensive income	From January 1 to March 31, 2020 ($ 5,392) - ($ 5,392)	From January 1 to March 31, 2019	From January 1 to March 31, 2019
			$ 21,145 - $ 21,145

For the business natures, major business locations, and the countries where the entities register, please refer to the attachment: “Information, Location of the Invested Company”

XII. Other financial assets - net

XII.	Other financial assets-net
XIII.	Time deposit with initial maturity date more than three (3) months away Negotiable certificate of deposit with original maturity longer than three months Less: Deductible of the refundable deposits (Note 16) Investment Property Investment property completed Right-of-use assets	March31,2020 $ 3,174,952 - ( 40,645) $ 3,134,307 March 31, 2020 $ 2,284,412 25,379 $ 2,309,791	December31,2019 $ 2,985,195 - ( 30,645) $ 2,954,550 December 31, 2019 $ 2,387,102 26,876 $ 2,413,978	March31,2019
				(	$ 3,204,212 3,000 42,861) $ 3,164,351 March 31, 2019
					$ 2,386,241 - $ 2,386,241

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Cost Balance at January 1, 2019 Increase Disposition Balance at March 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Depreciation expense Disposition Balance at March 31, 2019 Net at March 31, 2019 Cost Balance at January 1, 2020 Increase Disposition Transferred to property and equipment Balance at march 31, 2020 Accumulated depreciation and impairment Balance at January 1, 2020 Depreciation expense Disposition Transferred to property and equipment Balance at March 31, 2020 Net at March 31, 2020		Land $ 2,110,928 - - $ 2,110,928 $ - - - $ - $ 2,110,928 $ 2,120,730 - 42,078 ) 28,735) $ 2,049,917 $ - - - - $ - $ 2,049,917		House and building $ 507,735 - - $ 507,735 $ 228,987 3,435 - $ 232,422 $ 275,313 $ 509,617 256 27,642 ) 10,599) $ 471,632 $ 243,245 3,384 2,606 ) 6,886) $ 237,137 $ 234,495		Right-of-use assets $ - - - $ - $ - - - $ - $ - $ 32,861 - - - $ 32,861 $ 5,985 1,497 - - $ 7,482 $ 25,379		Total
	( (		( ( ( (				( ( ( (	$ 2,618,663 - - $ 2,618,663 $ 228,987 3,435 - $ 232,422 $ 2,386,241 $ 2,663,208 256 69,720 ) 39,334) $ 2,554,410 $ 249,230 4,881 2,606 ) 6,886) $ 244,619 $ 2,309,791

The Company amortized depreciation on the straight-line basis for its investment-oriented real estate of the following useful life:

House and building Right-of-use assets

55-60 years 5-15 years

The fair value of the investment property as of December 31, 2019 and 2018 was NT$4,597,915 thousand and NT$4,558,379 thousand. The fair value was measured at the level 3 inputs at each balance sheet date by the independent appraising company, Taiwan Da-Hua Real Estate Appraisers Joint Firm. The appraisal was evaluated based on the “Regulations on Real Estate Appraisal,” by applying appraisal approaches including market comparison, income, analysis of land development, or cost. The applied key unobservable input is the discount rate, namely 0.83%~6.00% and 0.95%~6.00%. Upon evaluation by the Company's management, the fair values substantially remained unchanged on March 31, 2020 and 2019.

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On May 21, 2010, the Company entered a co-building contract with Jut Land Development Co., Ltd. (“Jut Land Development”), to jointly build a building at one small section, Zhongshan Section, Zhongshan District, Taipei City. The approach of the project is co-construction for sharing building. The Company provided the land, and Jut Land Development provided fund for construction. The area of each levels and the parking lot are shared by Jut Land Development and the Company for 35% and 65%, respectively. According to the co-building contract, Jut Land Development should paid the deposit of NT$50,000 thousand to the Company when signing the contract, with a note bond with carrying amount of NT$50,000 thousand. The Company shall return the said bond and note bond to Jut Land Development upon building delivery. On May 6, 2016, the Company signed a complementary agreement with Jut Land Development. On the signing date, the deposit of NT$ 50,000 thousand was returned, and the note bond with carrying amount of NT$ 50,000 thousand would be returned when all the remaining properties to be signed-off to the clients.

The land provided by the Company was transferred on December 27, 2014, and the building started to be sold when the title of the building was obtained on January 27, 2015.

The Company disposed of the investment property including the land and buildings at Small Section 1, Zhongshan District, Taipei City, and generated the proceeds totaling NT$79,274 thousand (after tax) from January 1 to March 31, 2020. Less the book value, NT$56,583 thousand, the gains from the disposal became NT$22,691 thousand, stated as the operating revenue-gain (loss) on investment properties.

The Company disposed of the investment property including the land and buildings at Section 5, Roosevelt Rd., Taipei City, and the land at Sub-section No. 3, Xinglong Rd., Wenshan Dist., Taipei City, generated the proceeds totaling NT$11,563 thousand (after tax) from January 1 to March 31, 2020. Less the book value, NT$10,531 thousand, the gains from the disposal became NT$1,032 thousand, stated as the operating revenue-gain (loss) on investment properties.

On March 31, 2020, the total amounts of the expected future lease payments from the investment oriented real estate leased as operating leases are as the following:

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1st year 2st year 3st year 4th year 5th year More than 5 years	March 31, 2020 $ 102,007 91,997 64,704 39,598 27,575 5,376 $ 331,257	December 31, 2019 $ 111,209 95,946 73,142 43,170 32,626 9,624 $ 365,717	March 31, 2019	March 31, 2019
				$ 143,918 108,578 84,736 60,575 37,495 26,636 $ 461,938

XIV. Property and equipment

Cost Balance at January 1, 2019 Increase Disposition Balance at March 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Depreciation expense Disposition Balance at March 31, 2019 Net at March 31, 2019 Cost Balance at January 1, 2020 Increase Disposition Transferred from investment properties Balance at March 31, 2020 Accumulated depreciation and impairment Balance at January 1, 2020 Depreciation expense Disposition Transferred from investment properties Balance at March 31, 2020 Net at March 31, 2020		Own land	Buildings and ancillary equipment	Buildings and ancillary equipment		Computer equipment		Traffic and transport equipment		Other equipment	Leasehold improvements	Leasehold improvements		Total
		$ 271,576 - - $ 271,576 $ - - - $ - $ 271,576 $ 261,774 - - 28,735 $ 290,509 $ - - - - $ - $ 290,509		$ 165,259 - - $ 165,259 $ 91,127 879 - $ 92,006 $ 73,253 $ 164,730 - - 10,599 $ 175,329 $ 94,056 859 - 6,886 $ 101,801 $ 73,528		$ 30,005 705 - $ 30,710 $ 13,087 1,511 - $ 14,598 $ 16,112 $ 30,688 290 - - $ 30,978 $ 15,738 1,528 - - $ 17,266 $ 13,712		$ 9,044 116 - $ 9,160 $ 4,355 290 - $ 4,645 $ 4,515 $ 8,949 - - - $ 8,949 $ 5,307 290 - - $ 5,597 $ 3,352		$ 11,929 647 - $ 12,576 $ 6,393 495 - $ 6,888 $ 5,688 $ 10,839 - - - $ 10,839 $ 6,142 421 - - $ 6,563 $ 4,276		$ 7,394 2,917 - $ 10,311 $ 3,760 481 - $ 4,241 $ 6,070 $ 10,889 - - - $ 10,889 $ 6,237 657 - - $ 6,894 $ 3,995		$ 495,207 4,385 - $ 499,592 $ 118,722 3,656 - $ 122,378 $ 377,214 $ 487,869 290 - 39,334 $ 527,493 $ 127,480 3,755 - 6,886 $ 138,121 $ 389,372

The depreciation expenses are provided on the straight-line basis during the durable life span:

span:
Building	30-35 and 55 years
Auxiliary equipment
Power transmission equipment	15-20 years
Telecommunication equipment	8-10 and 15 years
Fire-fighting equipment	10 years
Computer equipment	3-6 years
Traffic and transport equipment	3-5 years
Other equipment	4-8 years
Leasehold improvements	4 years

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XV. Lease Agreement

(I) Right-of-use assets

Right-of-use assets
Cost Balance at January 1, 2019 Effects of retrospective application of IFRS 16 Balance on January 1, 2019 (after restatement) Increase Decrease in the current period Balance at March 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Effects of retrospective application of IFRS 16 Balance on January 1, 2019 (after restatement) Depreciation expense Decrease in the current period Balance at March 31, 2019 Net at March 31, 2019 Cost Balance at January 1, 2020 Increase Decrease in the current period Balance at March 31, 2020 Accumulated depreciation and impairment Balance at January 1, 2020 Depreciation expense Decrease in the current period Balance at March 31, 2020 Net at March 31, 2020		Land $ - 32,861 32,861 - - $ 32,861 $ - - - 1,496 - $ 1,496 $ 31,365 $ - - - $ - $ - - - $ - $ -		Building $ - 36,144 36,144 9,630 125) $ 45,649 $ - - - 5,553 125) $ 5,428 $ 40,221 $ 50,762 3,368 1,565) $ 52,565 $ 20,550 5,606 1,457) $ 24,699 $ 27,866		Transport equipment		Total
			( ( ( (		( (	$ - 8,074 8,074 - - $ 8,074 $ - - - 1,038 - $ 1,038 $ 7,036 $ 8,074 - 3,005) $ 5,069 $ 4,154 624 2,791) $ 1,987 $ 3,082	( ( ( (	$ - 77,079 77,079 9,630 125) $ 86,584 $ - - - 8,087 125) $ 7,962 $ 78,622 $ 58,836 3,368 4,570) $ 57,634 $ 24,704 6,230 4,248) $ 26,686 $ 30,948

(II) Lease Liabilities - 2020

Face values of lease liabilities Interest expense of lease liabilities	March 31, 2020 December 31, 2019 March 31, 2019 $ 62,188 $ 66,645 $ 85,004 From January 1 to March 31, 2020 From January 1 to March 31, 2019 $ 420 $ 561	March 31, 2020 December 31, 2019 March 31, 2019 $ 62,188 $ 66,645 $ 85,004 From January 1 to March 31, 2020 From January 1 to March 31, 2019 $ 420 $ 561	March 31, 2020 December 31, 2019 March 31, 2019 $ 62,188 $ 66,645 $ 85,004 From January 1 to March 31, 2020 From January 1 to March 31, 2019 $ 420 $ 561	March 31, 2020 December 31, 2019 March 31, 2019 $ 62,188 $ 66,645 $ 85,004 From January 1 to March 31, 2020 From January 1 to March 31, 2019 $ 420 $ 561	March 31, 2019	March 31, 2019


						$ 561

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Discount rates for the lease liabilities are as the following:

Land Building Transport equipment	March 31, 2020 2.616% 2.616% 2.616%	December 31, 2019 2.616% 2.616% 2.616%	March 31, 2019
			2.616% 2.616% 2.616%

(III) Major lessee activities and terms and conditions

When the Company is a lessee of lands and buildings, the period is one to five years. When the lease period expires, the Company has not favorable right to purchase the leased lands.

(IV) Other information of Leases

Other information of Leases
Total amount of cash (outflow) of lease	From January 1 to March 31, 2020 ($ 7,903)	From January 1 to March 31, 2019
	(	(	$ 8,319)

XVI. Refundable deposit

Refundable deposit
Refundable deposit Bond of Insurance Enterprises Bond of Litigation Others	March31,2020 $ 616,589 3,337 110,082 $ 730,008	December31,2019 $ 615,788 3,337 111,720 $ 730,845	March31,2019
				$ 550,000 6,359 116,219 $ 672,578

(I) Based on Article 141 and 142 of the Insurance Act, an insurance enterprise shall post bond at the national treasury in an amount equal to 15 percent of the total amount of its paid-in capital or paid-in fund. The bond posted is not to be returned except suspending business and having liquidation completed. The Company offset it with the government bonds.

(II) The Company has furnished the following assets to secure legal actions and others on March 31, 2020, and December 31 and March 31, 2019, respectively.

Other financial assets - Negotiable certificate of deposit - Time deposits Cash and cash equivalents	March31,2020 $ - 40,645 72,774 $ 113,419	December31,2019 $ - 30,645 84,412 $ 115,057	March31,2019	March31,2019
				$ 3,000 39,861 79,717 $ 122,578

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XVII. Reserve for liabilities

Reserve for liabilities
Net defined benefit liability	March 31, 2020 $ 83,990	December 31, 2019 $ 84,127	March 31, 2019
			$ 84,783

The pension expense related to the defined benefit program are calculated at the pension cost rate determined via actuarial on December 31 of 2019 and 2018, and recognized into the following titles in respective periods:

	recognized into the following titles in respective periods:	recognized into the following titles in respective periods:	recognized into the following titles in respective periods:
XVIII.	From January 1 to March 31, 2020 From January 1 to March 31, 2019 Operating Expenses $ 542 $ 611 Reinsurance contract asset and Insurance liabilities March31,2020 December31,2019 March31,2019 Claim recoverable from reinsurers $ 73,794 $ 32,778 $ 47,195 Less: allowance loss ( 369) ( 164) ( 236) $ 73,425 $ 32,614 $ 46,959 Due from reinsurers and ceding companies $ 171,036 $ 105,796 $ 162,042 Due from reinsurers and ceding companies - Non-accrual loan 5,908 9,009 29,097 Less: allowance loss ( 11,865) ( 11,732) ( 32,078) $ 165,079 $ 103,073 $ 159,061 Reinsurance reserve asset - net Ceding unearned premium reserves $ 854,867 $ 751,510 $ 807,680 Ceding claims reserves 933,661 1,036,813 942,525 Less: Accumulated impairment ( 4,279) ( 4,287) ( 4,543) $ 1,784,249 $ 1,784,036 $ 1,745,662 Insurance liabilities Unearned premium reserves $ 3,418,920 $ 3,215,885 $ 3,200,868 Claim reserves 2,832,624 2,888,112 2,839,387 Special reserves 2,138,668 2,141,949 2,206,808 Premium deficiency reserves 7,333 7,154 9,616 $ 8,397,545 $ 8,253,100 $ 8,256,679			From January 1 to March 31, 2019
						$ 611 March31,2019
	Claim recoverable from reinsurers Less: allowance loss Due from reinsurers and ceding companies Due from reinsurers and ceding companies - Non-accrual loan Less: allowance loss Reinsurance reserve asset - net Ceding unearned premium reserves Ceding claims reserves Less: Accumulated impairment Insurance liabilities Unearned premium reserves Claim reserves Special reserves Premium deficiency reserves	March31,2020 $ 73,794 ( 369) $ 73,425 $ 171,036 5,908 ( 11,865) $ 165,079 $ 854,867 933,661 ( 4,279) $ 1,784,249 $ 3,418,920 2,832,624 2,138,668 7,333 $ 8,397,545
		( ( (	( ( (		( ( (	$ 47,195 236) $ 46,959 $ 162,042 29,097 32,078) $ 159,061 $ 807,680 942,525 4,543) $ 1,745,662 $ 3,200,868 2,839,387 2,206,808 9,616 $ 8,256,679

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(I) Claim recoverable from reinsurers

Upon determination of the recoverability of claim recoverable from reinsurers, the Company took into account and all changes in the quality of credit of the claim recoverable from reinsurers during the period starting from the initial granting of the loan until the balance sheet date. The Company provides the allowance for loss based on the “Regulations Governing the Procedures for Insurance Enterprises to Evaluate Assets and Deal with Non-performing/Non-accrual Loans,” and all the claims that are overdue for nine months and recoverable from reinsurers are transferred to the non-accrued loans.

This is the current payment resulted from ceding reinsurance business among insurer’s peer, and thus the concentration of the credit risk is limited.

(II) Due from reinsurers and ceding companies

Upon determination of the recoverability of due from reinsurers and ceding companies, the Company took into account and all changes in the quality of credit of the due from reinsurers during the period starting from the initial granting of the loan until the balance sheet date. The Company provides the allowance for loss based on the “Regulations Governing the Procedures for Insurance Enterprises to Evaluate Assets and Deal with Non-performing/Non-accrual Loans,” and all the due from reinsurers overdue for nine months are transferred to the non-accrued loans.

This is the current payment resulted from ceding and inward reinsurance business among insurer’s peer and thus the concentration of the credit risk is limited.

(III) Movement of allowance for loss for Claim recoverable from reinsurers and due from reinsurers and ceding companies are as follows:

Balance at January 1, 2019 Add: Provision of the period Less: Reversal in the current period Balance at March 31, 2019 Balance at January 1, 2020 Add: Provision of the period Less: Reversal in the current period Balance at March 31, 2020	Impairment loss by individual assessment $ 16,181 6,667 - $ 22,848 $ 7,928 - ( 887) $ 7,041	Impairment loss by group assessment $ 14,827 - ( 5,361) $ 9,466 $ 3,968 1,225 - $ 5,193		Total
	(	(	( (	$ 31,008 6,667 5,361) $ 32,314 $ 11,896 1,225 887) $ 12,234

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The Company does not hold any collateral for the outstanding balances of such receivables.

(IV) Allowance for loss of the non-accrual loan

As of March 31, 2020, the impairment or unrecoverable amount has been evaluated for the due from reinsurers and ceding companies, and the allowance for loss has been provided as NT$7,041 thousand.

As of December 31, 2019, the impairment or unrecoverable amount has been evaluated for the due from reinsurers and ceding companies, and the allowance for loss has been provided as NT$7,928 thousand.

As of March 31, 2019, the impairment or unrecoverable amount has been evaluated for the due from reinsurers and ceding companies, and the allowance for loss has been provided as NT$22,848 thousand.

(V) Reinsurance reserve asset and Insurance liabilities

Movement of increase/decrease for reinsurance reserve assets and insurance liabilities during January 1 to March 31, 2020:

Reinsurance reserve asset- net Ceding unearned premium reserves Total amount Recognized impairment loss Ceding claims reserves Reported but not yet paid Not yet reported Recognized impairment loss Total of Reinsurance reserve asset Insurance liabilities Unearned premium reserves Claim reserves Reported but not yet paid Not yet reported Special reserves Special reserves for material accidents Special reserves for hazard changes Other special reserves Premium deficiency reserves Total insurance liabilities		January 1, 2020 $ 751,510 - 751,510 667,090 369,723 4,287) 1,032,526 $ 1,784,036 $ 3,215,885 1,848,738 1,039,374 2,888,112 186,099 796,548 1,159,302 2,141,949 7,154 $ 8,253,100		Provision of thePeriod $ 528,815 - 528,815 565,436 368,225 - 933,661 $ 1,462,476 $ 1,795,307 1,798,690 1,033,934 2,832,624 - - 7,577 7,577 7,333 $ 4,642,841		Recovery of thePeriod $ 425,458 - 425,458 667,090 369,723 - 1,036,813 $ 1,462,271 $ 1,592,272 1,848,738 1,039,374 2,888,112 2,023 - 8,835 10,858 7,154 $ 4,498,396		Others $ - - - - - 8 8 $ 8 $ - - - - - - - - - $ -		March 31, 2020
	(								(	$ 854,867 - 854,867 565,436 368,225 4,279) 929,382 $ 1,784,249 $ 3,418,920 1,798,690 1,033,934 2,832,624 184,076 796,548 1,158,044 2,138,668 7,333 $ 8,397,545

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Movement of increase/decrease for reinsurance reserve assets and insurance liabilities during January 1 to March 31, 2019:

Reinsurance reserve asset- net Ceding unearned premium reserves Total amount Recognized impairment loss Ceding claims reserves Reported but not yet paid Not yet reported Recognized impairment loss Total of Reinsurance reserve asset Insurance liabilities Unearned premium reserves Claim reserves Reported but not yet paid Not yet reported Special reserves Special reserves for material accidents Special reserves for hazard changes Other special reserves Premium deficiency reserves Total insurance liabilities		January 1, 2019 $ 731,042 - 731,042 562,855 390,112 4,533) 948,434 $ 1,679,476 $ 3,045,561 1,779,386 1,075,806 2,855,192 $ 194,190 805,099 1,188,936 2,188,225 8,660 $ 8,097,638		Provision of thePeriod $ 485,853 - 485,853 541,791 400,734 - 942,525 $ 1,428,378 1,686,119 1,745,806 1,093,581 2,839,387 $ - - 20,606 20,606 9,616 $ 4,555,728		Recovery of thePeriod $ 409,215 - 409,215 562,855 390,112 - 952,967 $ 1,362,182 1,530,812 1,779,386 1,075,806 2,855,192 $ 2,023 - - 2,023 8,660 $ 4,396,687
	(

Note: According to the “Notes to Enhancing the Reserves for Disaster Insurance Provided by Non-Life Insurance Enterprises (Commercial Earthquake Insurance and Typhoon and Flood Insurance)”, issued with Jin-Guan-Bao-Cai-Zi No. 10102515061, November 9, 2012, the special reserves for material accidents are reclassified to the special reserves for contingency reserves.

Based on the “Directions for Strengthening Natural Disaster Insurance (Commercial Earthquake, Typhoon, and Flood Insurance) Reserve by Non-Life Insurance Enterprises”, the “Notes to Enhancing the Reserves of Members of Residential Earthquake Insurance Co-Insurance Organization”, and the Requirement 2 specified in the Letter Jin-Guan-Bao-Cai-Zi No. 10102517095, December 28, 2012, from January 1, 2013, the Company first complements the reserves for material

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accidents for commercial earthquake insurance and typhoon and flood insurance and the special reserves for hazard changes to the full water level with the special reserves accounted under the liabilities provided before December 31, 2012; the remaining, after deducting the income tax, is accounted to the special earning reserves under Equity based on IAS 12.

During January 1 to March 31, 2020, the summary of effects to which the enhancing disaster reserve mechanism, and reserves of enhancing residential earthquake and nuclear energy insurance are listed as follows:

Amount applied Amount not applied Effects		Net Profit $ 130,320 128,702 $ 1,618		Earnings Per Share $ 0.36 0.36 $ -		Total Liabilities	(	Equity
						$ 10,293,289 9,082,360 $ 1,210,929		$ 8,534,003 9,582,687 $ 1,048,684)

During January 1 to March 31, 2019, the summary of effects to which the enhancing disaster reserve mechanism, and reserves of enhancing residential earthquake and nuclear energy insurance are listed as follows:

Amount applied Amount not applied Effects		Net Profit $ 206,176 204,558 $ 1,618		Earnings Per Share $ 0.57 0.56 $ 0.01		Total Liabilities		Equity
						$ 9,755,729 8,528,158 $ 1,227,571		$ 8,779,698 9,815,068 ($ 1,035,370)

XIX. Equity

(I) Capital stock

Common Stock

Authorized shares (thousand) Authorized capital The number of issued and outstanding shares with paid-in capital (thousand shares) Issued and outstanding share capital	March31,2020 600,000 $ 6,000,000 362,200 $ 3,622,004	December31,2019 600,000 $ 6,000,000 362,200 $ 3,622,004	March31,2019	March31,2019
				600,000 $ 6,000,000 362,200 $ 3,622,004

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(II) Capital surplus

Capital surplus
May be used for making up losses, or be distributed cash or provided as the share capital Premium in stock issuance Treasury stock transaction	March31,2020 $ 1,915 97,047 $ 98,692	December31,2019 $ 1,915 97,047 $ 98,692	March31,2019
				$ 1,915 97,047 $ 98,692

Such capital surplus may be used to offset a deficit; when the Company has no deficit, such capital surplus may be distributed as cash dividends or stock dividends up to a certain percentage of the Company’s paid-in capital.

(III) Retained earnings and dividend policy

Based on the distribution of earnings policy in the Company Charter, shall there be earnings after the annual settlement, the earnings shall offset the accumulated deficit from the previous years, and pay all the taxes, and 20% of the remaining shall be provided as the legal reserve. However, if the legal reserve reaches the total capital of the Company, the said requirement is not applicable. When the special reserve is provided or reversed based on laws, the remaining amount may be combined with the balance of the undistributed earnings at the beginning of the year and the adjusted amount of the undistributed earnings of the year, for the purpose of proposing the earnings distributions for the shareholders’ meeting to determine. For the motion for distribution of earnings referred to in the preceding paragraph, the distributable dividends and bonuses, in whole or in part, are paid in cash after a resolution has been adopted by a majority votes at a meeting of the Board of Directors attended by two-thirds of the total number of directors, and a report of such distribution shall be submitted to the shareholders’ meeting. For the policy for distributing compensation of employees and directors specified in the Company Charter, please refer to Note 20 (6), “Compensations of Employees and Directors.”

The Company is an insurance enterprise. As the competition has been intensifying since the opening of the insurance market, by taking into account of the ability of covering of the Company, enhancement of solvency, future needs of funds, and the long-term financial plans, as well as to properly meet the shareholders’

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demand for cash inflows, the Board of Directors takes stable and balanced dividend policy for the profit distribution proposal of the year, and adjust the percentage of the equity dividend and cash dividends upon its discretions. The cash dividends are no less than 10% of the total dividends; however, if the cash dividend per share is lower than NT$ 0.1, it may be distributed in equity.

Based on the “Regulations on Provision of Various Reserves for Insurance Enterprises” amended by the Letter Jin-Guan-Bao-Cai-Zi No. 09802513192, December 28, 2009, from January 1, 2011, the new provisions of the special reserves for material accidents and the special reserves for hazard changes each year shall be accounted to special reserves at the end of each year. Therefore, the earning of this portion shall not be distributed or used of other purpose. As of March 31, 2020 and 2019, the net provision was NT$48,481 thousand and NT$54,805 thousand, respectively. The net provision as of December 31, 2019 was NT$198,646 thousand.

The legal reserve shall be provided until the balance achieve the amount of the total paid-up capital of the Company; the legal reserve can be used to offset the deficits. Where the Company did not operate at a loss, the part of the legal reserve in excess of 25% of the paid-in capital could be taken as capital and may be allocated in cash as well. Furthermore, based on Jin-Guan-Bao-Cai-Zi No. 10202501991, “the insurance enterprises that intend to distribute the legal reserve and capital surplus in cash pro rata to the original holdings of shareholders based on Article 241 of the Company Act shall meet certain criteria”, to enhance the solvency and strengthen the operation of the companies, not only to meet the abovementioned criteria are to be met, the following requirements are also to be met, and such distribution shall be approved by FSC before the shareholders’ meeting, the legal reserve and capital surplus may be distributed in cash based on Article 241 of the Company Act.

The criteria specified in Jin-Guan-Bao-Cai-Zi No. 10202501991 are as follows:

The legal reserve provided based on Paragraph 1, Article 145-1 of the Insurance Act has achieved the total amount of paid in capital or funds.
The ratio of self-owned capital to the risk capital has achieved 250% after deducting the distribution of earnings in cash, cash distributed from capital reserve, and cash distributed from legal reserve.
The latest financial report for the year and six months (if the application date exceeding more than six month over the year) are certified by CPA without reserved opinion.
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The improvements have been made according to the advices for internal control provided by CPA when conducting auditing and certification within the latest year and six months (if the application date exceeding more than six month over the year) .
No fine over NT$ 1 million has been enforced by the competent authorities within the past year. However, shall the tangible improvement against these violations have been made and approved by the competent authorities, the previous requirement does not apply.
Healthy financial business with solvency.
There is no deficit or accumulated deficit, and on other fact showing any material internal control defect or possible hurdle to healthy operations.
The Company has held the meeting of the Board on March 20, 2020, and the
annual general meeting on June 14, 2019, and resolved to pass the distribution of the earnings for 2019 and 2018, respectively, as follows:

Legal reserve Special reserve Cash dividend	Disposition of net earnings 2019 2018 $ 139,252 $ 112,060 197,621 184,465 362,201 325,981	Dividends Per Share ($)	Dividends Per Share ($)
	2019 $ 139,252 197,621 362,201	2019 $ 1.0	2018 $ 0.9

With respect to the 2019 earning distribution, the cash dividends have been allocated upon resolution of the Board of Directors. The remainder will be disposed of per the resolution made at the annual general meeting on June 12, 2020.

(IV) Special reserve

The changes in the special reserve from January 1 to March 31, 2020 and 2019 are stated as follows:

are stated as follows:
Balance at January 1, 2019 Provision of the period Recovery of the period Balance at March 31, 2019 Balance at January 1, 2020 Provision of the period Recovery of the period Balance at March 31, 2020	Special reserves $ 1,536,861 - ( 3,070) $ 1,533,791 $ 1,735,507 - ( 14,062) $ 1,721,445	Provisions by initial application of IFRSs $ 671,714 - - $ 671,714 $ 671,714 - ( 3,111) $ 668,603		Special reserve form fin-tech employee transformation $ 6,554 - - $ 6,554 $ 8,330 - - $ 8,330		Total
	( (	(			( (	$ 2,215,129 - 3,070) $ 2,212,059 $ 2,415,551 - 17,173) $ 2,398,378

When the Company initially applied IFRSs, the unrealized value added amount from the re-evaluation is NT$ 698,510 thousand, and the special reserve has been

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provided for the same amount. As of the reporting date, for the disposal of property and equipment, NT$29,907 thousand of special reserve provided for the unrealized value added amount from the re-evaluation for real estate, will be reversed.

The special reserve provided for the investment property other than lands when initially applying IFRSs, may be reversed period by period during the usage period. The special reserve provided for lands, may be reversed when being disposed or reclassified. When distributing earnings, the special reserve shall be provided for the difference between the net deduction under other equity to shareholders and the special reserve provided for the initial application of IFRSs. Afterwards, if there is any reversal for the deduction under other equity to shareholders, the reversed portion may be distributed of earnings.

Based on Jin-Guan-Bao-Cai-Zi No. 10502066461 Letter on July 13, 2016, to respond to the development trend of fin-tech, assist the employees of insurance enterprises, and protect their interests, an insurance enterprises shall, when distributing the earnings of FY 2016 to 2018, a special reserve shall be made based on the range of 0.5% to 1% of after-tax earning against the distributable earnings. According to the decree under Jin-Guan-Bao-Cai-Zi No. 10804932431 dated July 30, 2019, since the fiscal year of 2019, when disbursing related expenses, the insurance industry may reverse the same amount within the balance of the special reserve provided by the earnings of the fiscal years of 2016~2018.

(V) Other equity

Unrealized valuation gain and losses on financial assets at fair value through other

comprehensive income

comprehensive income
Balance - beginning Those yielded in the current term Unrealized profit/loss Liability instruments Equity instrument Adjustment to the allowance loss of bond instrument Other comprehensive profit (loss) this term The accumulated profit/loss by disposing equity instrument transferred to the retained earnings Balance - ending	From January 1 to March 31, 2020 ($ 46,941) 1,878 ( 323,801) ( 67) ( 321,990) - ($ 368,931)	From January 1 to March 31, 2019
		( (	$ 345,480) 8,588 151,742 188 160,518 - $ 184,962)

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XX. Net Income from continuing operation

(I) Gain on financial assets and liabilities at fair value through profit or loss

Gain (loss) on disposal Gain (loss) on valuation Equity instrument Liability instruments Gain (loss) on investment properties Rental revenue from investment property Gain/Loss of disposal of investment properties Direct operational expenses of investment properties	From January 1 to March 31, 2020 $ 129 ( 34,188) 9,588 ($ 24,471) From January 1 to March 31, 2020 $ 30,687 23,723 ( 8,935) $ 45,475	From January 1 to March 31, 2019	From January 1 to March 31, 2019
		$ 27,415 3,413 ( 227) $ 30,601 From January 1 to March 31, 2019
	(	(	$ 35,914 - 7,677) $ 28,237

(II) Gain (loss) on investment properties

(III) Expected credit losses or reversal of expected credit losses of investments

Bond instruments measured at fair value through other comprehensive income	From January 1 to March 31, 2020 $ 67	From January 1 to March 31, 2019	From January 1 to March 31, 2019
		(	$ 188)

(IV) Gain (loss) of Foreign Currency Exchange

Gain (loss) of investment exchange Other gain (loss) of exchange	From January 1 to March 31, 2020 $ 1,436 ( 625) $ 811	From January 1 to March 31, 2019	From January 1 to March 31, 2019
	(		$ 7,839 1,692 $ 9,531

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(V) Summary of nature of employee benefits, depletion and amortization

	FromJanuary1toMarch31,2020	FromJanuary1toMarch31,2020	FromJanuary1toMarch31,2020	FromJanuary1toMarch31,2019	FromJanuary1toMarch31,2019	FromJanuary1toMarch31,2019
	Classified as operating cost	Classified as operating expense	Total	Classified as operating cost	Classified as operating expense	Total
Employee fringe benefit expenses	$ 63,849	$ 194,347	$ 258,196	$ 63,131	$ 189,848	$ 252,979
Salaries expense	63,849	155,197	219,046	63,131	151,846	214,977
Expenses for labor and health insurance	-	18,730	18,730	-	15,090	15,090
Pension expense	-	7,443	7,443	-	7,265	7,265
Remuneration to directors	-	11,477	11,477	-	12,516	12,516
Other employee fringe benefit expenses	-	1,500	1,500	-	3,131	3,131
Depreciation expense - Property and equipment	-	3,755	3,755	-	3,656	3,656
Depreciation expense - Investment oriented real estate	4,881	-	4,881	3,435	-	3,435
Depreciation expense - Right-of-use assets	-	6,230	6,230	-	8,087	8,087
Amortization expenses	-	728	728	-	489	489

Note: As of March 31, 2020 and 2019, the number of employee is 904 and 893, respectively; among them, nine directors do not concur as employees.

(VI) Compensation to Employees and Remuneration to Directors

Based on the Company Charter, the Company provide the employees’ compensation and directors’ remuneration at 1 - 5% and under 5% of the pre-tax profit before distributing the compensation to employees and directors of the year, respctively. From January 1 to March 31, 2020 and 2019, the estimated compensations to employees and directors are as the following:

Percentage of estimation

Percentage of estimation
Employee Compensation Directors’ remuneration	From January 1 to March31,2020 2.5% 2.5%	From January 1 to March31,2019
		2.5% 2.5%

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Amount

Amount
Employee Compensation Directors’ remuneration	From January 1 to March 31, 2020 $ 4,309 $ 4,309	From January 1 to March 31, 2019
			$ 6,580 $ 6,580

Shall there be any change to the annual financial report after the reporting date, the accounting treatment shall be applied, and the adjustment is accounted in the next year.

The estimated employees’ compensation and directors’ remuneration for 2019 and 2018 are respectively resolved by the Board of Directors on March 20, 2020 and March 22, 2019, as the following:

March 22, 2019, as the following:
Employee Compensation Directors’ remuneration	2019 Cash $ 21,939 $ 21,939	2018
		Cash
		$ 17,721 $ 17,721

The actual resolved amounts for the employees’ compensation and directors’ remuneration for 2019 and 2018 are not different form the amounts recognized in the financial statement of 2019 and 2018.

For the employees’ compensation and directors’ remuneration for 2020 and 2019 resolved by the Board of Directors, please check the “Market Observation Post System” at TWSE.

XXI. Income tax of the units in continued business operation

(I) Income tax recognized in profit and/or loss

The income tax expenses are primarily composed of the following items:

Income tax for the year Those yielded in the current period Deferred income tax Those yielded in the current period The income tax expenses recognized in profit and/or loss	From January 1 to March 31, 2020 $ 34,497 ( 1,094) $ 33,403	From January 1 to March 31, 2019	From January 1 to March 31, 2019
	(		$ 40,625 3,251 $ 43,876

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(II) Income tax liabilities of the current term

Income tax liabilities of the current term Income tax payable	March31,2020 $ 98,591	December31,2019 $ 64,964	March31,2019	March31,2019
				$ 110,434

(III) Verification of income tax

The Company’s profit-seeking enterprise income tax returns through 2018 have been examined and approved by the tax authority.

XXII. Earnings Per Share (EPS)

Earnings Per Share (EPS)
Basic EPS Diluted EPS	From January 1 to March 31, 2020 $ 0.36 $ 0.36	From January 1 to March 31, 2019
			$ 0.57 $ 0.57

The average amounts of shares for calculating the net profit of EPS and the average weighted of common shares are as follows:

Net Profit

Net Profit
Net profit attributed to the shareholders of the Company/ Net profit used to calculate EPS Net profit attributed to the shareholders of the Company/ Net profit used to calculate diluted EPS Shares The weighted average number of common shares to be used to calculate basic EPS Potential impact of common stock with dilution: Employee Compensation The weighted average number of common shares to be used to calculate diluted EPS	From January 1 to March 31, 2020 From January 1 to March 31, 2019 $ 130,320 $ 206,176 $ 130,320 $ 206,176 Unit: Thousand shares From January 1 to March 31, 2020 From January 1 to March 31, 2019 362,200 362,200 1,330 1,115 363,530 363,315	From January 1 to March 31, 2019
			362,200 1,115 363,315

If the Company may opt to release the employees’ compensation in shares or cash, the calculation of diluted EPS assumes the employees’ compensation is

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released in shares, and included the weighted average outstanding shares when such common shares have diluting effect, to calculate the diluted EPS. When calculating the diluted EPS before resolving the amount of shares to be released as the employees’ compensation in the next year, the diluting effects of such potential common shares are taken into account still.

XXIII. Financial instruments

(I) Information of Fair Value - financial instruments at fair value on the repetitive basis.
Level of fair value

March 31, 2020

March 31, 2020
Financial assets at fair value through profit or loss TSEC/GTSM listed shares Beneficiary certificates of funds Domestic financial bonds Domestic corporate bonds Total Financial assets at fair value through other comprehensive income Investments in equity instruments - TSEC/GTSM listed shares - Unlisted domestic shares Investments in liability instruments - Domestic financial bonds - Domestic corporate bonds - Overseas corporate bonds - Overseas financial bonds Total		Level 1 $ 321,069 76,719 - 10,100 $ 407,888 $ 2,626,043 - - - - - $ 2,626,043		Level 2 $ - - - - $ - $ - - 150,166 104,552 756,310 - $ 1,011,028		Level 3 $ - - 886,967 521,033 $ 1,408,000 $ - 379,681 - - - 151,000 $ 530,681		Total
								$ 321,069 76,719 886,967 531,133 $ 1,815,888 $ 2,626,043 379,681 150,166 104,552 756,310 151,000 $ 4,167,752

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December 31, 2019

December 31, 2019
Financial assets at fair value through profit or loss TSEC/GTSM listed shares Beneficiary certificates of funds Domestic financial bonds Domestic corporate bonds Total Financial assets at fair value through other comprehensive income Investments in equity instruments - TSEC/GTSM listed shares - Unlisted domestic shares Investments in liability instruments - Domestic financial bonds - Domestic corporate bonds - Overseas corporate bonds - Overseas financial bonds Total		Level 1 $ 255,708 101,131 - 10,385 $ 367,224 $ 2,863,573 - - - - - $ 2,863,573		Level 2 $ - - - - $ - $ - - 150,240 104,697 755,041 - $ 1,009,978		Level 3 $ - - 886,425 511,703 $ 1,398,128 $ - 365,862 - - - 150,000 $ 515,862		Total
								$ 255,708 101,131 886,425 522,088 $ 1,765,352 $ 2,863,573 365,862 150,240 104,697 755,041 150,000 $ 4,389,413

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March 31, 2019

March 31, 2019
Financial assets at fair value through profit or loss TSEC/GTSM listed shares Beneficiary certificates of funds Domestic financial bonds Domestic corporate bonds Total Financial assets at fair value through other comprehensive income Investments in equity instruments - TSEC/GTSM listed shares - Unlisted domestic shares Investments in liability instruments - Domestic government bonds - Domestic financial bonds - Domestic corporate bonds - Overseas corporate bonds - Overseas financial bonds Total		Level 1 $ 321,144 237,582 - 10,400 $ 569,126 $ 2,409,699 - - - - - - $ 2,409,699		Level 2 $ - - - - $ - $ - - 66,649 180,398 50,005 340,640 - $ 637,692		Level 3 $ - - 839,611 403,771 $ 1,243,382 $ - 475,946 - - - - 153,896 $ 629,842		Total
								$ 321,144 237,582 839,611 414,171 $ 1,812,508 $ 2,409,699 475,946 66,649 180,398 50,005 340,640 153,896 $ 3,677,233

There was no transfer between fair value measurement level 1 and level 2 in 2020 and January 1 to March 31, 2019.

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Reconciliation for the financial instruments measured at fair value level 3

From January 1 to March 31, 2020

From January 1 to March 31, 2020
Financial assets at fair value through profit or loss Financial assets Liability instruments Balance - beginning $ 1,398,128 Recognized in Profit/Loss (gain/loss on financial assets and liabilities at fair value through profit or loss) 9,872 Recognized into income－ exchange profit and/or loss - Recognized in other comprehensive income (unrealized profit/loss at fair value through other comprehensive income) - Add - Balance - ending $ 1,408,000 Other unrealized gain/loss of the period $ 9,872 From January 1 to March 31, 2019 Financial assets at fair value through profit or loss Financial assets Liability instruments Balance - beginning $ 1,244,060 Recognized in Profit/Loss (gain/loss on financial assets and liabilities at fair value through profit or loss) ( 678) Recognized into income－ exchange profit and/or loss - Recognized in other comprehensive income (unrealized profit/loss at fair value through other comprehensive income) - Disposition - Balance - ending $ 1,243,382 Other unrealized gain/loss of the period ($ 678)		Financial assets at fair value through other comprehensive income Liability instruments Equity instrument $ 150,000 $ 365,862 - - 1,000 - - ( 6,283) - 20,102 $ 151,000 $ 379,681 $ 1,000 $ - Financial assets at fair value through other comprehensive income Liability instruments Equity instrument $ 152,202 $ 451,809 - - 450 - 51,344 24,137 50,100) - $ 153,896 $ 475,946 $ 450 $ -	Total

			$ 1,913,990 9,872 1,000 ( 6,283) 20,102 $ 1,938,681 $ 10,872 Total
Financial assets Balance - beginning Recognized in Profit/Loss (gain/loss on financial assets and liabilities at fair value through profit or loss) Recognized into income－ exchange profit and/or loss Recognized in other comprehensive income (unrealized profit/loss at fair value through other comprehensive income) Disposition Balance - ending Other unrealized gain/loss of the period
		Liability instruments $ 152,202 - 450 51,344 50,100) $ 153,896 $ 450
	(		$ 1,848,071 ( 678) 450 75,481 ( 50,100) $ 1,873,224 ($ 228)

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The evaluation skills and inputs for Level 2 fair value measurement

	Categories of financial
	instruments	Evaluation skills and inputs
	TSEC/GTSM listed bond	Cash Flow Discount Method: Discounting
	investments	Based on the Market Interest Rate
		Reflecting the Similar Products of the
		Issuers at the End of Period and the Credit
		Rating.
	The evaluation skills and inputs for Level 3 fair value measurement
	Categories of financial
	instruments	Evaluation skills and inputs
	TWSE/TPEx listed	Based on cash flow discount approach, the
	bond/overseas bond	present value of incomes to be obtained by
	investments	holding the investment. The material
		unobservable input is the discount factor
		(yield), is obtained by considering the
		premium reward of risks and the reference
		interest rate of corporate bonds.
	Investments in unlisted	Based on the asset-based approach, reflect the
	domestic shares	entire value of the enterprise or business in
		terms of the total market values for the
		individual assets and liabilities applicable
		to the evaluated subject. The material
		unobservable input is the liquidity discount,
		minority interest discount, and financial
		information of the investees.

The evaluation skills and inputs for Level 3 fair value measurement

The Company’s measurement of the fair value of financial instruments is reasonable; however, if different evaluation models or parameters are applied, the outcome of evaluations may be different. For the financial instrument classified as Level 3, the effects to the profit/loss or other Comprehensive Income for the period when evaluation parameters change are as follows:

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Item	Inputs value	Ranges	Upward or downward changes	Changes of fair value reflect to the other comprehensive income of the period	Changes of fair value reflect to the other comprehensive income of the period
				Positive change	Negative change
March 31, 2020 Assets Bond investment Stock investment December 31, 2019 Assets Bond investment Stock investment March 31, 2019 Assets Bond investment Stock investment	Discount Rate Financial Information of the Investees Liquidity Discount Minority Interest Discount Discount Rate Financial Information of the Investees Liquidity Discount Minority Interest Discount Discount Rate Financial Information of the Investees Liquidity Discount Minority Interest Discount	1.60%~4.17% $232~$158,811 10%~20% 10% 1.87%~4.35% $234~$163,086 10% 10% 2.26%~ 4.03% $1,950~$158,315 10% 10%	100 bp change upward 5% change downward 10% change downward 10% change downward 100 bp change upward 5% change downward 10% change downward 10% change downward 100 bp change upward 5% change downward 10% change downward 10% change downward	$ - - - - $ - - - - $ - - - -	( $ 355,547 ) 1,009 ( 42,466 ) ( 30,776 ) ( $ 377,292 ) ( 6,566 ) ( 40,651 ) ( 40,651 ) ( $ 257,575 ) ( 10,772 ) ( 52,883 ) ( 52,883 )

The positive and negative changes of the Company refer to the fluctuation of the fair value; the fair value is obtained by calculating with the evaluation skills of the unobservable input parameters at different degrees.

Shall the financial instrument is affected by one or more inputs, the table above only reflect the effect incurred from one single input change, without considering the relativeness and variability among inputs.

48 -

(II) Categories of financial instruments

Financial assets Financial assets at fair value through profit and loss Financial assets carried at amortized cost (note 1) At fair value through other comprehensive income Investments in equity instruments Investments in liability instruments Financial liabilities at amortized cost (note 2)	March31,2020 $ 1,815,888 8,037,527 3,005,724 1,162,028 1,339,246	December31,2019 $ 1,765,352 7,849,322 3,229,435 1,159,978 1,019,943	March31,2019
			$ 1,812,508 8,190,631 2,885,645 791,588 912,084

Note 1: The balance includes the financial assets at amortized costs, such as cash and cash equivalents, note receivables, premium receivables, other receivables, claim recoverable from reinsurers, due from reinsurers and ceding companies, other financial assets - net, and refundable deposits.
Note 2: The balance includes financial liabilities at amortized costs, such as the claims payable, commissions payable, due to reinsurers and ceding companies, other payable, and refundable deposit.

(III) The objectives and policies of financial risk management

The major financial assets of the Company include the equity and bond instrument investment, receivables, and payables. The financial management department of the Company supervises, and manages the financial risks related to the Company’s operation based on internal risk report analyzing the degrees and breadth of exposures. Such risks include market risks (including foreign exchange risks, interest rate risks, and other price risks), credit risks and liquidity risks. The Risk Management Committee established by the Company is the independent organization established solely for supervising risks and policy implementation to reduce exposures.

1. Market risk

The operating activities of the Company cause the Company to assuming the major financial risks as the risk of foreign exchange change (refer to following (1)) and the risk of interest rate change (refer to following (2)).

49 -

The Company’s exposure to market risks of financial instruments, and approaches toward managing the measuring such exposures have not changed. (1) Foreign exchange rate risk

For the currency assets and currency liabilities denominated in non-functional currency on the balance sheet date, please refer to Note 29.

Analysis of sensitivity

The Company is mainly affected by the fluctuation of USD.

The following table explains in detail the analysis of sensitivity when the exchange rates of NT$ (the functional currency) against other related foreign currencies increase or decrease 1%. 1% is the sensitivity percentage used when internally reporting the exchange rate risks to the major management, as well as represents the evaluation for the reasonably possible extent of changes of foreign exchange by the management. The analysis of sensitivity only includes the outstanding foreign currency items, and the translation at the end of period is adjusted at 1% of exchange rate change. The positive figures in the following table are the amount increased for the pre-tax net profit or equity when NT$ against the related currencies appreciate 1%; when NT$ against the related currencies depreciate 1%, the effects to the pre-tax net profit or equity will be negative at the same amount.

Income (i) Equity	Effects from USD From January 1 to March 31, 2020 From January 1 to March 31, 2019 $ 8,750 $ 7,366 - -	Effects from CNY
	From January 1 to March 31, 2020 $ 8,750 -	From January 1 to March 31, 2020 From January 1 to March 31, 2019
		$ 2,585 $ 2,781 - -

(i) Mainly originated from the outstanding USD and CNY denominated financial instruments without being hedged against the cash flows.

(2) Interest rate risks

At the balance sheet date, the carrying amount of financial assets exposed to interest rates are as follows:

50 -

March 31, 2020 December 31, 2019 March 31, 2019

==> picture [346 x 36] intentionally omitted <==

Analysis of sensitivity

The following analyses of sensitivity are determined based on the interest rate exposure of the non-derivative instruments at the balance sheet dates. When internally reporting the interest rates to the major management, the variable interest rates applied is the interest rates increase or decrease 100 base points, and also represent the evaluation for the reasonably possible extent of changes of interest rate by the management.

If the interest rate increases for 100 base points, while other variables are kept the same, the other comprehensive income after tax during January 1 to March 31, 2020 and 2019 will decrease NT$428,960 thousand and NT$309,945 thousand, respectively, the main reason is the changes from the fair value of the fixed interest rate debt instruments.

(3) Other Price Risks

The Company suffered the equity price risk arising from the investment in equity securities and beneficiary certificates of funds.

Analysis of sensitivity

The following analyses of sensitivity are determined based on the price risk over equity securities and beneficiary certificates of funds at the balance sheet dates.

If the equity price increased/dropped by 1%, the income before tax would have increased/decreased by NT$3,978 thousand and NT$5,587 thousand due to the increase/decrease in the fair value of financial assets at fair value through profit or loss from January 1 to March 31, 2020 and 2019. The other comprehensive income would have increased/decreased by NT$30,057 thousand and NT$28,856 thousand due to the increase/decrease in the fair value of other financial assets at fair value through comprehensive income from January 1 to March 31, 2020 and 2019.

51 -

2. Credit risk

Credit risk represents the potential loss that would be incurred by the Company if the counter-parties or third parties breached the contracts. The Company’s financial instruments are affected by its credit risk concentration, component, contract amounts and other receivables. As the counterparties of the Company are the creditworthy financial institutions with low possibility of default, it is expect the material credit risk is unlikely.

- Credit risk exposure by territory

March 31, 2020

March 31, 2020
Financial assets	Taiwan	Asia	America	Others	Total
Cash and cash equivalents	$ 3,186,337	$ -	$ -	$ -	$ 3,186,337
Financial assets at fair value through profit or loss	1,418,100	-	-	-	1,418,100
Financial assets at fair value through other comprehensive income	1,149,737	319,805	62,939	246,136	1,778,617
Total	$ 5,754,174	$ 319,805	$ 62,939	$ 246,136	$ 6,383,054
% by territory	90.15%	5.01%	0.99%	3.85%	100.00%

December 31, 2019

December 31, 2019
Financial assets	Taiwan	Asia	America	Others	Total
Cash and cash equivalents	$ 3,384,021	$ -	$ -	$ -	$ 3,384,021
Financial assets at fair value through profit or loss	1,408,513	-	-	-	1,408,513
Financial assets at fair value through other comprehensive income	1,145,192	316,540	63,806	250,229	1,775,767
Total	$ 5,937,726	$ 316,540	$ 63,806	$ 250,229	$ 6,568,301
% by territory	90.40%	4.82%	0.97%	3.81%	100.00%

March 31, 2019

March 31, 2019
Financial assets	Taiwan	Asia	America	Others	Total
Cash and cash equivalents	$ 3,400,695	$ -	$ -	$ -	$ 3,400,695
Financial assets at fair value through profit or loss	1,253,782	-	-	-	1,253,782
Financial assets at fair value through other comprehensive income	1,124,979	216,609	-	-	1,341,588
Total	$ 5,779,456	$ 216,609	$ -	$ -	$ 5,996,065
% by territory	96.39%	3.61%	-	-	100.00%

52 -

3. Liquidity risk

The companies maintained sufficient fund to meet our operating capital requirements. Therefore, no liquidity risks associated with failure to source required funding are anticipated.

Liquidity of non-derivative financial liabilities and statement of interest rate risk

The following Table shows the analysis on the remaining contractual maturity for the non-derivative financial liabilities for which the Company has agreed on the repayment term. It was prepared based on the earliest date the Company might be asked to make the repayment, as well as the undiscounted cash flow from the financial liabilities.

March 31, 2020

March 31, 2020
On demand or shorter than 3 months Liabilities without interest $ 686,532 Lease liabilities 5,411 $ 691,943 December 31, 2019 On demand or shorter than 3 months Liabilities without interest $ 766,915 Lease liabilities 5,849 $ 772,764 March 31, 2019 On demand or shorter than 3 months Liabilities without interest $ 634,113 Lease liabilities 5,173 $ 639,286	3 months - 1 year $ 408,129 19,440 $ 427,569 3 months - 1 year $ 10,551 21,562 $ 32,113 3 months - 1 year $ 55,874 29,271 $ 85,145	1-5 years $ 27,884 39,666 $ 67,550 1-5 years $ 22,191 43,135 $ 65,326 1-5 years $ 23,215 64,517 $ 87,732	More than 5 years
			$ 735 - $ 735 More than 5 years
Liabilities without interest Lease liabilities March 31, 2019 Liabilities without interest Lease liabilities
			$ 5,910 - $ 5,910 More than 5 years
			$ 9,410 - $ 9,410

(IV) Based on Article 7 of the “Regulations Governing Insurance Enterprises Engaging in

Operating Reinsurance and Other Risk Spreading Mechanisms”, the unqualified counterparties for the ceding reinsurance of the Company March 31, 2020 are as follows:

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Counterparties of Reinsurance	Insurance type
Lemma Insurance Company	Temporary ceding reinsurance for marine hull insurance
Tugu Insurance Company Limited	Temporary ceding reinsurance for commercial fire insurance, marine cargo insurance, and marine hull insurance.
Trust International Insurance & Reinsurance Company B.S.C.(c), Trust Re	Temporary ceding reinsurance for commercial fire insurance, and marine hull insurance.
Asia Capital Reinsurance Group Pte Ltd	Temporary ceding reinsurance for marine hull insurance and aviation insurance, and cargo reinsurance.
Asia Capital Reinsurance Group Pte Ltd Hong Kong Branch Office	Temporary ceding reinsurance for commercial fire insurance, engineering insurance, and fishing vessel insurance, and cargo reinsurance.

The ineligible premium expense was NT$3,805 thousand; the ineligible reinsurance reserves was NT$8,087 thousand. The components include ceding unearned premium reserves for NT$1,903 thousand, claim recoverable from reinsurers to the reported and paid claims for NT$688 thousand, and the ceding claims reported but not claimed reserves for NT$5,496 thousand.

Based on Article 7 of the “Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms”, the unqualified counterparties for the ceding reinsurance of the Company March 31, 2019 are as follows:

2019 are as follows:
Counterparties of Reinsurance	Insurance type
Lemma Insurance Company	Temporary ceding reinsurance for marine hull insurance
Tugu Insurance Company Limited	Temporary ceding reinsurance for commercial fire insurance, marine cargo insurance, and marine hull insurance.
Trust International Insurance & Reinsurance Company B.S.C.(c), Trust Re	Temporary ceding reinsurance for commercial fire insurance, and marine hull insurance.

The unqualified premium expense is NT$ 0 thousand, the reserves for unqualified reinsurance is NT$4,543 thousand, all belongs to the ceding claims reported but not claimed reserves.

54 -

XXIV. Transactions with Related Parties

(I) Information about the Company’s related parties were as follows

Name of the Related Party Relationship with the Company Bank of Taiwan Co., Ltd. Major Management Yong-Shin Development Co., Ltd. Major Management Tong-Sheng Development Co., Ltd. Investor with significant effects Navigator Real Estate Co., Ltd. Investor with significant effects Navigator Investment Co., Ltd. Investor with significant effects Taiwan Navigator Asset Investment Co., Ltd. Related party in substance Taiwan Business Bank, Ltd. Related party in substance Goldsun Building Materials Co., Ltd. Related party in substance Tsun Chueh Leasing Co., Ltd. Related party in substance Bank Taiwan Insurance Brokers Co., Ltd. Related party in substance Taiming Assurance Broker Co., Ltd. Related party in substance Sirtec International Co.,Ltd Related party in substance Hua Nan Commercial Bank , Ltd. Related party in substance Forland Auto Trade Holding Co., Ltd. Taipei Related party in substance Branch (Cayman) Aiya Industrial Co., Ltd. Related party in substance Wellpool Co., Ltd. Related party in substance Great Taipei Co., Ltd. Related party in substance Other related parties Directors, supervisors, chairman, president, managers, their spouses, and the relatives within 2nd degree of kinship

(II) Significant related-party transactions were as follows

Deposit

Checking deposits and Demand deposits:

Major Management Bank of Taiwan Co., Ltd. Related party in substance Taiwan Business Bank Hua Nan Commercial Bank	March31,2020 $ 654,904 95,859 1,922 $ 752,685	December31,2019 $ 780,942 77,053 1,465 $ 859,460	March31,2019
			$ 780,580 69,241 405 $ 850,226

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Time deposits (including cash and cash equivalents, and other financial assets listed in accounts):

Major Management Bank of Taiwan Co., Ltd. Related party in substance Taiwan Business Bank Hua Nan Commercial Bank	March31,2020 $ 264,065 140,017 - $ 404,082	December31,2019 $ 263,185 139,961 - $ 403,146	March31,2019
			$ 317,362 154,461 3,000 $ 474,823

The time deposits in the related parties apply the interest rate of 0.09%~2.85% as of March 31, 2020. As of December 31 and March 31, 2019, the interest rates were 0.09%~2.55% and 0.09%~3.75%, with same transaction terms as non-related parties’.

Premium income (direct policy writing)

Major Management Bank of Taiwan Co., Ltd. Related party in substance Tsun Chueh Leasing Co., Ltd. Goldsun Building Materials Co., Ltd. Sirtec International Co.,Ltd Aiya Industrial Co., Ltd. Wellpool Co., Ltd. Great Taipei Co., Ltd. Other related parties	From January 1 to March 31, 2020 $ 4,120 - 356 21 226 23 252 22,740 $ 27,738	From January 1 to March 31, 2019	From January 1 to March 31, 2019
			$ 250 610 160 33 226 321 252 616 $ 2,468

The insurances to the abovementioned related parties provide the same insurance conditions to unrelated parties.

56 -

3. Claims (direct policy writing)

Claims (direct policy writing)
Major Management Bank of Taiwan Co., Ltd. Related party in substance Sirtec International Co.,Ltd Goldsun Building Materials Co., Ltd. Other related parties	From January 1 to March 31, 2020 $ 348 - - - $ 348	From January 1 to March 31, 2019
			$ - 554 189 2 $ 745

The insurances to the abovementioned related parties provide the same claim conditions to unrelated parties.

Commission expenditure

Commission expenditure
Major Management Bank of Taiwan Co., Ltd. Related party in substance Bank Taiwan Insurance Brokers Co., Ltd. Taiming Assurance Broker Co., Ltd. (TABC)	From January 1 to March 31, 2020 $ 693 6,767 2,614 $ 10,074	From January 1 to March 31, 2019
			$ 599 6,027 2,548 $ 9,174

The insurances to the abovementioned related parties provide the same commission conditions to unrelated parties.

Lessor Agreement

Operating lease

The operating leases of the Company for the investment properties have the lease period of one to ten years. When the lessees exercise the right of continual lease, the rents are agreed to be adjusted based on the market price. Upon the end of the leasehold duration, the lessees are not entitled to preferential lease right over the investment properties.

The future lease payments to be received are aggregated as the following:

57 -

Type/Name of the Related Parties Major Management Yong-Shin Development Co., Ltd. Investor with significant effects Navigator Real Estate Co., Ltd. Tong-Sheng Development Co., Ltd. Navigator Investment Co., Ltd. Related party in substance Taiwan Navigator Assets Forland Auto Trade Holding Co., Ltd. Taipei Branch (Cayman) Sirtec International Co.,Ltd Taiming Assurance Broker Co., Ltd. (TABC)	March 31, 2020 $ 310 744 465 310 $ 1,829 1,085 7,704 17,913 $ 30,360	December 31, 2019 $ 330 792 495 330 $ 1,947 1,155 9,864 20,075 $ 34,988	March 31, 2019	March 31, 2019
				$ 450 1,080 675 450 $ 2,655 1,575 15,050 28,958 $ 50,893

(1) The details of the rents received by leasing the investment properties to

the related parties are as follows:

Major Management Yong-Shin Development Co., Ltd. Investor with significant effects Navigator Real Estate Co., Ltd. Tong-Sheng Development Co., Ltd. Navigator Investment Co., Ltd. Related party in substance Taiwan Navigator Assets Forland Auto Trade Holding Co., Ltd. Taipei Branch (Cayman) Sirtec International Co.,Ltd Taiming Assurance Broker Co., Ltd. (TABC)	From January 1 to March31,2020 $ 19 46 29 19 113 67 1,650 2,063 $ 4,006	From January 1 to March31,2019	From January 1 to March31,2019
			$ 19 45 29 19 113 67 1,331 2,063 $ 3,686

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(2) The deposits the Company received for leasing properties to the related parties as of March 31, 2020, and December 31 and March 31, 2019 are as follows:

as follows:
Major Management Yong-Shin Development Co., Ltd. Investor with significant effects Navigator Real Estate Co., Ltd. Tong-Sheng Development Co., Ltd. Navigator Investment Co., Ltd. Related party in substance Forland Auto Trade Holding Co., Ltd. Taipei Branch (Cayman) Taiwan Navigator Assets Sirtec International Co.,Ltd Taiming Assurance Broker Co., Ltd. (TABC)	March31,2020 $ 20 48 30 20 70 118 1,652 1,615 $ 3,573	December31,2019 $ 20 48 30 20 70 118 1,652 1,615 $ 3,573	March31,2019
				$ 20 48 30 20 70 118 1,652 1,615 $ 3,573

The abovementioned property leasing to the related parties provided the transaction conditions similar to ordinary transactions.

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6. Lessee Agreement

Lessee Agreement
Type/Name of the Related Parties March Right-of-use assets Investor with significant effects Navigator Real Estate Co., Ltd. $ Lease liabilities Investor with significant effects Navigator Real Estate Co., Ltd. $ Type/Name of the Related Parties Interest expense Investor with significant effects Navigator Real Estate Co., Ltd. Total amount of cash (outflow) of lease Investor with significant effects Navigator Real Estate Co., Ltd. Lease expenses Investor with significant effects Navigator Real Estate Co., Ltd.	March		31, 2020 December 31, 2019 March 31, 2019 4,641 $ 5,201 $ 6,882 4,845 $ 5,415 $ 6,832 From January 1 to March 31, 2020 From January 1 to March 31, 2019 $ 32 $ 46 $ 602 $ 874 $ - $ 53	March 31, 2019
		$
		$

Interest expense Investor with significant effects Navigator Real Estate Co., Ltd. Total amount of cash (outflow) of lease Investor with significant effects Navigator Real Estate Co., Ltd. Lease expenses Investor with significant effects Navigator Real Estate Co., Ltd.					$ 46 $ 874 $ 53

Leasing properties from Navigator Real Estate Co., Ltd. that has significant effects provided the transaction conditions similar to ordinary transactions.

The Company has leased properties from Navigator Real Estate Co., Ltd. which has significant effects, the outstanding balance of paid deposit at March 31, 2020, and December 31 and March 31, 2019 were both NT$ 482 thousand.

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(III) Incentive remuneration to key management level

The total salaries and remunerations to directors and other key management in

2020 and January 1 to March 31, 2019 are enumerated below:

Short-term employee benefits Post-employment benefits	From January 1 to March 31, 2020 $ 37,623 576 $ 38,199	From January 1 to March 31, 2019	From January 1 to March 31, 2019
			$ 32,223 495 $ 32,718

The salaries and remunerations to directors and other key management were determined by the Salary Committee in accordance with the personal performances and trends in the markets.

XXV. Others

(I) Gross retained earned premium
As of March 31, 2020, the balance of the gross retained earned premium for the

compulsory and non-compulsory insurance, and the calculation are as follows:

compulsory and non-compulsory insurance, and the calculation are as follows:	compulsory and non-compulsory insurance, and the calculation are as follows:	compulsory and non-compulsory insurance, and the calculation are as follows:	compulsory and non-compulsory insurance, and the calculation are as follows:	compulsory and non-compulsory insurance, and the calculation are as follows:
Insurance type Premium income (1) Reinsurance premium income (2) Reinsurance premium outward (3) Premium retained (4)＝(1)＋(2)－(3) Compulsory insurance $ 216,261 $ 61,155 $ 102,763 $ 174,653 Non-Compulsory insurance 1,552,975 33,968 510,184 1,076,759 $ 1,769,236 $ 95,123 $ 612,947 $ 1,251,412 Item Unearned premium reserves for directinsurance Unearned premium reserves for reinsuranceinwards Net change in unearned premium reserves (9)=(5)－ (6)+(7)－(8) Reserve (5) Recovery (6) Reserve (7) Recovery (8) Compulsory insurance $ 344,993 $ 338,780 $ 144,987 $ 144,516 $ 6,684 Non-Compulsory insurance 1,257,134 1,053,440 48,193 55,536 196,351 $ 1,602,127 $ 1,392,220 $ 193,180 $ 200,052 $ 203,035
			$	174,653 1,076,759 1,251,412 Net change in unearned premium reserves (9)=(5)－ (6)+(7)－(8)
			$

	Reserve (7) $ 144,987 48,193 $ 193,180	Recovery (8)
		$ 144,516 55,536 $ 200,052		$ 6,684 196,351 $ 203,035

Item Compulsory insurance Non-Compulsory insurance	Unearned premium reserves for ceding reinsurance inward Reserve (10) Recovery (11) $ 206,999 $ 203,272 321,816 222,186 $ 528,815 $ 425,458	Ceding net change in unearned premium reserves (12)=(10)－(11) $ 3,727 99,630 $ 103,357	Gross retained earned premium (13)=(4)－(9)+(12) $ 171,696 980,038 $ 1,151,734	Gross retained earned premium (13)=(4)－(9)+(12) $ 171,696 980,038 $ 1,151,734
				$ 171,696 980,038 $ 1,151,734

61 -
As of March 31, 2019, the balance of the gross retained earned premium for the compulsory and non-compulsory insurance, and the calculation are as follows:

compulsory and non-compulsory insurance, and the calculation are as follows:	compulsory and non-compulsory insurance, and the calculation are as follows:	compulsory and non-compulsory insurance, and the calculation are as follows:	are as follows:	are as follows:	are as follows:
Insurance type Premium income (1) Reinsurance premium income (2) Reinsurance premium outward (3) Premium retained (4)＝(1)＋(2)－(3) Compulsory insurance $ 204,432 $ 60,595 $ 95,427 $ 169,600 Non-Compulsory insurance 1,430,517 42,615 476,539 996,593 $ 1,634,949 $ 103,210 $ 571,966 $ 1,166,193 Item Unearned premium reserves for direct insurance Unearned premium reserves for reinsurance inwards Net change in unearned premium reserves (9)=(5)－ (6)+(7)－(8) Reserve (5) Recovery (6) Reserve (7) Recovery (8) Compulsory insurance $ 333,153 $ 330,762 $ 143,562 $ 141,738 $ 4,215 Non-Compulsory insurance 1,153,927 1,006,493 55,477 51,819 151,092 $ 1,487,080 $ 1,337,255 $ 199,039 $ 193,557 $ 155,307			Premium retained (4)＝(1)＋(2)－(3)
				$	169,600 996,593 1,166,193 Net change in unearned premium reserves (9)=(5)－ (6)+(7)－(8)
				$

	Reserve (7) $ 143,562 55,477 $ 199,039	Recovery (8)
		$ 141,738 51,819 $ 193,557			$ 4,215 151,092 $ 155,307

Item Compulsory insurance Non-Compulsory insurance	Unearned premium reserves for ceding reinsuranceinward Reserve (10) Recovery (11) $ 199,902 $ 198,467 285,951 210,748 $ 485,853 $ 409,215	Ceding net change in unearned premium reserves (12)=(10)－(11) $ 1,435 75,203 $ 76,638	Gross retained earned premium (13)=(4)－(9)+(12)	Gross retained earned premium (13)=(4)－(9)+(12)
				$ 166,820 920,704 $ 1,087,524

(II) Retained claims
As of March 31, 2020, the balance of the gross retained claims for the compulsory and non-compulsory insurance, and the calculation are as follows:

Insurance type Compulsory insurance Non-Compulsory insurance	Claims (including the claim expenses) (1) $ 138,290 531,103 $ 669,393		Claims for reinsurance (2)		Refundable Claims for Reinsurance (3) $ 79,822 120,654 $ 200,476	Retained claims (4)＝(1)＋(2)－(3)	Retained claims (4)＝(1)＋(2)－(3)
			$ 54,845 13,887 $ 68,732				$ 113,313 424,336 $ 537,649

As of March 31, 2019, the balance of the gross retained claims for the compulsory and non-compulsory insurance, and the calculation are as follows:

Insurance type Compulsory insurance Non-Compulsory insurance	Claims (including the claim expenses) (1) $ 91,003 515,752 $ 606,755		Claims for reinsurance (2)		Refundable Claims for Reinsurance (3) $ 53,438 94,705 $ 148,143	Retained claims (4)＝(1)＋(2)－(3)	Retained claims (4)＝(1)＋(2)－(3)
			$ 57,202 2,573 $ 59,775				$ 94,767 423,620 $ 518,387

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(III) Unearned premium reserves

The balances of the retained unearned premium reserves for each insurance type as of March 31, 2020 are summarized as the followings:

Item General Personal Automobile Liability Insurance General Personal Automobile Physical Damage Insurance Personal Accident Insurance One-year Residential Fire Insurance Compulsory Automobile Liability Insurance General commercial Automobile Liability Insurance Other Insurance (Note) Less: Accumulated impairment	Unearned premium reserves Direct business Reinsurance inward business $ 834,337 $ 41 491,150 - 251,065 1,589 175,427 - 168,331 66,499 131,981 - 1,128,672 169,828 3,180,963 237,957 - - $ 3,180,963 $ 237,957	Unearned premium reserves Direct business Reinsurance inward business $ 834,337 $ 41 491,150 - 251,065 1,589 175,427 - 168,331 66,499 131,981 - 1,128,672 169,828 3,180,963 237,957 - - $ 3,180,963 $ 237,957	Ceding unearned premium reserves Ceding reinsurance business $ 3,945 6,365 24,616 - 100,999 470 718,472 854,867 - $ 854,867		Retained business
	Direct business $ 834,337 491,150 251,065 175,427 168,331 131,981 1,128,672 3,180,963 - $ 3,180,963
					$ 830,433 484,785 228,038 175,427 133,831 131,511 580,028 2,564,053 - $ 2,564,053

Note: the balance of each insurance type less than 5% of the total are stated collectively.

The balances of the retained unearned premium reserves for each insurance type as of March 31, 2019 are summarized as the followings:

Item General Personal Automobile Liability Insurance General Personal Automobile Physical Damage Insurance Personal Accident Insurance Compulsory Automobile Liability Insurance One-year Residential General Insurance Compulsory Motorcycle Liability Insurance Other Insurance (Note) Less: Accumulated impairment	Unearned premium reserves Direct business Reinsurance inward business $ 745,048 $ 37 473,157 - 248,383 1,540 165,475 67,182 165,160 - 143,437 64,217 1,022,967 104,265 2,963,627 237,241 - - $ 2,963,627 $ 237,241	Unearned premium reserves Direct business Reinsurance inward business $ 745,048 $ 37 473,157 - 248,383 1,540 165,475 67,182 165,160 - 143,437 64,217 1,022,967 104,265 2,963,627 237,241 - - $ 2,963,627 $ 237,241	Ceding unearned premium reserves Ceding reinsurance business $ 3,732 5,995 16,121 99,292 - 86,065 596,475 807,680 - $ 807,680		Retained business
	Direct business $ 745,048 473,157 248,383 165,475 165,160 143,437 1,022,967 2,963,627 - $ 2,963,627
					$ 741,353 467,162 233,802 133,365 165,160 121,589 530,757 2,393,188 - $ 2,393,188

Note: the balance of each insurance type less than 5% of the total are stated collectively.

63 -

(IV) Claim reserves

As of March 31, 2020, the balance of the reported but not paid and unreported claim reserves, and the calculation are as follows:
(1) Claim reserves and ceding claims reserves

1) Claim rese	rves and ceding	rves and ceding	claims reserves
Item Reported but not yet paid Not yet reported Less: Accumulated impairment	Claim r		eserves Reinsurance inward business (2) $ 324,261 167,106 - $ 491,367		Ceding claims reserves Ceding reinsurance business (3) $ 565,436 368,225 4,279 ) $ 929,382	Retained business (4)=(1)+(2)-(3)
	Direct Insurance (1)
		$ 1,474,429 866,828 - $ 2,341,257		(			$ 1,233,254 665,709 4,279 $ 1,903,242

(2) Ceding net change in claims reserves and net change in ceding claims
reserves

				DirectInsurance	DirectInsurance	Reinsuranceinward business	Reinsuranceinward business	Reinsuranceinward business	Reinsuranceinward business		Net change in	Net change in
											claims reserves
			Reserve		Recovery		Reserve		Recovery		(5)=(1)-(2)+(3)
	Item			(1)	(2)		(3)		(4)			-(4)
Reported but not yet			$ 1,474,429		$ 1,561,264	$	324,261	$	287,474		( $	50,048 )
paid
Not yet	reported			866,828	873,230		167,106		166,144		(	5,440)
			$ 2,341,257		$ 2,434,494	$	491,367	$	453,618		($	55,488)
					Cedingreinsurance business					Ceding		net change
					Reserve		Recovery			in claims reserves
		Item			(6)		(7)				(8)=(6)-(7)
Reported but not yet			paid	$	565,436		$	667,090		( $		101,654 )
Not yet reported					368,225			369,723		(		1,498)
				$	933,661		$ 1,036,813			($		103,152)

As of March 31, 2019, the balance of the reported but not paid and unreported claim reserves, and the calculation are as follows:
(1) Claim reserves and ceding claims reserves

1) Claim rese	rves and ceding	rves and ceding	claims reserves
Item Reported but not yet paid Not yet reported Less: Accumulated impairment	Claim r		eserves Reinsurance inward business (2) $ 286,820 176,529 - $ 463,349		Ceding claims reserves Ceding reinsurance business (3) $ 541,791 400,734 4,543) $ 937,982	Retained business (4)=(1)+(2)-(3)
	Direct Insurance (1)
		$ 1,458,986 917,052 - $ 2,376,038		(			$ 1,204,015 692,847 4,543 $ 1,901,405

64 -
(2) Ceding net change in claims reserves and net change in ceding claims
reserves

				DirectInsurance	DirectInsurance	Reinsuranceinward business	Reinsuranceinward business	Reinsuranceinward business	Reinsuranceinward business		Net change in
											claims reserves
			Reserve		Recovery		Reserve		Recovery		(5)=(1)-(2)+(3)
	Item			(1)	(2)		(3)		(4)		-(4)
Reported but not yet			$ 1,458,986		$ 1,487,583	$	286,820	$	291,803		( $ 33,580 )
paid
Not yet	reported			917,052	898,768		176,529		177,038		17,775
			$ 2,376,038		$ 2,386,351	$	463,349	$	468,841		($ 15,805)
					Cedingreinsurance business					Ceding net change
					Reserve		Recovery			in claims reserves
		Item			(6)		(7)				(8)=(6)-(7)
Reported but not yet			paid	$	541,791		$	562,855		( $	21,064 )
Not yet reported					400,734			390,112			10,622
				$	942,525		$	952,967		($	10,442)

(V) Premium deficiency reserves
As of March 31, 2020, the balance of the premium deficiency reserves of each insurance type, and the calculation are as follows:
- (1) Premium deficiency reserves and ceding premium deficiency reserves

Item Fishing Vessel Insurance Marine Hull Insurance Aviation Insurance Marine Cargo Insurance	Premium deficiencyreserves Direct business Reinsurance inward business $ 2,663 $ 121 1,712 34 1,489 57 1,244 13 $ 7,108 $ 225	Premium deficiencyreserves Direct business Reinsurance inward business $ 2,663 $ 121 1,712 34 1,489 57 1,244 13 $ 7,108 $ 225	Ceding premium deficiency reserves Ceding reinsurance business $ - - - - $ -		Retained business
	Direct business $ 2,663 1,712 1,489 1,244 $ 7,108
					$ 2,784 1,746 1,546 1,257 $ 7,333

(2) Net change in premium deficiency reserves and ceding net change in premium deficiency reserves

Item Fishing Vessel Insurance Marine Hull Insurance Aviation Insurance Marine Cargo Insurance		DirectInsurance	DirectInsurance	DirectInsurance	Reinsuranceinward business	Reinsuranceinward business	Reinsuranceinward business	Reinsuranceinward business	Net change in premium deficiency reserves for direct business and reinsurance inward (5)=(1)-(2)+ (3)-(4) ( $ 396 ) 897 ( 1,438) 1,116 $ 179
		Reserve (1) $ 2,663 1,712 1,489 1,244 $ 7,108		Recovery (2)		Reserve (3) $ 121 34 57 13 $ 225		Recovery (4)
				$ 2,946 783 2,881 139 $ 6,749				$ 234 66 103 2 $ 405

65 -

Item Fishing Vessel Insurance Marine Hull Insurance Aviation Insurance Marine Cargo Insurance		Cedingreinsurance business Reserve (6) Recovery (7) $ - $ - - - - - - - $ - $ -	Cedingreinsurance business Reserve (6) Recovery (7) $ - $ - - - - - - - $ - $ -		Ceding net change in premium deficiency reserves (8)=(6)-(7) $ - - - - $ -	Loss recognized under the net provision of premium deficiency reserves for the period (9)=(5)-(8)	Loss recognized under the net provision of premium deficiency reserves for the period (9)=(5)-(8)
		Reserve (6) $ - - - - $ -
						( (	$ 396 ) 897 1,438 ) 1,116 $ 179

The abovementioned premium deficiency reserves does not apply discount when calculating.

As of March 31, 2019, the balance of the premium deficiency reserves of each insurance type, and the calculation are as follows:
(1) Premium deficiency reserves and ceding premium deficiency reserves

1) Premium defici	ency reserves and ceding pre	mium deficienc	reserves
Item Marine Hull Insurance Aviation Insurance Fishing Vessel Insurance Marine Cargo Insurance Overseas division business	Premiumdeficiencyreserves Direct business Reinsurance inward business $ 2,698 $ 164 2,580 133 2,170 195 1,515 27 1 133 $ 8,964 $ 652	Ceding premium deficiency reserves Ceding reinsurance business $ - - - - - $ -	Retained business
	Direct business $ 2,698 2,580 2,170 1,515 1 $ 8,964
			$ 2,862 2,713 2,365 1,542 134 $ 9,616

(2) Net change in premium deficiency reserves and ceding net change in premium deficiency reserves

Item Marine Hull Insurance Aviation Insurance Fishing Vessel Insurance Marine Cargo Insurance Overseas division business		DirectInsurance Reserve (1) Recovery (2) $ 2,698 $ 2,853 2,580 3,506 2,170 1,836 1,515 - 1 - $ 8,964 $ 8,195	Net change in premium deficiency reserves for direct business and reinsurance inward (5)=(1)-(2)+ (3)-(4) Reinsuranceinward business Reserve (3) Recovery (4) $ 164 $ 30 ( $ 21 ) 133 147 ( 940) 195 105 424 27 - 1,542 133 183 ( 49) $ 652 $ 465 $ 956	Net change in premium deficiency reserves for direct business and reinsurance inward (5)=(1)-(2)+ (3)-(4) Reinsuranceinward business Reserve (3) Recovery (4) $ 164 $ 30 ( $ 21 ) 133 147 ( 940) 195 105 424 27 - 1,542 133 183 ( 49) $ 652 $ 465 $ 956
		Reserve (1) $ 2,698 2,580 2,170 1,515 1 $ 8,964		Reserve (3) $ 164 133 195 27 133 $ 652

66 -

Item Marine Hull Insurance Aviation Insurance Fishing Vessel Insurance Marine Cargo Insurance Overseas division business		Cedingreinsurance business Reserve (6) Recovery (7) $ - $ - - - - - - - - - $ - $ -	Cedingreinsurance business Reserve (6) Recovery (7) $ - $ - - - - - - - - - $ - $ -		Ceding net change in premium deficiency reserves (8)=(6)-(7) $ - - - - - $ -	Loss recognized under the net provision of premium deficiency reserves for the period (9)=(5)-(8)	Loss recognized under the net provision of premium deficiency reserves for the period (9)=(5)-(8)
		Reserve (6) $ - - - - - $ -
						( ( (	$ 21 ) 940) 424 1,542 49) $ 956

(VI) Special reserves

As of March 31, 2020, the special reserves for the compulsory and non-compulsory insurance increase/decrease as the following:
(1) Special reserves - Compulsory automobile liability insurance

Item Balance - beginning Provision of the Period Recovery of the Period Balance - ending		Amount
	(	$ 928,997 7,577 8,835) $ 927,739

(2) Special reserves - Non-Compulsory automobile liability insurance

Item				Liabi	lit	ies						Special	re	serve
		Material accidents		Hazard changes		Others		Total		Material accidents		Hazard changes		Others		Total
Balance - beginning Provision of the Period Recovery of the Period Balance - ending		$ 186,099 - ( 2,023) $ 184,076		$ 796,548 - - $ 796,548		$ 230,305 - - $ 230,305		$ 1,212,952 - ( 2,023) $ 1,210,929		$ 396,144 - - $ 396,144		$ 926,829 - ( 14,062) $ 912,767		$ 412,534 - - $ 412,534		$ 1,735,507 - ( 14,062) $ 1,721,445

Note: The recovery of the special reserves under the previous liability refers to the special reserves provided for non-compulsory automobile liability insurance before January 1, 2011.

As of March 31, 2019, the special reserves for the compulsory and non-compulsory insurance increase/decrease as the following:
(1) Special reserves - Compulsory automobile liability insurance

Item Balance - beginning Provision of the Period Recovery of the Period Balance - ending		Amount
		$ 958,631 20,606 - $ 979,237

67 -
(2) Special reserves - Non-Compulsory automobile liability insurance

2) Speci	l reserv	s - Non-	Compul	ory aut	mobile	ability	in	suranc
Item		Liabili	ties			Special	re	serve
	Material accidents $ 194,190 - ( 2,023) $ 192,167	Hazard changes $ 805,099 - - $ 805,099	Others	Total	Material accidents	Hazard changes		Others	Total
Balance - beginning Provision of the Period Recovery of the Period Balance - ending			$ 230,305 - - $ 230,305	$ 1,229,594 - ( 2,023) $ 1,227,571	$ 349,985 - - $ 349,985	$ 826,597 - ( 3,070) $ 823,527		$ 360,279 - - $ 360,279	$ 1,536,861 - ( 3,070) $ 1,533,791

Note: The recovery of the special reserves under the previous liability refers

to the special reserves provided for non-compulsory automobile liability insurance before January 1, 2011.

(VII) Details of balance sheet and income/cost of compulsory automobile liability insurance
Detailed balance sheet of compulsory automobile liability insurance

. Detailed ba	lance she	et of com	pulsory	automobile lia	bility ins	urance
Item		Amount		Item		Amount
ASSETS	March 31, 2020	December 31, 2019	March 31, 2019	Liabilities	March 31, 2020	December 31, 2019	March 31, 2019
Cash and Bank deposits Cash Equivalents Notes receivable Premiums receivable Claim recoverable from reinsurers Due from reinsurers and ceding companies Other accounts receivable Financial assets at fair value through other comprehensive income Ceding unearned premium reserves Ceding claims reserves Temporary paid and payment to be carried over OTHER ASSETS	$ 1,533,810 - 9,985 32,781 21,196 39,026 - - 206,999 270,603 2,971 -	$ 1,551,499 11,977 27,130 15,878 40,106 - - 203,272 280,366 2,407 176	$ 1,612,848 - 10,654 33,504 20,151 35,338 - - 199,902 304,948 575 -	Notes payable Claims payable Claim recoverable from reinsurers Due to reinsurers and ceding companies Unearned premium reserves Claim reserves Special reserves Temporary received and payment to be carried over Other liabilities	$ - - - 16,648 489,980 680,963 927,739 - 2,041	$ - - - 45,307 483,296 673,672 928,997 176 1,363	$ - 4,372 - 49,151 476,715 706,309 979,237 - 2,136
Total assets	$ 2,117,371	$ 2,132,811	$ 2,217,920	Total liabilities	$ 2,117,371	$ 2,132,811	$ 2,217,920

68 -

2. Detailed income/cost statement of compulsory automobile liability insurance

. Detailed income/cost statement of com	pulsory automobile	liability insurance
Item	From January 1 to March 31, 2020	From January 1 to March 31, 2019
OPERATING REVENUE Premium Income (including reinsurance revenue NT$61,155 thousand and NT$60,595 thousand, respectively) Less: Reinsurance premium outward Net change in unearned premium reserves Retained earned premium Interest income Total operating revenues Operating Costs Insurance Claims (including claims for reinsurance NT$54,845 thousand and NT$57,202 thousand, respectively) Less: Claim recovered from reinsurer Retained claims Net change in claims reserves Net change in special reserves Total operating costs	$ 232,424 ( 102,763) ( 2,957) 126,704 2,405 $ 129,109 $ 193,135 ( 79,822) 113,313 17,054 ( 1,258) $ 129,109	$ 219,635 ( 95,427) ( 2,780) 121,428 2,480 $ 123,908 $ 148,205 ( 53,438) 94,767 8,535 20,606 $ 123,908

(VIII) Acquisition Cost of Insurance Contracts

As of March 31, 2020, the amount of the insurance contracts at each insurance

category and the calculations are as follows:

Item General Personal Automobile Liability Insurance General Personal Automobile Physical Damage Insurance Personal Accident Insurance Compulsory Automobile Liability Insurance One-year Residential General Fire Insurance One-year Commercial Fire Insurance Other Insurance (Note)	Commission expenditure $ 46,725 30,622 22,133 - 13,264 13,267 51,320 $ 177,331		Fee expenditure $ - - - 18,141 - - 10,430 $ 28,571	Reinsurance commission expenditure $ - - - - - 54 2,222 $ 2,276		Othercost $ 1,000 188 25 - 2,218 - 1 $ 3,432		Total
								$ 47,725 30,810 22,158 18,141 15,482 13,321 63,973 $ 211,610

69 -

Note: The balance of each insurance type less than 5% of the total are stated collectively.

The acquisition costs of the said insurance contracts are not recognized as deferred.

As of March 31, 2019, the amount of the insurance contracts at each insurance category and the calculations are as follows:

Item General Personal Automobile Liability Insurance General Personal Automobile Physical Damage Insurance Personal Accident Insurance Compulsory Automobile Liability Insurance One-year Residential General Fire Insurance One-year Commercial Fire Insurance Other Insurance (Note)	Commission expenditure	Commission expenditure		Fee expenditure $ - - - 18,166 - - 9,836 $ 28,002	Reinsurance commission expenditure $ - - - - - 235 2,969 $ 3,204		Othercost $ 991 181 29 - 2,088 - - $ 3,289		Total
		$ 43,630 29,168 25,033 - 12,724 13,119 52,258 $ 175,932							$ 44,621 29,349 25,062 18,166 14,812 13,354 65,063 $ 210,427

Note: The balance of each insurance type less than 5% of the total are stated collectively.

The acquisition costs of the said insurance contracts are not recognized as deferred.

(IX) Analysis for business profit and loss

The amount of the profits and losses at each insurance category and the calculations during January 1 to March 31, 2020 are as follows:
(1) Direct Insurance

Item		Premium income (1) $ 139,678 447,902 229,366 109,822 68,631 75,220 15,046 111,380 572,191 $ 1,769,236		Net change in unearned premium reserves (2) $ - 89,896 713 1,776 ) 14,967 2,652 ) 4,834 9,523 94,402 $ 209,907		Acquisition Cost of Insurance Contracts (3) $ 8,443 47,725 30,810 13,267 7,703 15,481 132 22,158 63,615 $ 209,334	Claims (including the claim expenses) (4) $ 1,700 188,304 130,302 36,528 23,463 4,853 ( 24,474 ) 45,235 263,482 $ 669,393	c	Net change in laims reserves (5) $ - 21,966 1,647 ) 67 29,065 ) 6,574 9,761 ) 7,834 ) 73,537 ) $ 93,237)	Profit (loss) of Insurance (6)=(1)-(2)-(3)- (4)-(5)	Profit (loss) of Insurance (6)=(1)-(2)-(3)- (4)-(5)
Residential Earthquake Insurance General Personal Automobile Liability Insurance General Personal Automobile Physical Damage Insurance One-year Commercial General Fire Insurance General Liability Insurance One-year Residential General Fire Insurance Marine Hull Insurance Personal Accident Insurance Other Insurance (Note)			( (				(	( ( ( ( ( (			$ 129,535 100,011 69,188 61,736 51,563 50,964 44,315 42,298 224,229 $ 773,839

70 -

(2) Reinsurance assumed

2) Reinsurance a	s	sumed
Insurance type Residential Earthquake Insurance Typhoon and Flood Insurance Commercial earthquake insurance Nuclear Energy Insurance Foreign Inward Reinsurance - Aviation insurance General Liability Insurance Fishing Vessel Insurance Marine Hull Insurance Personal Accident Insurance Bonding Insurance Other Insurance (Note)		Reinsurance premium income (1) $ 18,543 697 1,330 712 - 136 365 109 936 460 71,835 $ 95,123		Net change in unearned premium reserves (2) $ 2,824 1,468 ) 1,220 ) 1,132 ) - 2,861 ) 776 ) 321 ) 28 185 2,131) $ 6,872 )		Reinsurance commission expenditure (3) $ - 3 61 - - - 53 2 - - 2,157 $ 2,276		Claims for reinsurance (4) $ 195 490 83 - 391 ) 2,007 2,578 - 55 1 63,714 $ 68,732	c	Net change in laims reserves (5) $ 194 ) 1,348 ) 156 ) 110 ) 1,022 ) 331 ) 2,454 ) 514 ) - 101 ) 43,979 $ 37,749	Profit (loss) of reinsurance inward (6)=(1)-(2)-(3)- (4)-(5)
			( ( ( ( ( ( ( (				(		( ( ( ( ( ( ( ( (		( (	$ 15,718 3,020 2,562 1,954 1,413 1,321 964 942 853 375 35,884) $ 6,762 )

(3) Ceding reinsurance business

Insurance type Residential Earthquake Insurance Marine Hull Insurance General Liability Insurance Commercial earthquake insurance One-year Commercial General Fire Insurance Compulsory Automobile Liability Insurance Other Insurance (Note)		Reinsurance premium outward (1) $ 139,678 15,956 36,707 44,475 94,439 63,755 217,937 $ 612,947		Ceding net change in unearned premium reserves (2) $ - 6,001 7,242 15,432 16,342 2,027 56,313 $ 103,357	i	Reinsurance commission ncome and fee income (3) $ 14,115 801 7,661 1,353 26,593 - 23,122 $ 73,645		Refundable Claims for Reinsurance (4) $ - 22,317 ) 14,964 2,506 40,308 52,514 112,501 $ 200,476	c	Ceding net change in laims reserves (5) $ - 7,195 ) 21,279 ) 1,988 ) 6,778 ) 7,812 ) 58,100) $ 103,152 )	Loss (profit) of Ceding reinsurance (6)=(1)-(2)-(3)- (4)-(5)	Loss (profit) of Ceding reinsurance (6)=(1)-(2)-(3)- (4)-(5)
							(		( ( ( ( ( ( (			$ 125,563 38,666 28,119 27,172 17,974 17,026 84,101 $ 338,621

Note: The balance of each insurance type less than 5% of the total are stated collectively.

The amount of the profits and losses at each insurance category and the calculations during January 1 to March 31, 2019 are as follows:
(1) Direct Insurance

Item Residential Earthquake Insurance One-year Commercial General Fire Insurance General Personal Automobile Physical Damage Insurance General Personal Automobile Liability Insurance One-year Residential General Fire Insurance Personal Accident Insurance Commercial earthquake insurance Other Insurance (Note)		Premium income (1) $ 131,333 107,862 223,223 398,716 71,114 118,971 56,869 526,861 $ 1,634,949		Net change in unearned premium reserves (2) $ - 1,606 ) 1,273 80,809 1,417 ) 15,194 16,563 39,010 $ 149,826		Acquisition Cost of Insurance Contracts (3) $ 7,936 13,119 29,349 44,621 14,813 25,062 5,436 66,887 $ 207,223	Claims (including the claim expenses) (4) $ - 42,417 107,807 210,998 4,414 46,239 6,897 187,983 $ 606,755	c	Net change in laims reserves (5) $ - 21,374 ) 15,554 5,527 1,770 ) 9,394 ) 7,776 ) 8,920 $ 10,313 )	Profit (loss) of Insurance (6)=(1)-(2)-(3)- (4)-(5)	Profit (loss) of Insurance (6)=(1)-(2)-(3)- (4)-(5)
			( (					( ( ( ( (			$ 123,397 75,306 69,240 56,761 55,074 41,870 35,749 224,061 $ 681,458

71 -

(2) Reinsurance assumed

2) Reinsurance a	s	sumed
Insurance type Residential Earthquake Insurance Compulsory Automobile Liability Insurance One-year Commercial General Fire Insurance Nuclear Energy Insurance Aviation Insurance General Liability Insurance Other Insurance (Note)		Reinsurance premium income (1) $ 17,583 34,700 3,214 1,450 56 ) 3,891 42,428 $ 103,210		Net change in unearned premium reserves (2) $ 2,110 498 2,348 ) 456 ) 322 ) 997 5,002 $ 5,481		Reinsurance commission expenditure (3) $ - - 235 - 14 ) 846 2,137 $ 3,204		Claims for reinsurance (4) $ - 36,324 159 - 2,711 ) 190 25,813 $ 59,775	c	Net change in laims reserves (5) $ - 16,873 ) 282 1,453 ) 72 233 ) 12,713 $ 5,492 )	Profit (loss) of reinsurance inward (6)=(1)-(2)-(3)- (4)-(5)
	(		( ( (		(		(		( ( ( (		(	$ 15,473 14,751 4,886 3,359 2,919 2,091 3,237) $ 40,242

(3) Ceding reinsurance business

Insurance type Residential Earthquake Insurance One-year Commercial General Fire Insurance Commercial earthquake insurance Typhoon and Flood Insurance Engineering Insurance Other Insurance (Note)		Reinsurance premium outward (1) $ 131,333 106,960 47,624 23,950 31,666 230,433 $ 571,966		Ceding net change in unearned premium reserves (2) $ - 23,631 17,022 6,263 9,556 20,166 $ 76,638	i	Reinsurance commission ncome and fee income (3) $ 13,270 42,808 2,400 1,591 6,610 22,844 $ 89,523		Refundable Claims for Reinsurance (4) $ - 33,808 4,299 243 7,224 102,569 $ 148,143	c	Ceding net change in laims reserves (5) $ - 23,004 ) 5,024 ) 122 ) 7,298 ) 25,006 $ 10,442 )	Loss (profit) of Ceding reinsurance (6)=(1)-(2)-(3)- (4)-(5)	Loss (profit) of Ceding reinsurance (6)=(1)-(2)-(3)- (4)-(5)
									( ( ( ( (			$ 118,063 29,717 28,927 15,975 15,574 59,848 $ 268,104

Note: The balance of each insurance type less than 5% of the total are

stated collectively.

(X) Non-insurance assets acquired by executing recovery rights - residuals taken over and right for pursuit of recovery

Credit Insurance Miscellaneous Insurance Bonding Insurance Personal Comprehensive Insurance General Liability Insurance Engineering Insurance	March31,2020	March31,2020	December31,2019 $ 36,022 1,801 2,071 13 11 2 $ 39,920	March31,2019	March31,2019
		$ 35,791 2,065 2,153 48 11 1 $ 40,069			$ 36,683 3,462 1,960 7 11 2 $ 42,125

(XI) Requirements for Asset Segmentation for Certain Assets

The Company has an operation for compulsory automobile liability insurance (“the insurance”), and the insurance has an independent accounting based on the “Compulsory Automobile Liability Insurance Act”, to record the operation and financial position of the insurance.

72 -

FSC issued Jin-Guan-Bao-Chan-Zi No. 10202530301 to amend “Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance” on December 31, 2013, and enforced the regulations on January 1, 2014.

Based on Article 5 of the “Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance”, the special reserves provided for the insurance shall be deposited in financial institutions via the purchase of treasury bills or in the format of time deposit. However, with the approval of the competent authorities, the following domestic negotiation securities may be purchased:

Government bond. Exchangeable government bonds are excluded.
Financial bonds, NCD, bank's acceptance bill, and commercial papers guaranteed by financial institutions. But the financial bonds are limited to the general financial bonds.

The treasury bills purchased and the amount of time deposits in financial institution specified previously, shall not be lower than 30% of the total amount of retained earned pure premiums audited or reviewed by CPA of the latest period. The competent authorities may properly raise the percentage depending on the operation status of the Company.

Shall the balance of the special reserves not meet 30% of the total amount of retained earned pure premiums audited or reviewed by CPA of the latest period, all the reserves shall purchase treasury bills or have been deposited in financial institutions as time deposits.

The funds held by the insurance (various reserves, payables, temporary receipts and payment to be carried over) are handled based on Article 6 of the “Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance”, and shall be deposited in the banks as demand deposits and time deposits. However, with the approval of the competent authorities, the following domestic negotiation securities may be purchased:

Treasury Bills.
NCD, bank's acceptance Bill, and commercial papers guaranteed by financial institutions.
Repo Government Bonds.

The amount of time deposits in financial institution specified previously, shall not be lower than 45% of the balance of funds held by the insurance minus special

73 -

reserves, and 30% of the amount of retained earned pure premiums audited or reviewed by CPA of the latest period. The competent authorities may properly raise the percentage depending on the operation status of the Company.

Shall the sum of the unearned premium reserves and claim reserves not meet 30% of the total amount of retained earned pure premiums audited or reviewed by CPA of the latest period, all the reserves shall be deposited in financial institutions as time deposits.

Based on Article 11 of the “Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance”, when a non-life insurance enterprise suspends or cease to provide the said insurance, all the reserves of the insurance shall be transferred and included to the reserve provisions of the non-life insurance enterprise succeeding the business.

Where an insurance enterprise is ordered to suspend business and undergo rehabilitation, ordered to dissolve, or its permit to provide the insurance is abrogated but no other insurer takes over the insurance business, and the liabilities of the insurance are terminated with positive balance of special reserves, the corresponding assets of such special reserves shall be transferred to Motor Vehicle Compensation Fund.

XXVI. Claim Liabilities to Policyholders

(I) As of March 31, 2020, the information of the claim liabilities to the policyholders by the Company is summarized as the following:
The claim liabilities reported and paid, reported but not paid, and unreported to the policyholders

Item General Personal Automobile Liability Insurance Compulsory Automobile Liability Insurance One-year Commercial Fire Insurance Compulsory Motorcycle Liability Insurance General Personal Automobile Physical Damage Insurance Marine Hull Insurance Other Insurance (Note)	Claims payable Reported and paid $ - - - - 1 - 1,055 $ 1,056		Claim reserves
		Reported but not yet paid $ 466,693 68,445 214,647 70,357 143,509 114,525 720,514 $ 1,798,690	Not yetreported $ 126,088 337,098 14,145 132,745 39,966 50,693 333,199 $ 1,033,934		Total
					$ 592,781 405,543 228,792 203,102 183,475 165,218 1,053,713 $ 2,832,624

74 -
Reinsurance reserve assets - Claim recoverable from reinsurers to the reported

and paid claims to the policyholders

Insurance type Fishing Vessel Insurance Compulsory Automobile Liability Insurance General Liability Insurance Engineering Insurance Compulsory Commercial Automobile Liability Insurance Commercial earthquake insurance Other Insurance (Note) Allowance loss		Claim paid $ 61,071 13,416 11,117 6,593 5,064 3,882 27,352) 73,791 369) $ 73,422	Reported and paid $ - - 3 - - - - 3 - $ 3		Total
	( (			( (	$ 61,071 13,416 11,120 6,593 5,064 3,882 27,352) 73,794 369) $ 73,425

Reinsurance reserve assets - Claim recoverable from reinsurers to the reported but not paid and unreported ceding claims to the policyholders

Insurance type Compulsory Automobile Liability Insurance One-year Commercial Fire Insurance Marine Hull Insurance Marine Cargo Insurance Fishing Vessel Insurance Compulsory Motorcycle Liability Insurance Engineering Insurance Other Insurance (Note) Accumulated impairment	Reported but not yet paid $ 25,356 149,632 97,215 42,030 52,935 8,065 44,093 146,110 $ 565,436		Not yet reported $ 151,725 5,800 30,100 36,700 17,200 53,868 6,300 66,532 $ 368,225		Total
				(	$ 177,081 155,432 127,315 78,730 70,135 61,933 50,393 212,642 933,661 4,279) $ 929,382

Note: The balance of each insurance type less than 5% of the total are stated collectively.

75 -
(II) As of December 31, 2019, the information of the claim liabilities to the policyholders by the Company is summarized as the following:
The claim liabilities reported and paid, reported but not paid, and unreported to the policyholders

Item General Personal Automobile Liability Insurance Compulsory Automobile Liability Insurance One-year Commercial Fire Insurance General Personal Automobile Physical Damage Insurance Compulsory Motorcycle Liability Insurance Marine Hull Insurance Fishing Vessel Insurance Other Insurance (Note)	Claims payable Reported and paid $ 841 - 3,028 389 - - - 146 $ 4,404		Claim reserves
		Reported but not yet paid $ 444,442 73,710 199,153 145,430 47,123 121,295 125,114 692,471 $ 1,848,738	Not yet reported $ 126,371 343,397 9,009 39,693 130,597 54,197 27,972 308,138 $ 1,039,374		Total
					$ 570,813 417,107 208,162 185,123 177,720 175,492 153,086 1,000,609 $ 2,888,112

Reinsurance reserve assets - Claim recoverable from reinsurers to the reported and paid claims to the policyholders

Insurance type Compulsory Automobile Liability Insurance General Liability Insurance Engineering Insurance Marine Cargo Insurance Compulsory Motorcycle Liability Insurance Commercial earthquake insurance One-year Commercial General Fire Insurance Compulsory Commercial Automobile Liability Insurance Personal Accident Insurance Other Insurance (Note) Allowance loss		Claim paid $ 9,141 8,652 5,800 4,216 4,180 3,882 2,128 2,557 1,828 10,341) 32,043 160) $ 31,883	Reported and paid $ - - - - - - 719 - 16 - 735 ( 4) $ 731		Total
	( (		(	( (	$ 9,141 8,652 5,800 4,216 4,180 3,882 2,847 2,557 1,844 10,341) 32,778 164) $ 32,614

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Reinsurance reserve assets - Claim recoverable from reinsurers to the reported

but not paid and unreported ceding claims to the policyholders

Insurance type Compulsory Automobile Liability Insurance One-year Commercial Fire Insurance Marine Hull Insurance Fishing Vessel Insurance General Liability Insurance Marine Cargo Insurance Compulsory Motorcycle Liability Insurance Engineering Insurance Other Insurance (Note) Accumulated impairment	Reported but not yet paid $ 29,163 158,010 102,210 115,636 48,481 27,677 7,357 49,307 129,249 $ 667,090	Not yet reported $ 155,730 4,200 32,300 16,500 14,100 33,900 52,927 6,200 53,866 $ 369,723		Total
			(	$ 184,893 162,210 134,510 132,136 62,581 61,577 60,284 55,507 183,115 1,036,813 4,287) $ 1,032,526

Note: The balance of each insurance type less than 5% of the total are stated collectively.

(III) As of March 31, 2019, the information of the claim liabilities to the policyholders by the Company is summarized as the following:

The claim liabilities reported and paid, reported but not paid, and unreported to the policyholders

Item General Personal Automobile Liability Insurance Compulsory Automobile Liability Insurance One-year Commercial Fire Insurance Compulsory Motorcycle Liability Insurance General Personal Automobile Physical Damage Insurance Marine Hull Insurance General Liability Insurance Other Insurance (Note)	Claims payable Reported and paid $ 2,851 2,172 13 170 2,903 - 504 2,899 $ 11,512		Claim reserves
		Reported but not yet paid $ 457,647 68,255 198,921 66,291 145,901 114,600 100,535 593,656 $ 1,745,806	Not yetreported $ 122,400 380,795 11,106 129,977 38,951 65,729 54,636 289,987 $ 1,093,581		Total
					$ 580,047 449,050 210,027 196,268 184,852 180,329 155,171 883,643 $ 2,839,387

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Reinsurance reserve assets - Claim recoverable from reinsurers to the reported

and paid claims to the policyholders

Insurance type General Liability Insurance Compulsory Automobile Liability Insurance Marine Cargo Insurance Personal Accident Insurance Compulsory Commercial Automobile Liability Insurance Engineering Insurance Commercial earthquake insurance Other Insurance (Note) Allowance loss		Claim paid $ 14,375 13,193 5,261 4,591 2,960 3,682 3,530 3,687) 43,905 220) $ 43,685	Reported and paid $ 375 1,303 181 76 1,217 27 - 111 3,290 ( 16) $ 3,274		Total
	( (		(	( (	$ 14,750 14,496 5,442 4,667 4,177 3,709 3,530 3,576) 47,195 236) $ 46,959

Reinsurance reserve assets - Claim recoverable from reinsurers to the reported but not paid and unreported ceding claims to the policyholders

Insurance type Compulsory Automobile Liability Insurance One-year Commercial Fire Insurance Marine Hull Insurance Marine Cargo Insurance Compulsory Motorcycle Liability Insurance General Liability Insurance Aviation Insurance Other Insurance (Note) Accumulated impairment	Reported but not yet paid $ 36,385 159,271 92,041 39,450 10,417 $ 33,713 46,101 124,413 $ 541,791		Not yet reported $ 178,215 5,600 38,600 30,800 53,245 $ 20,100 1,700 72,474 $ 400,734		Total
				(	$ 214,600 164,871 130,641 70,250 63,662 $ 53,813 47,801 196,887 942,525 4,543) $ 937,982

Note: The balance of each insurance type less than 5% of the total are stated collectively.

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XXVII. Effects from Changes of Estimates and Assumptions

(I) The estimate amount of claims for the following significant claim events, is the neutral estimation for the current forecast of future amount of claim, based on the inspection of the insurance accidents. However, the estimation and assumption are uncertain, and may not be consistent to the actual claim outcomes in the future. The said estimation may be revised due to re-evaluation of the case by the insurance notary or the claim personnel after inspection and collection of information; or may be modified because the delegated attorneys change the future claim amount specified in the arising litigation and related legal fees. The Company will re-evaluated and account based on the said changes, and cause the estimated claim amount of the claim event. The changed amount will directly affect the profit/loss of the period when changes occur. The estimation of the amount of each insurance type and the amount after changes are listed as follows:
From January 1 to March 31, 2020

Insurance type One-year Commercial General Fire Insurance Fishing Vessel Insurance Aviation Insurance Marine Hull Insurance	Estimated amount $ 118,979 100,999 30,190 27,524 $ 277,692	Amount after changes
		$ 118,979 52,570 30,190 23,884

The abovementioned effects do not take into account of ceding reinsurance.

From January 1 to March 31, 2019

Insurance type One-year Commercial General Fire Insurance Aviation Insurance	Estimated amount $ 143,468 30,190 $ 173,658	Amount after changes
		$ 143,468 30,190

The abovementioned effects do not take into account of ceding reinsurance.

(II) The Company evaluates the premium deficiency reserve based on the expected cost method, while considering the individual cases specified in Article 10, the “Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance
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and Other Risk Spreading Mechanisms” However, the estimation and assumption are uncertain, and may not be consistent to the actual loss rate and actual general fee rate in the future. The said estimation may, due to the changes of future economic situations, cause the provision of premium deficiency reserve to increase or decrease. When the expected loss rate increases of decrease 5%, the amount of the provision of premium deficiency reserve for the period of January 1 to March 31, 2020 and 2019 may increase NT$461 thousand or NT$340 thousand, or decrease NT$461 thousand or NT$340 thousand, respectively. The changed amount will directly affect the profit/loss of the period when changes occur. The abovementioned effects do not take into account of ceding reinsurance.

XXVIII. Information of risk management

(I) Structure, Organization, and Authorities and Responsibilities of Risk Management 1. Structure and Organization of Risk Management

Organization Chart

President Ethical Management Remuneration Committee	President Ethical Management Remuneration Committee	President Ethical Management Remuneration Committee	President Ethical Management Remuneration Committee	President Ethical Management Remuneration Committee		Audit Dept.
Committee					President's Dept.	Legal Compliance Dept.	Risk Management Dept.
Kaohsiung Branch	Taichung Branch	Hsinchu Branch	Business Development Dept. 1	Underwriting Dept., Property		Bancassurance Dept.	Planning Dept.
Tainan Branch	Changhua Branch	Taoyuan Branch	Banchiau Branch	Underwriting Dept., Liability		Intermediary Channel Dept.	Information Technology Service Dept.
Hualien Branch Yilan Branch Chiayi Branch	Chiayi Branch		Yilan Branch	Underwriting Dept., Auto		Direct Marketing Dept.	Finance Dept.
			Hualien Branch	Underwriting Dept., Personal Lines		E-commerce Dept.	Actuarial Dept.
				Claim Service Dept., Personal Lines			Human Resources Dept.
				Claim Service Dept., Commercial Lines

In order to effectively plan, supervise and execute the risk management, in the 29th meeting of the 22nd Board of Directors on September 24, 2010, the Risk Management Committee was set up under the Board.

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Risk management strategies of the Company:

(1) The standards of risk management established by Company include: insurance risk, credit risk, market risk, liquidity risk, operation risk and risk of match for asset and liability.
(2) Based on the operational plan and target of financial incomes, the risk appetite of the Company is set up as no less than 400% of the capital adequacy ratio.
(3) Establish the risk management procedures consistent of the business scale, nature, and complexity of the Company, so each risk is controlled to the acceptable extent.
(4) Effectively control the capital adequacy ratio by complying with the regulations of managing capital adequacy ratio by the competent authorities.
(5) Establish the information security guarding mechanism and contingency plan for the business or transactions, and inter-application of information.
Risk management procedure of the Company:

To identify, measure, supervise and monitor each risk faced by the Company, the risk management procedure is divided as five stages, namely risk identification, risk measurement, risk response, risk control, and risk report, as for the operation of risk management.

The functions of each unit are as follows:
(1) Board of Directors
- A. Recognize the risks to be assumed for the operations of insurance enterprise, ensure to effectiveness of the risk management, and be ultimately responsible for the risk management as a whole.
- B. Must establish the proper risk management mechanism and culture, approve the proper risk management policies and review them regularly, and optimize the allocations of resources.
- C. Not only pay attentions to the risks assumed by individual unit, but rather consider the effects from the aggregation of each risk at the company level. Meanwhile, the mandatory capitals required by the competent authorities, and various regulations of finance and business impacting the capital allocation shall be taken into account.
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(2) Risk Management Committee
A. Draft the policies, structures, organizational functions of risk management, establish the qualified and quantified management standards, report to the Board regularly and reflect the implementation of risk management to the Board in timely manner, and propose the necessary improvement advices.
B. Execute the Board’s decisions of risk management, and regularly review the performance for development, establishment, and execution of the risk management mechanism at the Company level.
C. Assist and supervise the risk management activities conducted by each department.
D. Adjusted the risk categories, limit allocation, and assumption approach depending on the changes of circumstance.
E. Coordinate the interactions and communications of cross-department risk management.
(3) Risk Management Dept.
A. Charge of the executions of daily risk monitor, measurement, and evaluation, and independent from the business to perform the duties.
B. Risk management department shall perform the following duties based on the categories of operations:
- a. Assisting to draft and execute the risk management policies approved by the Board of Directors.
- b. Assisting to draft the risk limits based on the risk appetite.
- c. Compiling the risk information provided by each unit, to coordinate and communicate among them for the purpose of executing policies and limits.
- d. Providing the risk management related report regularly.
- e. Monitoring the risk limits and utilization of each business unit.
- f. Assisting to the stress test.
- g. Conducting backtracking test when necessary.
- h. Other matters related to risk management.
C. Handling the breach of risk limits by other units under the authorization of the Risk Management Committee.
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(4) Business units (all departments other than Audit Dept and Risk Management Dept)
A. The heads of business units’ duties to execute the risk management are as follows:
- a. Charge of the management and report of the daily risks for the unit he/she belongs to, and taking the necessary responding strategies.
- b. Supervising the regular conveyance of related risk information to the Risk Management Dept.
B. Business units’ duties to execute the risk management are as follows:
- a. Identifying risks and reporting the exposures.
- b. Measuring the extent (quantifying or qualifying) of impact when such risks materialize, and convey the risk information in a timely and correct manner.
- c. Reviewing each risks and limit regularly, to ensure the risk limit of the unit is effectively executed.
- d. Monitoring the risk exposure and report the breaches, including the measures taken for such breaches.
- e. Assisting the development of the risk models, to ensure the measurement of risk, use of model, and establishment of assumptions within the business unit is on the reasonable and consistent basis.
- f. Ensuring the effective execution of the internal control within the business unit, to comply with the laws and regulations as well as the risk management policies of the Company.
- g. Assisting the collection of the operational risks.
(5) Audit Dept.

Based on the current laws and regulations to audit the execution of risk management for business units of the Company.

(II) The extent and nature of the risk reporting and measuring system for the non-life insurance enterprises

The Risk Management Dept. compiles the risk information provided by each unit, to prepare the risk management report regularly, as well as reviews and tracks the utilization of major risk limits, to monitor the risk regularly. The risk management report is submitted to the Risk Management Committee every quarter,

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and the holistic risk management report is submitted to the Board of Director every six months.

The insurance risk management information system of the Company has the database for the accumulations under the same insurance for each category of insurance, and the limit control for each policy. The database not only is able to control the significant disaster risk timely, but also helpful for the business units to conduct scenario analysis and the stress tests. The limit control for each policy includes the real-time ceding reinsurance, to control the risks of significant disaster and reinsurances effectively.

(III) The procedures for non-life insurance enterprises to sustain, measure, supervise, and control the insurance risks, and to ensure the insurance-approval policies for proper risk categorization and premium levels

When the sales of each insurance of the Company solicit business, the “Regulations Governing Business Solicitation” of the Company shall be followed. The insurance approver of each insurance shall be strictly required for their qualification, authorities and duties based on the “Regulations Governing Insurance Approval and Claims”, and they shall follow the established operational process of insurance approval for the insurance type when approving insurance, to ensure the proper risk categorization and premium levels, as well as to control the insurance risks.

(IV) Evaluating and managing the insurance risk extent on the basis of company as a whole

For the management of insurance risks, the Company has the risks of product design and pricing, insurance approval, reinsurance, significant disaster, claim, reserves, as well as the matching risks for assets and liabilities.

(V) The approaches used by the non-life insurance enterprises to limit the insurance risk exposures and prevent the risk of undue concentration:

The Company has, based on the “Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms”, to established a risk management mechanism for the retained and ceding reinsurance and reinsurance inwards business; and the “Reinsurance Risk Management Operating Guidelines” has been established for execution by considering the ability to assume risks. The retained limits of insurance for each hazard unit of each insurance type are disclosed as the following:

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March 31, 2020

Insurance type
One-year Commercial Fire Insurance
One-year Residential Fire Insurance and Allied Perils
Insurance
Marine Cargo Insurance
Inland Marine Insurance
Marine Hull Insurance (casualty insurance of crews
and passengers)
Marine Hull Insurance (other than the casualty
insurance of crews and passengers)
Fishing Vessel Insurance
Aviation Insurance
Engineering Insurance
Credit Insurance
Bonding Insurance
General Liability Insurance
Professional Liability Insurance
Commercial Comprehensive Insurance
Miscellaneous Insurance
Personal Comprehensive Insurance
Personal Accident Insurance
Health Insurance
Automobile Physical Damage Insurance and Allied
Perils Insurance
Automobile Liability Insurance

Unit: NT$ Thousand
Highest retention
NT$ 1,500,000
NT$ 480,000
US$ 5,000
US$ 1,000
US$ 25,000
US$ 3,000
US$ 1,200
US$ 3,000
NT$ 1,500,000
NT$ 300,000
NT$ 300,000
NT$ 300,000
NT$ 300,000
NT$ 1,200,000
NT$ 1,200,000
NT$ 40,000
NT$ 40,000
NT$ 10,000
NT$ 30,000
NT$ 120,000

Note: The special businesses are not subjected to the above restrictions for the maximum self-retained amount.

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December 31, 2019

Unit: NT$ Thousand

Highest retention

NT$ 1,500,000
NT$ 480,000
US$ 5,000
US$ 1,000
US$ 25,000
US$ 1,000
US$ 1,200
US$ 1,200
NT$ 1,500,000
NT$ 120,000
NT$ 120,000
NT$ 300,000
NT$ 300,000
NT$ 1,200,000
NT$ 500,000
NT$ 40,000
NT$ 40,000
NT$ 10,000
NT$ 30,000
NT$ 120,000

Note: The special businesses are not subjected to the above restrictions for the maximum self-retained amount.

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March 31, 2019

Unit: NT$ Thousand

Highest retention

Note: The special businesses are not subjected to the above restrictions for the maximum self-retained amount.

(VI) Approaches of Managing Assets and Liabilities

When implementing various business, the case officers shall manage and monitor the potential risks in the day-to-day operations based on the internal control procedures and SOP, to prevent the mismatch between the cash flows from liabilities and assets caused by the behaviors of policyholders.

(VII) When certain events occur, the non-life insurance enterprises have to assume extra liabilities or input extra commitments of owner’s equity. The procedures for management, supervision, and control

According to the Insurance Act, for the non-life insurance enterprises, the ratio of total adjusted net capital to risk-based capital may not be lower than 200%. Fail to meet the said ratio, the profits are not to be distributed; also, the capital-increase shall

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be conducted within a certain period upon the requests from the competent authorities, or the scope of operations or fund application shall be limited.

Based on the risk appetite regulated by the Risk Management Policy of the Company, the ratio of total adjusted net capital to risk-based capital may not be lower than 400%.

(VIII) Explanation of the Insurance Risk Concentration

The insurances sold by the Company include: fire insurance, marine cargo insurance, ship hull insurance, aviation insurance, personal accident insurance, automobile insurance, cash insurance, credit insurance, engineering insurance, liability insurance, health insurance, and other property insurances; the major sources of business are from within the Republic of China, and the insurance contract taken do not significantly differ from different regions.

The premium incomes for the Company mainly concentrate at automobile insurance, fire insurance, marine cargo insurance, personal accident insurance, and liability insurance.

Various reserves are provided based on the “Regulations on Provision of Various Reserves for Insurance Enterprises” and other official orders and letters. (IX) The Sensitivities of Insurance Risks

Year From January 1 to March 31, 2020 From January 1 to March 31, 2019	The impact to the profit/loss when the expected loss ratio increase5% Before holding the reinsurance After holding the reinsurance ($ 67,065) ($ 51,765) ($ 64,995) ($ 52,395)	The impact to the profit/loss when the expected loss ratio increase5% Before holding the reinsurance After holding the reinsurance ($ 67,065) ($ 51,765) ($ 64,995) ($ 52,395)	Unit: NT$ Thousand The impact to the profit/loss when the expected loss ratio decrease5% Before holding the reinsurance After holding the reinsurance $ 64,640 $ 49,140 $ 74,685 $ 56,385	Unit: NT$ Thousand The impact to the profit/loss when the expected loss ratio decrease5% Before holding the reinsurance After holding the reinsurance $ 64,640 $ 49,140 $ 74,685 $ 56,385
	Before holding the reinsurance ($ 67,065) ($ 64,995)		Before holding the reinsurance $ 64,640 $ 74,685
	( (	( (

Note: The compulsory automobile insurance, nuclear energy insurance and residential earthquake insurance are excluded.

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(X) Development Trend of Claims
The development trend of claims during January 1 to March 31, 2020 are as the followings:

Unit: NT$ Thousand

Incurred accumulated claims (claim expenses included)

Year/Month of the Accident 2016 2017 2018 2019 2020	12 $ 2,503,104 2,013,877 2,239,137 2,136,349 414,004	24 $ 2,499,139 2,087,243 2,298,082 2,236,865	36 $ 2,452,145 2,073,409 2,282,754	48 $ 2,417,893 2,074,836	60
					$ 2,416,831

Note: The compulsory automobile insurance, nuclear energy insurance and residential earthquake insurance are excluded.
The development trend of claims during January 1 to March 31, 2019 are as the followings:

Unit: NT$ Thousand

Incurred accumulated claims (claim expenses included)

Year/Month of the Accident 2015 2016 2017 2018 2019	12 $ 1,788,128 2,503,104 2,013,877 2,239,137 415,784	24 $ 1,894,557 2,499,139 2,087,243 2,326,629	36 $ 1,861,135 2,452,145 2,103,484	48 $ 1,825,024 2,413,495	60
					$ 1,822,524

Note: The compulsory automobile insurance, nuclear energy insurance and residential earthquake insurance are excluded.

XXIX. Information of Foreign Currency Assets and Liabilities with Material Impacts

The following information is the consolidated expression of the foreign currencies other than the functional currency of the Company. The disclosed exchange rate refers to the exchange rate translating such foreign currencies to the functional currency. The foreign currency assets and liabilities with material impacts:

Unit: (Foreign currency / NT$ Thousand)

							Unit: (Foreign	currency /	NT$ Thousand)
Foreignassets	M	arch31,20	20	Dec	ember31,	2019	M	arch31,20	19
	Foreign Currency	Exchan ge rate	Carrying Amount	Foreign Currency	Exchan ge rate 30.03 4.32 30.03	Carrying Amount	Foreign Currency	Exchan ge rate	Carrying Amount
	$ 30,019 60,680 1,074	30.23 4.26 30.23	$ 907,460 258,496 32,453	$ 30,264 60,541 970		$ 908,828 261,537 29,129	$ 24,078 60,724 171	30.81 4.58 30.81	$ 741,840 278,117 5,270
Monetary items USD RMB Foreign liabilities
Monetary items USD

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The unrealized profits/losses of the foreign currencies with material impacts are as follows:

follows:
Foreign Currency USD RMB	From January 1 to March 31, 2020 Exchange rate Foreign exchange income or loss, net 30.23 $ 5,064 4.26 ( 3,300) $ 1,764		From January 1 to March 31, 2019
	Exchange rate 30.23 4.26		Exchange rate 30.81 4.58	Foreign exchange income or loss, net
		(		$ 1,834 10,460 $ 12,294

XXX. Additional Disclosures

(I) Information about significant transactions
The amount of acquired properties is NT$ 100 million or more, or 20% of the paid-up capitals or more. (None)
The amount of disposed properties is NT$ 100 million or more, or 20% of the paid-up capitals or more. (None)
Transactions of the major core business items between the Company and the related parties, with the amount of NT$ 100 million or more, or 20% of the paid-up capitals or more. (None)
The receivables from the related parties is NT$ 100 million or more, or 20% of the paid-up capitals or more. (None)
Transactions in engaging in derivative financial instruments. (None)
Other information: Amount of the business relationship and major transactions between parent company and subsidiaries and among subsidiaries. (None)
(II) Information related to reinvested enterprises. (Table 1)
(III) Information about investment in mainland china

The Company has no investment in Mainland China.

(IV) Information about major shareholders: Name, shareholdings and percentages of shareholders with more than 5% shareholding. (Table 2)

XXXI. Information about segment

Based on International Financial Reporting Standards IFRS 8, “Operating Segments”, because the Company’s major business is a single business of non-life insurance, and when the management making the operational decisions, the applied company components are based on the holistic information of the Company, the

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Company is considered as a single operating segment, and the financial information of operating segments need not to be disclosed.

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Table 1: Information related to the Name, Location of the Investee:

Unit: NT$ Thousand

										Unit: NT$	Thousand
Name of Investor	Name of Investee	Location	Main Activities	Original investment amount		Holdings at end of year			Net income (losses) of the investee in current period	Investment income (loss) recognized in current period	Remarks
				End of current period	End of previous period	Shares (thousand)	%	Carrying Amount
Taiwan Fire & Marine Insurance Co., Ltd.	Wen-Ding Venture Capital Co., Ltd.	Taipei City	Investments	$ 198,000	$ 198,000	19,800	24.75	$ 212,547	( $ 21,784 )	( $ 5,392 )

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Table 2: Information about major shareholders:

Name of major shareholder	Shares	Shares
	Shares	Equity(%)
Bank of Taiwan Co., Ltd. Navigator Investment Co., Ltd. Yong-Shin Development Co., Ltd.	64,608,278 25,168,675 24,158,535	17.84% 6.95% 6.67%

Note: The information about major shareholders referred to in the table is based on the information about the shareholders holding more than 5% of the common shares (including treasury stock) of the Company for which the Company has already completed the non-tangible registration and delivery. The capital stock recorded herein might be different, or vary, from the number of shares for which the non-tangible registration/delivery has been completed, depending on the preparation basis.
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AI assistant

TFMI — Interim / Quarterly Report 2020

52200_rns_2020-12-16_4cd0f044-7570-4aa1-960c-d523a916a5fd.pdf

Taiwan Fire & Marine Insurance Co., Ltd.

Financial Reports and ICPA’s Review Report First Quarter, 2020 and 2019

§ TABLE OF CONTENTS §

ICPA’s Review Report

Prelude

Scope

Taiwan Fire & Marine Insurance Co., Ltd.

Balance Sheets

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

Taiwan Fire & Marine Insurance Co., Ltd.

Statement of Comprehensive Income

2020 and From January 1 to March 31, 2019

(Continued)

(Continued)

Taiwan Fire & Marine Insurance Co., Ltd.

Statements of Changes in Equity

Unit: NT$ Thousand

Taiwan Fire & Marine Insurance Co., Ltd.

Statements of Cash flows

2020 and From January 1 to March 31, 2019

(Continued)

Notes to Financial Statement

I. Company profile

II. Date and Procedure for Authorization of Financial Statements

IFRS 17 “Insurance Contracts”

Level of aggregation of insurance contracts

Recognition

3. For a group of onerous contracts, when the group becomes onerous.

Measurement of the initial recognitions

Subsequent measuring

Onerous contract

Premium Allocation Approach

Modification and derecognition

Transitional Regulations

V. Major sources of major accounting judgments, estimate and hypotheses

VII. Receivable

(I) Receivable

March 31, 2019

(II) Investments in liability instruments

X. Credit risks management for Investments in liability instruments

March 31, 2020

December 31, 2019

XII. Other financial assets - net

XIV. Property and equipment

XV. Lease Agreement

(I) Right-of-use assets

(II) Lease Liabilities - 2020

(III) Major lessee activities and terms and conditions

XVI. Refundable deposit

XVII. Reserve for liabilities

(I) Claim recoverable from reinsurers

(IV) Allowance for loss of the non-accrual loan

(V) Reinsurance reserve asset and Insurance liabilities

XIX. Equity

Common Stock

(II) Capital surplus

(IV) Special reserve

comprehensive income

XX. Net Income from continuing operation

(II) Gain (loss) on investment properties

(V) Summary of nature of employee benefits, depletion and amortization

(VI) Compensation to Employees and Remuneration to Directors

Percentage of estimation

Amount

(II) Income tax liabilities of the current term

(III) Verification of income tax

XXII. Earnings Per Share (EPS)

XXIII. Financial instruments

March 31, 2020

December 31, 2019

March 31, 2019

From January 1 to March 31, 2020

(II) Categories of financial instruments

(III) The objectives and policies of financial risk management

1. Market risk

Analysis of sensitivity

(2) Interest rate risks

TFMI Interim / Quarterly Report 2020