UNION INS. — Annual Report 2021

Nov 8, 2021

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Stock Code:2816

UNION INSURANCE CO., LTD.

Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2021 and 2020

Address: No. 219, Sec. 4, Zhongxiao E. Road, Taipei, Taiwan Telephone: (02)27765567

The independent auditors’ report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and financial statements, the Chinese version shall prevail.

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Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to the Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information 9. List of major account titles 10. Review Report of Other Disclosures in Financial Reports 11. Other Disclosures in Financial Reports (1)Information on business conditions (2)Market price of securities, dividend and dispersion of ownership (3)Financial information (4)Financial position and financial performance analysis (5)CPA information

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KPMG

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Independent Auditors’ Report

To the Board of Directors of Union Insurance Co., LTD.:

Opinion

We have audited the financial statements of Union Insurance Co., LTD.(“the Company”), which comprise the balance sheets as of December 31, 2021 and 2020, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Insurance Enterprises and and with the International Financial Reporting Standards (“ IFRSs” ), International Accounting Standards (“ IASs” ), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Assessment of insurance liability

Please refer to Note 4(o) “ Insurance liabilities” for the related accounting policy, Note 5(a) for accounting assumptions and estimation uncertainty of insurance liability, and Note 6(o) for details of the assessment of insurance liability.

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

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Description of key audit matter:

The Company measures insurance liabilities in accordance with “ Regulations Governing the Provision of Various Reserves” and relevant administrative rules, of which the judgment of future uncertainty and related hypothetical parameters include claim development factor and expected claim rate used in estimating the claim reserve, as well as the reserve of unearned premium is based on the calculated factors according to characteristics of each insurance type. Above mentioned assessment is involved the exercise of significant professional judgments. Therefore, the valuation of insurance liabilities has been identified as a key audit matter in our audit.

How the matter was addressed in our audit:

Our principal audit procedures included: engaging our internal actuarial specialists to perform relevant audit procedures over insurance liability, inspecting whether the methods and parameters of insurance liabilities are in accordance with insurance related regulations and administrative rules and relevant practical principles set by the Actuarial Institute of the Republic of China; independently establishing models to recalculate the amount of reserves and further comparing the result of recalculation with the one provided by the management; the appropriateness of actuarial assumptions based on internal data or industry experiences with the characteristics of insurance products, performing the changes of insurance liabilities analysis, including understanding of industry and market, and evaluating the rationality of actuarial assumption adopted by the management.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Insurance Enterprises and with the IFRSs, IASs, IFRIC, SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’ s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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1. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

2. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

3. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

4. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are WU, CHENG YEN and CHUNG, TAN TAN.

KPMG

Taipei, Taiwan (Republic of China) March 24, 2022

Notes to Readers

The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and financial statements, the Chinese version shall prevail.

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(English Translation of Financial Statements Originally Issued in Chinese) UNION INSURANCE CO., LTD.

Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2021 Assets Amount % 11000 Cash and cash equivalents (note 6(a)) $ 3,648,227 19 12000 Receivables (note 6(b)) 680,984 4 12600 Current tax assets - - 14110 Financial assets at fair value through profit or loss (note 6(f)) 1,879,359 10 14190 Financial assets at fair value through other comprehensive income (note 6(f)) 2,080,399 11 14145 Financial assets at amortized cost (note 6(f)) 1,396,058 7 14180 Other financial assets, net (note 6(f)) 2,427,420 13 16700 Right-of-use assets (note 6(j)) 18,127 - 14200 Investment property (note 6(h)) 856,508 4 15000 Reinsurance assets (note 6(c)) 3,860,017 20 16000 Property and equipment (note 6(i)) 1,262,061 7 17000 Intangible assets 120,574 1 18000 Other assets 791,203 4 Total assets $ 19,020,937 100	December 31, 2020 Amount % 2,386,542 13 667,810 4 302 - 1,966,543 11 2,356,484 13 1,493,894 8 2,121,637 12 7,810 - 791,880 5 3,920,832 22 1,165,781 7 136,982 1 728,235 4 17,744,732 100 Liabilities and Equity 21000 Accounts payable (note 6(b) and (e)) 21700 Current tax liabilities 24000 Insurance liabilities (note 6(o)) 27000 Provisions (note 6(m)) 23800 Lease liabilities (note 6(k)) 28000 Deferred tax liabilities (note 6(p)) 25000 Other liabilities Total liabilities Equity 31100 Ordinary share (note 6(q)) 33100 Legal reserve (note 6(q)) 33200 Special reserve (note 6(o) and (q)) 33300 Unappropriated retained earnings (note 6(q)) 34210 Revaluation gains (losses) on investments in equity instruments measured at fair value through other comprehensive income Total equity Total liabilities and equity	December 31, 2021		December 31, 2020
		Amount %		Amount %
		$ 1,237,685 7 102,936 - 10,958,474 58 179,077 1 18,257 - 63,920 - 18,815 - 12,579,164 66 2,236,080 12 854,366 4 2,459,890 13 811,953 4 79,484 1 6,441,773 34 $ 19,020,937 100		1,256,750 7 180 - 10,326,662 58 214,043 2 7,863 - 63,920 - 28,121 - 11,897,539 67 2,236,080 13 718,040 4 2,235,431 13 599,184 3 58,458 - 5,847,193 33 17,744,732 100

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese) UNION INSURANCE CO., LTD.

Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Share)

41000 Operating revenue: 41110 Written premium 41120 Reinsurance premium 41100 Premium 51100 Less: Reinsurance expense 51310 Net change in unearned premiums reserve 41130 Retained earned premium 41300 Reinsurance commission received 41500 Net income(loss) from investments 41510 Interest income 41521 Gains on financial assets or liabilities at fair value through profit or loss 41527 Realized gains (losses) on financial assets at fair value through other comprehensive income 41550 Foreign exchange gains (losses), investments 41570 Gains (losses) on investment property 41585 Expected credit losses or reversal of expected credit losses of investments (note 6(f)) 41590 Other net income (loss) from investments (note 6(g)) 41800 Other operating income Total operating revenue 51000 Operating costs: 51200 Insurance claim payment 41200 Less: Claims recovered from reinsurers 51260 Retained claim payment 51300 Net change in other insurance liability (note6(o)) 51320 Net change in claim reserve 51340 Net change in special claim reserve 51500 Commission expense 51800 Other operating costs 51700 Finance costs Total operating costs 58000 Operating expenses: 58100 General expenses 58200 Administrative expenses 58300 Staff training expenses 58400 Expected credit losses or reversal of expected credit losses of non-investments Total operating expenses Net operating income 59000 Non-operating income and expenses: 59100 Gains (losses) on disposals of property and equipment 59900 Other non-operating income and expenses, net Total non-operating income and expenses 62000 Net income before income tax 63000 Less: Income tax expenses (note6(p)) Net Income 83000 Other comprehensive income: 83100 Components of other comprehensive income that will not be reclassified to profit or loss 83110 Gains (losses) on remeasurements of defined benefit plans (note 6(m)) 83190 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss 83000 Other comprehensive income (after tax) Total comprehensive income 97500 Basic earnings per share (note 6(r)) 98500 Diluted earnings per share (note 6(r))	2021 Amount % $ 10,661,485 121 432,458 5 11,093,943 126 3,098,508 35 181,957 2 7,813,478 89 450,664 5 73,657 1 367,578 4 73,713 1 (50) - 20,801 - 219 - - - 9,851 - 8,809,911 100 5,923,882 67 1,962,711 22 3,961,171 45 295,174 3 12,878 - 1,697,771 19 32,459 1 4,690 - 6,004,143 68 1,647,501 19 396,933 4 1,468 - (34,251) - 2,011,651 23 794,117 9 - - 12,144 - 12,144 - 806,261 9 109,593 1 696,668 8 19,593 - 57,205 1 76,798 1 76,798 1 $ 773,466 9 $ 3.12 $ 3.09	2020 Change Amount % % 10,222,889 124 4 419,272 5 3 10,642,161 129 3,259,029 39 (5) 238,756 3 (24) 7,144,376 87 579,520 7 (22) 78,337 1 (6) 264,405 3 39 67,954 1 8 (657) - 92 51,825 1 (60) 76 - 188 38,855 - (100) 13,091 - (25) 8,237,782 100 5,926,033 72 - 2,136,153 26 (8) 3,789,880 46 58,378 1 406 (5,066) - 354 1,618,526 20 5 45,501 - (29) 2,484 - 89 5,509,703 67 1,611,241 20 2 434,332 5 (9) 1,195 - 23 7,421 - (562) 2,054,189 25 673,890 8 18 2,141 - (100) 30,021 1 (60) 32,162 1 706,052 9 3,955 - 702,097 9 (1) (29,815) - 166 (52,572) (1) 209 (82,387) (1) 193 (82,387) (1) 193 619,710 8 25 3.14 3.12

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese) UNION INSURANCE CO., LTD.

Statements of Changes in Equity

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Balance at January 1, 2020 Net income Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Special reserve on appropriated-net change in special claim reserve Cash dividends of ordinary share Stock dividends of ordinary share Special reserve on reversal-employee training and transferring plan Disposal of subsidiaries Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance at December 31, 2020 Net income Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Special reserve on appropriated-net change in special claim reserve Cash dividends of ordinary share Special reserve on reversal-employee training and transferring plan Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance at December 31, 2021	Share capital	Share capital				Retained earnings				Other	equity Equity related to assets (or disposal groups) classified as held-for-sale	equity Equity related to assets (or disposal groups) classified as held-for-sale	Total equity
	Ordinary shares			Legal reserve		Special reserve		Unappropriated retained earnings		Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income
	$ 2,129,600 - - - - - - 106,480 - - - 2,236,080 - - - - - - - - $ 2,236,080			577,284		2,038,341		549,288		120,375		2,953 - - - - - - - - (2,953) - - - - - - - - - - -	5,417,841
		- -		- -		- -							702,097 (82,387)
		-		-		-							619,710
		- - - 106,480 - - -		140,756 - - - - - -									- - (187,405) - - (2,953) -
		2,236,080		718,040									5,847,193
		- -		- -									696,668 76,798
		-		-									773,466
		- - - - -		136,326 - - - -									- - (178,886) - -
		$ 2,236,080		854,366									6,441,773

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese) UNION INSURANCE CO., LTD.

Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Net income before income tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Net profit on financial assets or liabilities at fair value through profit or loss Interest expense Interest revenue Dividend revenue Net change in insurance liabilities Net change in other provisions Expected credit loss of investments (Reversal of) expected credit loss of non-investments Gain on disposal of property and equipment Gain on disposal of investment properties Gain on disposal of intangible assets Gain on disposal of subsidiaries Others Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Increase in notes receivable Increase (decrease) in premiums receivable Decrease (increase) in other receivables Decrease (increase) in financial assets at fair value through profit or loss Decrease (increase) in financial assets at fair value through other comprehensive income Decrease (increase) in financial assets at amortized cost (Increase) decrease in other financial assets Decrease in reinsurance assets (Increase) decrease in other assets Total changes in operating assets Changes in operating liabilities: Decrease in other payable Decrease in other liabilities Total changes in operating liabilities Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net Cash flows from operating activities Cash flows from (used in) investing activities: Increase in prepayments Proceeds from disposal of subsidiaries Acquisition of property and equipment Proceeds from disposal of property and equipment Acquisition of intangible assets Proceeds from disposal of intangible assets Acquisition of investment properties Proceeds from disposal of investment properties Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Payment of lease liabilities Cash dividends paid Net cash flows used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2021 $ 806,261 51,004 17,462 (336,882) 4,690 (73,657) (104,409) 636,458 (15,373) (219) (34,251) - - - - (2) 144,821 (9,546) (17,930) 9,907 424,066 333,290 40,000 (305,783) 98,728 (5,047) 567,685 (19,065) (9,306) (28,371) 1,490,396 73,958 105,107 (4,690) (6,535) 1,658,236 (4,977) - (195,863) - (855) - (375) - (202,070) (15,595) (178,886) (194,481) 1,261,685 2,386,542 $ 3,648,227	2020 706,052 53,997 17,301 (240,451) 2,484 (78,337) (91,908) (69,823) (49,204) (76) 7,421 (2,141) (9,947) (3,189) (38,855) (15) (502,743) (16,689) 224,866 (25,108) (106,834) (548,762) (72,991) 465,933 228,338 33,259 182,012 (26,478) (80,054) (106,532) 278,789 78,686 92,163 (2,484) (7,166) 439,988 (21,168) 74,980 (56,714) 3,980 (14,364) 10,500 (2,251) 38,000 32,963 (16,265) (187,405) (203,670) 269,281 2,117,261 2,386,542

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese) UNION INSURANCE CO., LTD.

Notes to the Financial Statements

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

UNION INSURANCE CO., LTD. (the “Company”) was founded on February 20, 1963 and registered under the Ministry of Economic Affairs, R.O.C. The address of the Company’s registered office is 12th Floor, No. 219, Sec. 4, Zhongxiao E. Road, Taipei, Taiwan, R.O.C. The Company are primarily engaged in underwriting of fire, marine, automobile, engineering, liability and accident insurance, reinsurance, insurance businesses entrusted by other companies, performing a variety of investments and other businesses in accordance with the regulations.

(2) Approval date and procedures of the financial statements:

These financial reports were approved and announced by the Board of Directors on March 24, 2022.

(3) New standards, amendments and interpretations adopted:

• (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2021:

• ●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• ●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”

• ●Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its financial statements:

• －

• ●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”

• －

• ●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”

• ●Annual Improvements to IFRS Standards 2018–2020

• ●Amendments to IFRS 3 “Reference to the Conceptual Framework”

(Continued)

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UNION INSURANCE CO., LTD. Notes to the Financial Statements

(c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The following new and amended standards, which may be relevant to the Company, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Interpretations IFRS 17 “Insurance Contracts”	Content of amendment Effective date per IASB The new standard of accounting for insurance contracts contain recognition, measurement, presentation and disclosure of insurance contracts issued, and the main amendments are as follows: January 1, 2023

• ●Recognition: an entity recognizes a group of insurance contracts that it issues from the earliest of :

• the beginning of the coverage period of the group of contracts;

• the date when the first payment from a policyholder in the group because due; and

• for a group of onerous contracts, when the group becomes onerous, if facts and circumstances indicate that there is such a group.

• ●Measurement: on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. For subsequent measurement, the entity shall estimate the cash flows, discount rates and the adjustment for nonfinancial risk.

• ●Presentation and disclosure: the presentation of insurance revenue is based on the provision of service pattern and investment components excluded from insurance revenue.

(Continued)

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UNION INSURANCE CO., LTD. Notes to the Financial Statements

Standards or Effective date per Interpretations Content of amendment IASB Amendments to IFRS 17 The fundamental principles introduced January 1, 2023 “Insurance Contracts” when the Board first issued IFRS 17 in May 2017 remain unaffected. The amendments are designed to:

• ●reduce costs by simplifying some requirements in the Standard;

• ●make financial performance easier to explain; and

●ease transition by deferring the effective date of the Standard to 2023 and by providing additional relief to reduce the effort required when applying IFRS 17 for the first time. Amendments to IFRS 17 The amendment adds a new transition January 1, 2023 “Initial Application of IFRS option to IFRS 17 (the ‘ classification 17 and IFRS 9 – Comparative overlay’ ) to alleviate accounting Information “ mismatches in comparative information between insurance contract liabilities and related financial assets on the initial application of IFRS 17. It allows presentation of comparative information about financial assets to be presented in a manner that is more consistent with IFRS 9 Financial Instruments.

The Company is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its financial position and financial performance. The results thereof will be disclosed when the Company completes its evaluation.

The Company does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its financial statements:

• ●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

• ●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

• ●Amendments to IAS 1 “Disclosure of Accounting Policies”

• ●Amendments to IAS 8 “Definition of Accounting Estimates”

• ●Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(Continued)

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UNION INSURANCE CO., LTD. Notes to the Financial Statements

(4) Summary of significant accounting policies:

The significant accounting policies presented in the financial statements are summarized as follows. Unless otherwise indicated, the significant accounting policies have been applied consistently to all periods presented in these financial statements.

(a) Statement of compliance

These financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Insurance Companies and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed by the FSC (hereinafter referred to IFRS endorsed by the FSC).

• (b) Basis of preparation

• (i) Basis of measure

Except for the following significant accounts, the financial statements have been prepared on a historical cost basis:

• 1) FVTPL are measured at fair value.

• 2) FVOCI are measured at fair value.

• 3) Net defined benefit liability is recognized as the fair value of the plan assets less the present value of the defined benefit obligation and the effect of the asset ceiling.

• 4) Part of investment properties are measured at fair value as their recognized cost.

• 5) Reinsurance reserve assets and insurance liability are measured in accordance with the “Regulations Governing the Provision of Various Reserves”.

• (ii) Functional currency and Presentation Currency

The functional currency of the Group entities is determined based on the primary economic environment in which the entities operate. The financial statements are presented in New Taiwan Dollar, which is the Group’s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

(c) Foreign currency

Transactions in foreign currencies are translated into the respective functional currencies of the Company at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for the differences relating to an investment in equity securities designated as at fair value through other comprehensive income.

(Continued)

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UNION INSURANCE CO., LTD. Notes to the Financial Statements

(d) Principle of classifying assets and liabilities as current and non-current

Due to the specific business feature of insurance business, the operating cycle is more difficult to establish, and therefore assets and liabilities are not classified as current or non-current. Nonetheless, the items are classified per their properties and are arranged per their liquidity.

(e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents comprise time deposits due within three months and bonds purchased under resale agreements which are held for the purpose of meeting short term cash commitments, readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Those time deposits exceed three months are recognized － as other financial assets net.

(f) Bills and bonds purchased/sold under agreements to resell

Bills and bonds purchased/sold under agreements to resell, they are accounted at the transaction price and are included in assets on the delivery date if it's compliance with financing conditions. When selling back, they are regarded as the realization of the assets, and the difference between the trading and the selling is classified as interest income.

(g) Financial instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

(Continued)

13

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

• 2) Fair value through other comprehensive income (FVOCI)

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Company’s right to receive payment is established.

• 3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

(Continued)

14

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• 4) Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘ principal’ is defined as the fair value of the financial assets on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

• contingent events that would change the amount or timing of cash flows;

• terms that may adjust the contractual coupon rate, including variable rate features;

• prepayment and extension features; and

• terms that limit the Company’s claim to cash flows from specified assets (e.g. nonrecourse features)

• 5) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, receivables, guarantee deposit paid and other financial assets), debt investments measured at FVOCI, accounts receivable and contract assets.

The Company measures loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL:

• debt securities that are determined to have low credit risk at the reporting date; and

• other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’ s historical experience and informed credit assessment as well as forwardlooking information.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

(Continued)

15

UNION INSURANCE CO., LTD. Notes to the Financial Statements

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 month after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘ credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit-impaired includes the following observable data:

• significant financial difficulty of the borrower or issuer;

• a breach of contract such as a default or being more than 90 days past due;

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charge to profit or loss and is recognized in other comprehensive income instead of reducing the carrying amount of the asset.

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

• 6) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(Continued)

16

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(ii) Financial liabilities

1) Other financial liabilities

Financial liabilities not classified as held for trading or designated as at fair value through profit or loss are measured at fair value (including payables and other liabilities), plus any directly attributable transaction costs at the time of initial recognition. Subsequent to initial recognition, they are measured at amortized cost calculated using the effective interest method.

2) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

3) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(h) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition and subsequently at cost less accumulated depreciation and accumulated impairment losses. Depreciation expense is calculated based on the depreciation method, useful life, and residual value which are the same as those adopted for property, plant and equipment.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount) is recognized in profit or loss.

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

When the use of an investment property changes such that it is reclassified as property, plant and equipment, its book value at the date of reclassification becomes its cost for subsequent accounting.

(Continued)

17

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(i) Insurance contracts

An insurance contract is a “ contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder” . The Company defines significant insurance risk as the event which might lead to additional significant payment.

Once a contract has qualified as an insurance contract, it remains an insurance contract until all rights and obligations are extinguished or expired, even if insurance risk becomes insignificant or not existent. However, some contracts do not transfer any insurance risk to the Company at inception, although they do transfer insurance risk at a later time. In those cases, the contract is not considered an insurance contract until the risk transfer happens.

(j) Reinsurance contract assets

The Company’ s rights to the reinsurer include ceded unearned premium reserve, ceded claim reserve, ceded premium deficiency reserve, claims recoverable from reinsurers, and net reinsurance receivables. The way to estimate claims and payments recoverable from reinsures is consistent with the way to estimate claims of policies. Receivables and payables of reinsurance are not offset and present by net amounts unless both parties to the contract have statutory offsetting rights and intend to deliver on a net basis or at the same time.

The Company periodically assesses the impairment of the reinsurance assets described above, reinsurance reserve assets, claims recoverable from reinsurers, reinsurance receivables, and reinsurance liabilities reserve deposit. A reinsurance asset is impaired if, and only if (a) there is objective evidence, as a result of an event that occurred after initial recognition of the reinsurance asset, that the Company may not receive all amounts due to it under the terms of the contract; and (b) that event has a reliably measurable impact on the amounts that the Company will receive from the reinsurer. If the Company’s reinsurance reserve assets are impaired, the Company shall reduce its carrying amount accordingly and recognize that impairment loss in profit or loss, and recognize proper allowance for claims recoverable from reinsurers, reinsurance receivables, and reinsurance liabilities reserve deposit.

The Company assesses whether significant insurance risks have been transferred to the reinsurer. If significant insurance risks of the insurance contract have not been transferred, the contract is recognized via deposit accounting. The premium minus the company retained reinsurance premium (or fee) is recognized as deposit asset or liability, not profit or loss.

Compliance with the “Regulations Governing the Provision of Unauthorized Reinsurance Reserves for Insurance Company”, the Company deposits reserve for those unauthorized reinsurance ceded businesses according to “ Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms” on ceded date or balance sheet date and discloses in notes of financial statements.

(Continued)

18

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• (k) Property, plant and equipment

• (i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

• (ii) Reclassifies the property to investment property

When the use of a property changes to investment property, the Company reclassifies the property to investment property based on the carrying amount when the use is changed.

• (iii) Subsequent cost

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

• (iv) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

• 1) Buildings 20-61 years

• 2) Office and other equipment 3-9 years

Depreciation methods, useful lives, and residual values are reviewed at each reporting date and adjusted if appropriate.

(l) Leases

• (i) Identifying a lease

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

(Continued)

19

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(ii) As a leasee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• － fixed payments, including in-substance fixed payments;

• － variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• －

• －

• amounts expected to be payable under a residual value guarantee; and

• payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

• －

• there is a change in future lease payments arising from the change in an index or rate; or

• － there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or

• － there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or

• － there is a change of its assessment on whether it will exercise a extension or termination option; or

• －

• there is any lease modifications such as lease subject, scope or other lease terms.

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

(Continued)

20

UNION INSURANCE CO., LTD. Notes to the Financial Statements

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Company has elected not to recognize right-of-use assets and lease liabilities for shortterm leases of IT equipment and leases of low-value assets.The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(iii) As a leasor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of lease income.

(m) Intangible assets

• (i) Recognition and measurement

Intangible assets, including computer software and golf membership, that are acquired by the Company are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent Expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.

(iii) Amortization

The amortizable amount is the cost of an asset less its residual value. Amortization is recognized in profit or loss on a straight line basis over the estimated useful lives of intangible assets from the date that they are available for use.

(Continued)

21

UNION INSURANCE CO., LTD. Notes to the Financial Statements

The estimated useful lives for current and comparative periods are as follows:

(1) Computer software 3-12 years

(2) Golf membership 10-12 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(n) Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(o) Insurance liability

The Company determines reserves for insurance contracts in accordance with the “ Regulations Governing the Provision of Various Reserves” , “ Regulations for Management of the Various Reserve of Compulsory Automobile Liability Insurance” , “ Enforcement Rules for the Risk Spreading Mechanism of Residential Earthquake Insurance”, and “Regulations for the Reserve of Nuclear Insurance” , methodologies used to determine the reserve are certified by the appointed actuary who is authorized by the Financial Supervisory Commission, Executive Yuan.

The methodologies used to determine the reserves are described as follows:

(i) Unearned premiums reserve:

Unearned premium reserve is determined based on the exposure of the unexpired period for the unexpired policies and the policies that have been not terminated.

(ii) Claim reserve:

The Company shall determine claim reserve, including case reserve and IBNR, using actuarial approaches, based on the historical experiences for each line of business. The case reserve shall be estimated case by case, based on actual relevant information.

(Continued)

22

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• (iii) Special reserve:

Special reserve comprises three parts, catastrophe reserve, risk volatility reserve and travel insurance reserve.

• 1) Special reserve - catastrophe special reserve

Catastrophe special reserve for each line of business shall be determined based on ratios regulated by the Authority. The portion of the losses over NT$ 30 million shall be recovered from catastrophe special reserve. Catastrophe special reserve can be released after 15 years based on the mechanism decided by the appointed actuary and filed to the Authority.

From July 1, 2011, reserve of Commercial Earthquake Insurance and Typhoon and Flood Insurance can be released after 30 years and recognized in accordance with the “ Regulations for Insurance Companies Determining Various Reserves of Commercial Earthquake Insurance and Typhoon and Flood Insurance”

• 2) Special reserve - risk volatility special reserve

If the actual loss, after deducting catastrophe special reserve, is less than the expected loss, an equalization special reserve shall be recognized at 15% of that difference. From July 1, 2011, according to “Regulations for Insurance Companies Determining Various Reserves of Commercial Earthquake Insurance and Typhoon and Flood Insurance”, for commercial earthquake insurance and typhoon and flood insurance, if the actual claim of the retention, deducted by the balance of the insurance written off by catastrophe special reserve, is lower than the expected claim, then a equalization special reserve shall be provided based on 75% of the difference. The expected claim shall not be less than 60% of the expected rate of loss.

If the actual loss, after deducting the catastrophe special reserve recovered for the line of business, exceeds the expected loss, the amount of that difference shall be recovered from the equalization special reserve. If the equalization special reserve is insufficient to deduct for a specific line of business, it can be released from other line of business. The amount released and the line of business from which shall follow the related regulations. If the cumulative equalization special reserve exceeds 60% of the net earned premium, the equalization special reserve shall be released by that difference. Although accident insurance and health insurance shall be released in accordance with the “ Regulations Governing the Provision of Various Reserves” Art. 20.1.(3).

From July 1, 2011, according to “ Regulations for Insurance Companies Determining Various Reserves of Commercial Earthquake Insurance and Typhoon and Flood Insurance” , if the equalization special reserve of commercial earthquake insurance exceeds 18 times of the net earned premium, or the equalization special reserve of typhoon and flood insurance exceeds 8 times of the net earned premium, the equalization special reserve shall be released by that difference.

(Continued)

23

UNION INSURANCE CO., LTD. Notes to the Financial Statements

In addition, according to “Directions Concerning Enhanced Natural Disaster Reserve of Property Insurance (Commercial Earthquake Insurance, Typhoon Insurance, and Flood Insurance)” under Jin Guan Bao Cai Zi No. 10102515061, from January 1, 2013, “ Enforcement Rules for the Risk Spreading Mechanism of Residential Earthquake Insurance” under Jin Guan Bao Cai Zi No. 10102531691, and “Regulations for Insurance Companies Determining Various Reserves of Nuclear Insurance” under Jin Guan Bao Cai Zi No. 10102517091, the Company should first fill the special catastrophe reserve and risk volatility reserve for commercial earthquake insurance and typhoon and flood insurance to maximum amount with the special catastrophe reserve and risk volatility reserve, which was in liability account and was provided before December 31, 2012, in the equity account. The calculation of the maximum amount of the special catastrophe reserve and risk volatility reserve for Commercial Earthquake Insurance, Typhoon Insurance, and Flood Insurance is to take the net earned premium of 2012 and the average amount of net earned premium from 2008 to 2012, which is higher, as the base. The catastrophe special reserve is calculated by the base amount described above multiply the catastrophe special reserve rate (7%) and cumulative age (30 years), and the maximum amount of risk volatility reserve is calculated by the base amount described above multiply the cumulative multiples (Commercial Earthquake Insurance multiply 18; Typhoon Insurance and Flood Insurance multiply 8).

The deficiency between the amount which was in liability and equity accounts on December 31, 2012 and the maximum amount of the special catastrophe reserve shall be first filled by special reserves of other insurances and then scaled to the risk volatility special reserve of Commercial Earthquake Insurance, Typhoon Insurance, and Flood Insurance. If there is any reserve left, the amount deducted by income tax calculated based on IAS 12 shall be reclassified to special reserve in equity account.

The amount that is transferred from special reserves of other insurances to catastrophe special reserve under liability accounts shall be released by one thirtieth of the ending balance of liability on January 1, 2013. The recoverable amount described above shall first deduct the amount of losses caused by the event exceed over NT$ 30 million dollars for the individual company. If the cumulative amount of catastrophe special reserve is lower than the recoverable amount described above before deduction, the excess amount can only be released after the deficiency being filled. In addition, the recoverable amount described above shall be reviewed annually before 2025. If the recoverable amount described above is greater than the released amount of other types of accidents before the implementation of the precautions, the after tax difference shall be transferred to equity account. The difference described above shall be allocated in proportion to the retained premiums of other insurances of current period.

The “ Regulations for Insurance Companies Determining Various Reserves of Commercial Earthquake Insurance and Typhoon and Flood Insurance” shall be followed when determining risk volatility special reserve of Commercial Earthquake Insurance and Typhoon and Flood Insurance.

(Continued)

24

UNION INSURANCE CO., LTD. Notes to the Financial Statements

3) Special reserve – travel insurance special reserve

In accordance with the provisions of the Financial Supervisory Commission, R.O.C. (Taiwan) Jin Guan Bao Cai Zi No. 10904939031 dated October 29, 2020, in order to improve the financial structure of the insurance enterprises, the insurance enterprises shall, at the end of each business year, set aside 10% of the total premium income based on the amount of insurance and the number of days of insurance, less 20% of the nominal tax rate, in the special reserve account under owners' equity in accordance with the “ Standard Rate Schedule for Personal Travel Insurance Accidental Death and Dismemberment Benefit”.

4) Compulsory automobile liability insurance

The special reserve of compulsory automobile liability insurance is determined in accordance with the Regulations for Management of the Various Reserve of Compulsory Automobile Liability Insurance. The amount calculated by sum of retention of earned premium, withdrawal of claims reserve and special reserve of prior period plus interests deducts retained claim payment and deposit claim reserve, shall be deposited as special reserve. If the former amount is less than the latter amount, the deficiency shall be recovered by the special reserve cumulated in previous periods. If the deficiency still exists, it shall be recorded by memo entries and recovered by the special reserve cumulated in future periods.

In accordance with the provisions of the Financial Supervisory Commission, R.O.C. (Taiwan) Jin Guan Bao Cai Zi No. 11004107771 dated February 20, 2021, the insurance enterprises that operate as compulsory automobile liability insurance shall set aside a special reserve from the business expenses received from the operation of such business.

Except for the special reserve of compulsory automobile liability insurance, the provision each year is recognized in special reserve under equity account with the amount deducted by income tax. The amount is calculated based on IAS 12. For the amount which should be written off or reclaimed, the Company writes off and reclaims it via special reserve under equity account with the amount deducted by income tax.

(iv) Premium deficiency reserve

The company shall evaluate the future losses and expenses for the unexpired policies and the policies that have been not terminated. If the expected future losses and expenses exceed the sum of the recognized unearned premium reserve and the expected future premium income, a premium deficiency reserve shall be recognized at the amount of that difference.

(v) Liability adequacy reserve

In accordance with IFRS 4, the Company should assess whether its recognized insurance liabilities are adequate, using current estimates of future cash flows at the end of each reporting period. If that assessment shows that the carrying amount of its insurance liabilities (less related intangible assets) is inadequate, the entire deficiency shall be recognized as a liability adequacy reserve.

(Continued)

25

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(p) Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability.The unwinding of the discount is recognized as finance cost.

(q) Premium income and acquisition costs

Premium income direct business is recognized based on the written policies and endorsement. Since January 1, 2015, sales that are attributable to car insurance recognize revenue. Assumed reinsurance premiums for reinsurance assumed business is recognized when the reinsurance statement arrived. For those statements have not been received, assumed reinsurance premium shall be estimated by a reasonable and systematic method on the balance sheet date. The related acquisition costs (such as: commissions, brokerages, fees, reinsurance commissions and etc.) is recognized in the same period without deferring.

Unearned premium reserve is determined based on the exposure of the unexpired period for the unexpired policies and the policies that have been not terminated.

Unearned premium reserve for the compulsory auto liability is determined in accordance with the Regulations for Management of the Various Reserve of Compulsory Automobile Liability Insurance.

Unearned premium reserve for the Residential earthquake insurance is determined in accordance with the Enforcement Rules for the Risk Spreading Mechanism of Residential Earthquake Insurance.

Unearned premiums reserve for the nuclear insurance is determined in accordance with the Regulations for the Reserve of Nuclear Insurance.

The approaches to determine unearned premiums reserves selected based on the characteristics of the line of business and decided by the actuary (The approaches are not allowed to change without the permission of the Authority.) Unearned premium reserve shall be certified by the appointed actuary.

Income tax, based on Value added and Non value added Business Tax Act, the Stamp Tax Act, and other relevant laws and regulations, related to the premium income shall be recognized on accrual basis.

(r) The cost of insurance claims

Loss for direct business is recognized based on the paid losses for the reported claims. Loss shall be estimated case by case, based on the actual relevant information, and recognized as the net change in reported but unpaid reserve for the claims which have been not yet paid, either have been determined or not been determined by the claim department.

Assumed reinsurance loss for reinsurance assumed business is recognized when the statement is arrival. For those statements have not been received, assumed reinsurance, loss shall be estimated in a reasonable and systematic way and recognized as the net change in loss reserve.

(Continued)

26

UNION INSURANCE CO., LTD. Notes to the Financial Statements

Unreported loss for direct written business and reinsurance assumed business shall be estimated using actuarial methodologies, based on the historical experience, and recognized as net change in the IBNR.

The loss receivable from the reinsurance companies according to the reinsurance ceded contract shall be recognized as claims recovered from reinsurers if the loss has been paid and recognized as net change in loss reserve if the loss has not been paid.

The loss reserve is not discounted.

The loss reserve for compulsory automobile liability insurance is determined in accordance with the Regulations for Management of the Various Reserve of Compulsory Automobile Liability Insurance.

The loss reserve for residential earthquake insurance is determined in accordance with the Enforcement Rules for the Risk Spreading Mechanism of Residential Earthquake Insurance.

The loss reserve for nuclear insurance is determined based on the Regulations for the Reserve of Nuclear Insurance.

• (s) Coinsurance organization, coinsurance business and guarantee fund agreement.

The Company signed coinsurance contract of the compulsory automobile liability insurance with all the member companies which approved by the government to operate the compulsory automobile liability coinsurance. It was agreed that all business of compulsory automobile liability insurance should be covered by the coinsurance institution or the Company should pay the penalty and be audited by the auditor of the coinsurance organization. The business of the coinsurance was calculated based on pure premium, and distribute by coinsurance percentage.

(t) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

(ii) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

(Continued)

27

UNION INSURANCE CO., LTD. Notes to the Financial Statements

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

• (iv) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(u) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

• (i) Assets and liabilities that are initially recognized but are not related to the business combination and have no effect on net income or taxable gains (losses) arising from the transaction.

• (ii) Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

(Continued)

28

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(iii) Taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilized.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if the following criteria are met:

• (i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and

• (ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

• 1) the same taxable entity; or

• 2) Different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(v) Earnings per share

The Company discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares.

(w) Operating segments

Operating segments are units of the Company that engage in operating activities that may earn revenue and incur expenses, including revenue and expenses related to transactions with other units within the Company. The operating results of all operating divisions are reviewed regularly by the Company's chief operating decision maker to make decisions about the allocation of resources to those divisions and to evaluate their performance. Separate financial information is available for each operating segment.

• (x) Salvage and subrogation

Salvage legally acquired from the claim procedure for direct written business shall be valued and recognized at its fair value. Subrogation legally acquired shall be recognized when the actual recovery is definite (the inflow of the economic benefits in the future is more likely than not), and its amount can be reliably measured.

(Continued)

29

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses in accordance with the Regulations Governing the Preperation of Financial Reports by Insurance Enterprises and IFRSs endorsed by the FSC. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

The carrying amount of the assets and liabilities as mentioned below may be affected by accounting estimates and judgment that have the most significant effects on the amounts recognized in the financial statements. The actual results may be influenced by the change of taken accounting estimates and professional judgments with the content has an existing significant difference as follows:

(a) Insurance liability

The Company measures insurance liabilities in accordance with “ Regulations Governing the Provision of Various Reserves”.

• (i) Unearned premium reserve is estimated based on the exposure of the unexpired period of each business line. The provision of reserves is determined by actuarial specialists in accordance with of characteristics each business line.

• (ii) Claim reserve is estimated in accordance with the method of a loss triangle. The final claim cost is calculated based on the primary assumptions that are loss development factors and expected claim ratio. The loss development factors and expected claim ratio of each business line are calculated based on historical claim experience and adjusted by Company's policies such as insurance rate and claim management.

The professional judgment used in the above process will affect the amount recognized, including net change in insurance liability and the provision of insurance liability.

(b) Reinsurance Reserve assets

The estimate of ceded reinsurance unearned premiums reserve, ceded reinsurance claim reserve and ceded reinsurance liability reserve is according to with the “Regulations Governing the Provision of Various Reserves”.

(Continued)

30

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash and cash equivalents
Cash on hand Petty cash Cash in bank Bonds purchased under resale agreements Total	December 31, 2021 $ 500 13,050 2,857,262 777,415 $ 3,648,227	December 31, 2020
		500 12,400 1,803,141 570,501
		2,386,542

(b) Receivables and Payables

(i) Receivables

(ii)	Item	December 31, 2021 $ 246,082 292,770 142,132 $ 680,984	December 31, 2020
	Notes receivable Premiums receivable Other receivables Total Payables		236,368 273,893 157,549
			667,810

	Item	December 31, 2021 $ 178,446 96,636 521,836 1,611 2,849 436,307 $ 1,237,685	December 31, 2020
	Commission payable Due to ceding companies Reinsurance premium payable Reinsurance commission payable Insurance claim payable Other payables Total		172,896 60,797 599,748 1,712 2,753 418,844
			1,256,750

(Continued)

31

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(iii) Receivables of insurance contracts

(iv)	Item	December 31, 2021 $ 247,532 (1,450) $ 246,082 December 31, 2021 $ 66,101 39,286 9,043 128,088 9,466 3,236 4,551 36,986 296,757 (3,987) $ 292,770 December 31, 2021 $ 176,514 (34,382) $ 142,132	December 31, 2020
	Notes receivable Less : Loss allowance Total Item		237,986 (1,618)
			236,368
			December 31, 2020
	Premiums receivable Fire insurance Marine insurance Hull and fishing vessel insurance Other accident insurance Compulsory pure premium Voluntary automobile insurance Compulsory automobile liability insurance Overdue receivables Subtotal Less : Loss allowance Total Other receivables Item		64,814 28,507 9,199 97,190 10,230 17,859 4,772 46,257
			278,828 (4,935)
			273,893
			December 31, 2020
	Other receivables Less : Loss allowance Total		187,153 (29,604)
			157,549

As of December 31, 2021 and 2020, the overdue receivables in notes receivable, premiums receivable and other receivable were $71,802 and $77,484, which provisioned the loss allowance $39,819 and $36,157, respectively. The movements of the loss allowance for receivable were as follows:

Beginning balance Loss recognized Ending balance	For the years ended December 31,	For the years ended December 31,
	2021 $ 36,157 3,662 $ 39,819	2020
		28,752 7,405
		36,157

(Continued)

32

UNION INSURANCE CO., LTD. Notes to the Financial Statements

The Company's aging analysis of receivables is as follows:

Under 90 days 90~270 days More than 271 days	December 31, 2021 December 31, 2020 $ 663,368 646,679 26,887 30,726 30,548 26,562

The estimate of expected credit losses of the Company's receivable please refer to Note 6(v)

(v) Payables of insurance contracts

Item Commission payable Reinsurance assets Claims recoverable from reinsurers (Note 6(d)) Due from reinsurers and ceding companies－net (Note 6(e)) Reinsurance reserve assets (Note 6(o)) Ceded unearned premiums reserve Ceded claim reserve Total	Item	December 31, 2021 $ 178,446 December 31, 2021 $ 249,297 244,371 1,742,957 1,623,392 $ 3,860,017	December 31, 2020
			172,896
			December 31, 2020
			354,660 346,272 1,907,983 1,311,917
			3,920,832

(c) Reinsurance assets

(d) Claims recoverable from reinsurers

Item	December 31, 2021 $ 9,633 1,279 6 69,309 (1,701) 95,164 21,571 2,289 51,658 89 - $ 249,297	December 31, 2020 7,990 95 98 78,633 - 156,371 40,611 706 70,141 15 -
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Overdue receivables Less : Loss allowance Total
		354,660

(Continued)

33

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• (e) Due from (to) reinsurers and ceding companies

• (i) Receivables of insurance contracts

Item Due from ceding companies Reinsurance premium receivable Reinsurance commission receivable Overdue receivable Subtotal Less : Loss allowance Total	December 31, 2021 $ 151,236 78,663 8,638 5,834 244,371 - $ 244,371	December 31, 2020
		215,149 62,081 61,381 45,574
		384,185 (37,913
		346,272

The movements of the loss allowance for receivables of insurance contracts were as follows:

Beginning balance (Reversal of) loss recognized Ending balance (ii) Payables of insurance contracts Item Due to ceding companies Reinsurance premium payable Reinsurance commission payable Total (f) Financial assets (i) Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss: Beneficiary certificate $ Real estate investment trust beneficiary certificate Domestic listed stocks and OTC stocks Total $	For the years ended December 31,	For the years ended December 31,
	2021 $ 37,913 (37,913) $ - December 31, 2021 $ 96,636 521,836 1,611 $ 620,083 December 31, 2021 131,006 342,856 1,405,497 1,879,359	2020 37,816 97
		37,913
		December 31, 2020
		60,797 599,748 1,712
		662,257
		December 31, 2020
		52,666 353,825 1,560,052
		1,966,543

(Continued)

34

UNION INSURANCE CO., LTD. Notes to the Financial Statements

Sensitivity analysis - the risk of equity price:

If there is an increase in the securities price of 1% on the reporting date (assume that all other variables remain the same), the impact on comprehensive income for 2021 and 2020 will increase $18,794 and $19,665, respectively. Conversely, if there is a decrease in the securities price of 1% on the reporting date based on all other variables remain the same, there will be the same amount but opposite direction of influence.

(ii) Financial assets at fair value through other comprehensive income

Equity investments at fair value through other comprehensive income Domestic listed stocks and OTC stocks Domestic unlisted stocks Total	December 31, 2021 $ 2,065,027 15,372 $ 2,080,399	December 31, 2020
		2,342,540 13,944
		2,356,484

The Company designated the investments shown above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold not for trading purposes.

During the years ended December 31, 2021 and 2020, the dividends of $73,713 and $67,954, respectively, related to equity investments at fair value through other comprehensive income held on the years then ended, were recognized; the dividend of $5,530 and $0, respectively, related to the investments derecognized during the year ended December 31, 2021 and 2020 were recognized.

The Company disposed shares designated as measured at fair value through other comprehensive income due to assets allocation, managing and rearranging portfolio. The disposed shares, during the December 31, 2020 and 2019, were as follows:

Fair value Accumulate gains by disposing	For the years ended December 31,	For the years ended December 31,
	2021 $ 431,970 $ 36,179	2020
		466,560
		9,345

The accumulate gains by disposing above have been transferred from other equity to retained earning.

Sensitivity analysis-the risk of equity price:

If there is an increase in the securities price of 1% on the reporting date (assume that all other variables remain the same), the impact on comprehensive income for 2021 and 2020 will increase $20,804 and $23,565, respectively. Conversely, if there is an decrease in the securities price of 1% on the reporting date based on all other variables remain the same, there will be the same amount but opposite direction of influence.

(Continued)

35

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(iii) Financial assets at amortized cost

Government bonds Financial bonds Corporate bonds Subtotal Less: Securities serving as deposits paid Loss allowance Total	December 31, 2021 $ 570,353 300,000 950,000 1,820,353 (423,641) (654) $ 1,396,058	December 31, 2020 610,619 300,000 950,000 1,860,619 (365,852) (873) 1,493,894

• 1) The Company assesses financial assets that are held to maturity in order to collect contractual cash flows, which are solely payments of principal and interest on the principal amount outstanding. Therefore, these financial assets are classified as measured at amortized cost.

• 2) Please refer to Note 6(v) for further information of credit risk and the movement in the loss allowance of financial assets measured at amortized cost.

• 3) The Company's financial assets measured at amortized cost had been pledged partially, please refer to Note 8.

• 4) The Company assessed the impairment of financial asset on December 31, 2021 and 2020, the amounts of the expected credit loss recognized (reversal of credit loss) were as follows:

Beginning balance (Reversal of) loss recognized Ending balance (iv) Other financial assets, net: Time deposits－initial maturity date over than three months Less: Securities serving as deposits paid Total	For the years ended December 31, 2021 2020 $ 873 949 (219) (76) $ 654 873 December 31, 2021 December 31, 2020 $ 2,594,420 2,288,637 (167,000) (167,000) $ 2,427,420 2,121,637

The Company's time deposits were pledged as securities serving as deposits paid, please refer to Note 8 for further information.

(Continued)

36

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(v) Capital outsourcing information

As of December 31, 2021 and 2020, the Company has outsourced to Securities Investment Trust to manage investment project and capital amount. Further information were as follows:

			December 31,	December 31,
Investment Trust			2021	2020
Company	Investment		Amount	Amount
Nomura Asset	Domestic listed stocks and OTC stocks, bonds		$ 600,000	500,000
Management	purchased under resale agreements, short term
	bills, etc.
Fuh Hwa Securities	〃		600,000	500,000
Investment Trust
Capital Investment	〃		600,000	500,000
Trust Corporation
			$ 1,800,000	1,500,000
The investment project was mentioned above, and the		carry amounts as of December 31, 2021
and 2020 were as follows:
		December 31,		December 31,
			2021	2020
Cash and cash equivalents		$	682,233	499,330
Financial assets at	fair value through profit or loss -
stocks			1,220,996	1,243,321
		$	1,903,229	1,742,651

The investment project was mentioned above, and the carry amounts as of December 31, 2021 and 2020 were as follows:

(g) Loss of control of subsidiary

The Company has completed the disposal of 62.39% ownership of China Insurance (THAI) Public Company Ltd. and lost control of it on January 7, 2020. The disposal price was $74,980, and the disposal benefit of $38,855 has been reported under the statements of comprehensive income item "Other net income (loss) from investments". The details of the carrying amounts of assets and liabilities of China Insurance (THAI) Public Company Ltd. at the date of loss of control were as follows:

follows:
Cash and cash equivalents	$	5,107
Financial assets at fair value through profit or loss		7,435
Other financial assets - net		60,588
Reinsurance assets		9,239
Other assets		7,342
Accounts payable		(13,523)
Insurance liabilities		(12,440)
Other liabilities		(1,108)
The carrying amounts of the subsidiary at the date when control is lost	$	62,640

(Continued)

37

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(h) Investment property

The cost, depreciation, and impairment of the investment property of the Company for the years ended December 31, 2021 and 2020, were as follows:

Cost or deemed cost: Balance at January 1, 2021 Additions Reclassification from property, plant and equipment Reclassification to property, plant and equipment Balance at December 31, 2021 Balance at January 1, 2020 Additions Disposal Reclassification to property, plant and equipment Balance at December 31, 2020 Accumulated depreciation and impairments Balance at January 1, 2021 Depreciation Reclassification from property, plant and equipment Peclassification to property, plant and equipment Balance at December 31, 2021 Balance at January 1, 2020 Depreciation Disposal Reclassification to property, plant and equipment Balance at December 31, 2020 Carrying amount: December 31, 2021 December 31, 2020 Fair value： December 31, 2021 December 31, 2020	Land and Improvement $ 681,525 - 53,931 (7,569) $ 727,887 $ 714,171 - (22,640) (10,006) $ 681,525 $ 2,359 - - - $ 2,359 $ 2,359 - - - $ 2,359 $ 725,528 $ 679,166	Buildings and constructions Total 187,636 869,161 375 375 32,686 86,617 (3,593) (11,162) 217,104 944,991 204,027 918,198 2,251 2,251 (7,400) (30,040) (11,242) (21,248) 187,636 869,161 74,922 77,281 4,226 4,226 8,576 8,576 (1,600) (1,600) 86,124 88,483 76,752 79,111 4,262 4,262 (1,987) (1,987) (4,105) (4,105) 74,922 77,281 130,980 856,508 112,714 791,880 $ 1,770,222 $ 1,695,676

(Continued)

38

UNION INSURANCE CO., LTD. Notes to the Financial Statements

On December 31, 2021 and 2020, the assessment of fair value of investment property mainly referred to the market trade.

As of December 31, 2021 and 2020, the Company's investment property has not been pledged as collateral.

(i) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Company for the years ended December 31, 2021 and 2020, were as follows:

Cost: Balance at January 1, 2021 Additions Reclassification from investment property Reclassification to investment property Scrap Balance at December 31, 2021 Balance at January 1, 2020 Additions Reclassification from investment property Disposal Scrap Balance at December 31, 2020 Accumulated depreciation and impairment loss: Balance at January 1, 2021 Depreciation Reclassification from investment property Reclassification to investment property Scrap Balance at December 31, 2021 Balance at January 1, 2020 Depreciation Reclassification from investment property Disposal Scrap Balance at December 31, 2020 Carrying amount: December 31, 2021 December 31, 2020		Land $ 825,946 136,007 7,569 (53,931) - 915,591 802,214 14,580 10,006 (854) - 825,946 15,196 - - - - 15,196 15,196 - - - - 15,196 $ 900,395 $ 810,750	Buildings and constructions 480,196 47,956 3,593 (32,686) - 499,059 441,007 30,243 11,242 (2,296) - 480,196 163,931 14,097 1,600 (8,576) - 171,052 148,303 12,834 4,105 (1,311) - 163,931 328,007 316,265	Computer Equipment 183,601 8,686 - - (1,647) 190,640 182,043 5,632 - - (4,074) 183,601 155,754 12,444 - - (1,647) 166,551 143,477 16,351 - - (4,074) 155,754 24,089 27,847	Transportation equipment 579 - - - - 579 579 - - - - 579 564 15 - - - 579 467 97 - - - 564 - 15	Other equipment 51,799 3,214 - - (705) 54,308 47,893 6,060 - - (2,154) 51,799 42,041 4,090 - - (705) 45,426 40,455 3,740 - - (2,154) 42,041 8,882 9,758	Leasehold improvement 2,004 - - - - 2,004 7,216 199 - - (5,411) 2,004 858 458 - - - 1,316 5,794 475 - - (5,411) 858 688 1,146	Total
								1,544,125 195,863 11,162 (86,617) (2,352)
								1,662,181
								1,480,952 56,714 21,248 (3,150) (11,639)
								1,544,125
								378,344 31,104 1,600 (8,576) (2,352)
								400,120
								353,692 33,497 4,105 (1,311) (11,639)
								378,344
								1,262,061
								1,165,781

As of December 31, 2021 and 2020, the Company's property, plant and equipment have not been pledged as collateral.

(Continued)

39

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(j) Right-of-use assets

The changes in the Company's costs and depreciation of leasing buildings, constructions, and transportation equipment were as follows:

Costs of right-of-use assets: January 1, 2021 Additions Derecognition December 31, 2021 January 1, 2020 Additions Derecognition December 31, 2020 Depreciation of right-of-use assets: January 1, 2021 Depreciation Derecognition December 31, 2021 January 1, 2020 Depreciation Derecognition December 31, 2020 Carrying amounts: December 31, 2021 December 31, 2020	Buildings and Constructions $ 27,162 21,821 (21,602) $ 27,381 $ 27,052 5,345 (5,235) $ 27,162 $ 20,835 13,385 (21,336) $ 12,884 $ 11,391 13,798 (4,354) $ 20,835 $ 14,497 $ 6,327	Transportation Equipment 5,434 4,436 (5,435) 4,435 5,434 - - 5,434 3,951 2,289 (5,435) 805 1,511 2,440 - 3,951 3,630 1,483	Total
			32,596 26,257 (27,037)
			31,816
			32,486 5,345 (5,235)
			32,596
			24,786 15,674 (26,771)
			13,689
			12,902 16,238 (4,354)
			24,786
			18,127
			7,810

(k) Lease liabilities

The Company's lease liabilities were as follows:

Within a year One to five years Total	December 31, 2021 $ 12,760 5,497 $ 18,257	December 31, 2020
		6,526 1,337
		7,863

The maturity analysis please refer to note 6(v) financial instruments.

(Continued)

40

UNION INSURANCE CO., LTD. Notes to the Financial Statements

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities	For the years ended December 31,	For the years ended December 31,
	2021 $ 354	2020
		278

The amounts recognized in the statement of cash flows for the Company was as follows:

Total cash outflow for leases $	For the years ended December 31,	For the years ended December 31,
	2021 15,949	2020 16,543

• (i) Leases of buildings and constructions

The Company leases buildings and constructions for its office space. The leases of office space typically run for 1 to 3 years.

• (ii) Other leases

The Company leases transportation equipment with contract terms of 1 to 3 years.

(l) Operating lease

Leases as lessor

The Company leases out its investment properties (please refer to Note 6(h)). The future minimum lease payments under non-cancellable leases are as follows:

Within a year One to five years More than five years	December 31, 2021 $ 32,754 85,968 85,215 $ 203,937	December 31, 2020 22,514 43,556 11,242 77,312

Rental incomes from investment properties were $25,027 and $46,140 for 2021 and 2020, respectively.

(m) Employee benefits

• (i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value for the Company are as follows:

Present value of the defined benefit obligations Fair value of plan assets Net defined benefit (liabilities) assets	December 31, 2021 $ (533,535) 354,458 $ (179,077)	December 31, 2020
		(564,445 350,402
		(214,043
		(Continued)

41

UNION INSURANCE CO., LTD. Notes to the Financial Statements

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two year time deposits with interest rates offered by local banks.

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $354,458 and $350,402 as of December 31, 2021 and 2020, respectively. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2) Movements in present value of the defined benefit obligations

The movement in present value of the defined benefit obligations for Company were as follows:

Defined benefit obligation at January 1 Current serviced costs and interest cost Past service cost Remeasurements of net defined benefit liabilities －Actuarial gains or losses arising from changes of demographic assumptions －Actuarial gains or losses arising from changes of financial assumptions －Actuarial gains or losses arising from experience adjustments Benefits paid by the plan Defined benefit obligation at December 31

For the years ended December 31, 2021 2020 $ 564,445 540,267 9,657 11,079 366 486 2,150 1,616 (19,497) 41,557 2,574 (3,118) (26,160) (27,442) $ 533,535 564,445

(Continued)

42

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• 3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Company were as follows:

Fair value of plan assets at January 1 Interest income Remeasurements of net defined benefit liabilities －Expected return on plan assets (excluding current interest) Contribution made to the plan Benefit paid by the plan Fair value of plan assets at December 31	For the years ended December 31, 2021 2020 $ 350,402 306,835 1,367 2,025 4,820 10,240 24,029 58,744 (26,160) (27,442 $ 354,458 350,402	For the years ended December 31, 2021 2020 $ 350,402 306,835 1,367 2,025 4,820 10,240 24,029 58,744 (26,160) (27,442 $ 354,458 350,402
		2020
		306,835 2,025 10,240 58,744 (27,442
		350,402

• 4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company were as follows:

Current service cost Net interest of net liabilities (assets) for defined benefit obligations Past service cost	For the years ended December 31, 2021 2020 $ 7,456 7,513 834 1,541 366 486 $ 8,656 9,540	For the years ended December 31, 2021 2020 $ 7,456 7,513 834 1,541 366 486 $ 8,656 9,540
		2020
		7,513 1,541 486
		9,540

• 5) Remeasurement of net defined benefit liability (asset) recognized in other comprehensive income

The Company’s remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income for the years ended December 31, 2021 and 2020, was as follows:

follows:
Accumulated amount at January 1 Recognized during the period Accumulated amount at December 31	For the years ended December 31, 2021 2020 $ 224,974 195,159 (19,593) 29,815 $ 205,381 224,974
		2020
		195,159 29,815
		224,974

(Continued)

43

UNION INSURANCE CO., LTD. Notes to the Financial Statements

6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

The principal actuarial assumptions at the reporting	date were as follows:
Discount rate Expected return on planned assets Future salary increases	For the years ended December 31,
	2021 2020 % 0.70 % 0.39 % 0.70 % 0.39 % 1.50 % 1.50

The expected allocation payment to be made by the Company to the defined benefit plans for the one year period after the reporting date is $7,816. The weighted average lifetime of the defined benefits plans is 11 years.

7) Sensitivity Analysis

When calculating the present value of the defined benefit obligations, the Company uses judgments and estimations to determine the actuarial assumptions, including discount rate and future salary increases. Any changes in the actuarial assumptions may significantly impact the amount of the defined benefit obligations.

As of December 31, 2021 and 2020, if the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows

December 31, 2021 Discount rate (change 0.5％) Future salary increases(change 0.5％) December 31, 2020 Discount rate (change 0.5％) Future salary increases (change 0.5％)	Effects to Defined Benefit Obligations
	Increase Decrease $ 32,032 27,974 31,609 27,939 36,294 33,370 35,699 33,195

The sensitivity analysis presented above is based on the condition that other variables are unchanged. In practice, the changes of many assumptions are correlated. The method that the sensitivity analysis adopted is in accordance with the method of calculating net pension liability.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2021 and 2020.

(Continued)

44

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(ii) Defined contribution plan

The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The pension costs of the Company incurred from the contributions to the Bureau of the Labor Insurance amounted to $33,079 and $31,948 for the years ended December 31, 2021 and 2020, respectively.

(n) Employee compensation and directors' remuneration

In accordance with the Articles of Incorporation the Company should contribute 1%～ 5% of the profit as employee compensation, and no more than 5% directors' and supervisors' remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit.

For the years ended December 31, 2021 and 2020, the Company estimated its employee remuneration and directors' remuneration amounting to $28,500 and $6,500 for both periods respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees and directors of each period, multiplied by the percentage of remuneration to employees and directors as specified in the Company's articles. These remunerations were expensed under operating costs or operating expenses during 2021 and 2020. If the actual amounts were subsequently decided after the approval and the issuance date of the financial statements in the following year differ from the estimated amounts, the differences are accounted for as changes in accounting estimates and recognized in profit or loss in the following year. If the Board of Directors resolved to distribute the employees' remuneration in the form of shares, the number of shares of the distribution is based on the closing price of the day before the Board of Directors' meeting date.

The amounts of compensation for employees and directors of the Company in 2020 and 2019 were $28,500 and $6,500, $28,000 and $6,000, respectively. There is no difference in the actual distribution situation. Relevant information can be obtained from the Market Observation Post System.

(o) Insurance liability

Unearned premium reserve Claims reserve Special reserve Total	December 31, 2021 $ 5,859,977 3,931,668 1,166,829 $ 10,958,474	December 31, 2020
		5,847,692 3,325,019 1,153,951
		10,326,662

(Continued)

45

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(i) Unearned premium reserve

1) Unearned premium reserve and ceded reinsurance unearned premiums reserve

	Item	Item	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021
			Unearned premium reserve Ceded unearned premiums reserve Direct business Reinsurance ceded in Reinsurance ceded out $ 705,612 43,038 372,973 83,200 829 73,501 42,275 671 29,124 1,598,479 130,219 344,087 7,451 348 3,976 2,245,868 35,246 652,264 406,884 1,796 40,613 26,511 - 6,541 366,445 165,105 219,878 $ 5,482,725 377,252 1,742,957 December 31, 2020					Retained business 375,677 10,528 13,822 1,384,611 3,823 1,628,850 368,067 19,970 311,672 4,117,020
			Direct business $ 705,612 83,200 42,275 1,598,479 7,451 2,245,868 406,884 26,511 366,445 $ 5,482,725
							Ceded unearned premiums reserve Reinsurance ceded out 388,904 62,285 32,715 415,550 6,331 734,876 41,534 1,986 223,802 1,907,983	Retained business 378,487 8,346 14,533 1,319,235 5,523 1,546,892 344,980 8,935 312,778 3,939,709
		Direct business $ 732,273 69,509 46,222 1,510,914 11,492 2,244,480 384,605 10,921 372,987 $ 5,383,403
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total

(Continued)

46

UNION INSURANCE CO., LTD. Notes to the Financial Statements

2) Reserve for unearned premiums and reserve for unearned premiums out

Items Compulsory insurance Non- compulsory insurance Total Items Compulsory insurance Non- compulsory insurance Total						For the year	s ended Decem	ber 31, 2021					Retained premiums earned
	Premium revenue	Reinsurance premium 299,770 132,688 432,458	Reinsurance expense 408,888 2,689,620 3,098,508	Retained Premiums	Direct b Unearned pre	usiness mium reserve Recover 372,987 5,005,770 5,378,757 For the year	Reinsuranc Unearned reser	e ceded in premium ve Recover 163,593 300,696 464,289 ber 31, 2020	Net change in unearned premiums reserve (5,030) 21,961 16,931	Reinsurance Ceded unearn reser	ceded out ed premium ve Recover 223,802 1,684,181 1,907,983	Net change in ceded unearned premiums reserve (3,924) (161,102) (165,026)
					Provision 366,445 5,116,280 5,482,725		Provision 165,105 212,147 377,252 s ended Decem			Provision 219,878 1,523,079 1,742,957
	$ 967,046 9,694,439 $ 10,661,485			857,928 7,137,507 7,995,435									859,034 6,954,444
													7,813,478
													Retained premiums earned
	Premium revenue	Reinsurance premium 293,622 125,650 419,272	Reinsurance expenses 412,365 2,846,664 3,259,029	Retained Premiums	Direct b Unearned pre	usiness mium reserve Recover 373,487 4,680,272 5,053,759	Reinsuranc Unearned reser	e ceded in premium ve Recover 163,176 397,581 560,757	Net change in unearned premiums reserve (83) 233,259 233,176	Reinsurance Ceded unearn reser	ceded out ed premium ve Recover 224,101 1,689,462 1,913,563	Net change in ceded unearned premiums reserve (299) (5,281) (5,580)
					Provision 372,987 5,010,416 5,383,403		Provision 163,593 300,696 464,289			Provision 223,802 1,684,181 1,907,983
	$ 975,122 9,247,767 $ 10,222,889			856,379 6,526,753 7,383,132									856,163 6,288,213
													7,144,376

3) The movements in unearned premium reserve and ceded unearned premiums reserve were as follows:

Item Beginning balance Provision Recovery Ending balance Item Beginning balance Provision Recovery Ending balance	For the years ended December 31, 2021 Unearned premium reserve Ceded unearned premiums reserve $ 5,847,692 1,907,983 5,859,977 1,742,957 (5,847,692) (1,907,983) $ 5,859,977 1,742,957 For the years ended December 31, 2020 Unearned premium reserve Ceded unearned premiums reserve $ 5,622,576 1,913,563 5,847,692 1,907,983 (5,622,576) (1,913,563) $ 5,847,692 1,907,983
	Unearned premium reserve $ 5,622,576 5,847,692 (5,622,576) $ 5,847,692

The provision methods of unearned premiums reserve are determined by an actuary according to the characteristics of each insurance and are stated in the instruction of insurance commodity calculation and shall not be changed without the approval of the competent authority. The Company has submitted the provision method of unearned premiums reserve on Letter (Wang) Zong Jing Suan No. 1112 on October 24, 2011 and had been approved by Financial Supervisory Commission, R.O.C. (Taiwan) Insurance Bureau Jin Guan Bao Cai Zi No. 10002518120.

(Continued)

47

UNION INSURANCE CO., LTD. Notes to the Financial Statements

On October 9, 2014, the Company signed a specific business transferring contract with Asia Insurance Company Ltd. Taiwan Branch and accepted its long term fire insurance contracts on the delivery date, which was December 15, 2014. The Company undertook the amount of $3,916 unearned premium reserve and charged $3,648 to Asia Insurance Company Ltd. Taiwan Branch. According to IFRS 4 “ Insurance Contract” that paragraph of insurance contracts acquired in business combination or portfolio transfer: the intangible asset recognized was the difference of $268 from the fair value of the contractual insurance rights acquired and insurance obligations assumed to a liability measured in accordance with the insurer's accounting policies for insurance contracts that it issued. The subsequent measurement of this asset shall be consistent with the measurement of the related insurance liability.

On December 7, 2012, the Company signed a special business transferring contract with Walsun Insurance Ltd. and accepted its direct business of four types of insurance contracts on January 10, 2013: long term residential fire insurance contracts, employer's accidental liability insurance contracts, contractor's liability insurance contracts, and architect's professional liability insurance contracts. The Company undertook the amount of $232,939 unearned premium reserve and requested for a grants of $67,451 from the Insurance and Security Fund of the Corporation. According to IFRS 4 “ Insurance Contract” that paragraph of insurance contracts acquired in business combination or portfolio transfer: the intangible asset recognized was the difference of $165,488 from the fair value of the contractual insurance rights acquired and insurance obligations assumed to a liability measured in accordance with the insurer's accounting policies for insurance contracts that it issued. The subsequent measurement of this asset shall be consistent with the measurement of the related insurance liability

As of December 31, 2021 and 2020, the unearned premium reserve from the business transfer has recovered $6,661 and $11,565, respectively. According to relevant measurements, the intangible asset has reduced $4,646 and $8,060 as recovery deduction of unearned premium reserve, respectively. The amount of $2,015 and $3,505 were net recovered unearned premium reserve. .As of December 31, 2021 and 2020, the relevant unearned premium reserve from the business transfer and intangible assets were $18,982 and $13,328, $25,643 and $17,974, respectively.

• (ii) Special reserve

• 1) Segmentation of specific assets

The Company is engaged in business of compulsory automobile liability insurance (hereinafter referred to as "this insurance") accounting to this insurance's relevant accounting of Compulsory Automobile Liability Insurance Law.

This insurance of special reserve provision obeys "Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance" Article 5 that is to the insurer shall purchase treasury bills or deposit the reserve with a financial institution as a time deposit. Provided that with the approval of the competent authority, the insurer may purchase the following domestic securities:

• a) Government bonds, not including exchangeable government bonds.

(Continued)

48

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• b) Financial bonds, negotiable certificates of deposit, bankers’ acceptances, and commercial paper guaranteed by a financial institution, provided that financial bonds shall be limited to ordinary financial bonds only.

The amount of treasury bills purchased or time deposits placed in a financial institution under the preceding paragraph shall not be less than 30 percent of the total amount of the insurer's retained earned pure premiums for this Insurance in the most recent period, as audited or reviewed by a certified public accountant. The competent authority may raise that percentage to a level it deems appropriate based on the insurer's operational status.

If the balance of special reserve is less than 30 percent of the total amount of the retained earned pure premiums for this insurance in the most recent period, as audited or reviewed by a certified public accountant, then the full amount of its special reserve shall be deposited in a financial institution as a time deposit or treasury bills.

According to Article 6 of "Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance", funds (all types of reserves, payables, temporary credits and amounts to be carried forward) held by an insurer for this Insurance shall be deposited in a financial institution in the form of demand deposits and time deposits, provided that with the approval of the competent authority, an insurer may purchase any of the following domestic securities:

• a) Treasury bills.

• b) Negotiable certificates of deposit, bankers’ acceptances, and commercial paper guaranteed by a financial institution.

• c) Government bonds in a repo transaction.

The amount of deposits deposited in financial institutions under the first paragraph shall not be less than 45 percent of the balance remaining after subtracting the amount of special reserves from the amount of funds held by the insurer due to the operation of this Insurance, or less than 30 percent of the retained earned pure premium for the most recent period as audited or reviewed by a certified public accountant. The competent authority may raise the percentage of deposits required by the insurer to a level it deems appropriate based on the insurer's operational status.

If the total amount of unearned premium reserve and loss reserve of the insurer with respect to this Insurance is less than 30 percent of the retained earned pure premiums of this Insurance for the most recent period as audited or reviewed by a certified public accountant, the funds held by the insurer through its conduct of this Insurance shall be deposited in full with a financial institution in the form of deposits.

Accounting Article 11 of "Regulations for the Management of the Various Reserves for Compulsory Automobile Liability Insurance", when an insurer suspends business operations or terminates its operation of this Insurance, the various reserves for this Insurance shall be transferred into the various reserves set aside for handling of this Insurance by the other insurer that assumes the business.

(Continued)

49

UNION INSURANCE CO., LTD. Notes to the Financial Statements

When an insurer has been duly ordered to suspend business and undergo rehabilitation, ordered to dissolve, or its permission to operate this Insurance business has been revoked, and no other insurer is to assume this Insurance business, and there is no outstanding liability under this Insurance, and the balance of the special reserve is positive, the assets corresponding to the special reserve shall be transferred to the Motor Vehicle Accident Compensation Fund.

In accordance with the provisions of the Financial Supervisory Commission, R.O.C. (Taiwan) Jin Guan Bao Cai Zi No. 11004107771 dated February 20, 2021, the insurance company that operates as compulsory automobile liability insurance shall set aside a special reserve from the business expenses received from the operation of such business.

In accordance with the provisions of the Financial Supervisory Commission, R.O.C. (Taiwan) Jin Guan Bao Cai Zi No. 10904939031 dated October 29, 2020, in order to improve the financial structure of the insurance enterprises, the insurance enterprises shall, at the end of each business year, set aside 10% of the total premium income based on the amount of insurance and the number of days of insurance, less 20% of the nominal tax rate, in a special reserve account under owners' equity in accordance with the "Standard Rate Schedule for Personal Travel-Insurance Accidental Death and Dismemberment Benefit".

Special reserve – Compulsory Automobile Liability Insurance

Item	For the years ended December 31,	For the years ended December 31,
	2021 $ - 90,791 (72,848) $ 17,943	2020 - 35,350 (35,350) -
Beginning balance Provision Recovery Ending balance

Special reserve – Non-Compulsory Automobile Liability Insurance

Item			For the year	s ended Decembe	r 31, 2021
		Liability	Total 1,149,795 - (5,065) 1,144,730		Special	reserve
	Catastrophic risk $ 111,610 - (5,065) $ 106,545	Contingency risk 1,038,185 - - 1,038,185		Contingency risk 703,784 86,751 - 790,535	Contingency risk 1,516,706 195,548 (61,841) 1,650,413	Travel Insurance - 4,289 - 4,289	Total
Beginning balance Provision Recover Ending balance							2,220,490 286,588 (61,841)
							2,445,237

(Continued)

50

UNION INSURANCE CO., LTD. Notes to the Financial Statements

Item			For the year	s ended Decembe	r 31, 2020
		Liability	Total 1,154,861 - (5,066) 1,149,795		Special r	eserve
	Catastrophic risk $ 116,676 - (5,066) $ 111,610	Contingency risk 1,038,185 - - 1,038,185		Contingency risk 624,342 79,442 - 703,784	Contingency risk 1,396,038 193,200 (72,532) 1,516,706	Travel Insurance - - - -	Total
Beginning balance Provision Recover Ending balance							2,020,380 272,642 (72,532)
							2,220,490

Note: The liability of special reserve mentioned above means non-compulsory automobile liability insurance reserve had been provisioned before January 1, 2011. In addition, Article 8 4 of Various Provisions of Insurance Industry and Financial Supervisory Commission, R.O.C. (Taiwan) Jin Guan Bao Cai Zi No.1002509161 on June, 16, 2011 also have set the standard that the business of commercial earthquake insurance and typhoon flood insurance should provision various reserve, which is the base of recovered special reserve as of December 31, 2021 and 2020.

2) Special reserves -Other

In 2013, the determination of cost of real estate and equipment based on the International Financial Reporting Standards No. 1 that approved by the Financial Supervisory Committee, the Company chose the exemption that the revaluation reserve of land and buildings according to the Generally Accepted Accounting Principles of the Republic of China transferred to retained earnings. However, according to the standard of the Preparation of Financial Reports by Insurance Enterprises, the revaluation reserve that estimated by the cash flow discount approach via contractual rent of the investment real estate target as the upper limit adjustment to define the cost and the value added part. Then, to fill the unrecognized pension loss, the unrecognized transition net payment obligation, the increase on defined benefit obligation based on the change of actuarial assumptions, and the employee's paid leave liability, those adjustment increased the special increase of $4,156.

(Continued)

51

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(iii) Claim reserve

1) Liabilities for claims are to be paid, reported but unpaid and incurred but not reported (IBNR).

Item		December 31, 2021	December 31, 2021
	Insurance claims payable Reported to be paid $ - - - 386 1 1,709 538 52 163 $ 2,849		Claims reserve
		Reported but unpaid IBNR 600,260 53,835 106,666 57,635 77,133 16,604 971,331 275,476 18,261 5,459 681,395 45,574 73,239 193,046 110 5,405 192,067 558,172 2,720,462 1,211,206 December 31, 2020		Total
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total Item				654,095 164,301 93,737 1,246,807 23,720 726,969 266,285 5,515 750,239
				3,931,668
	Insurance claims payable Reported to be paid $ - - - 392 1 1,730 536 36 58 $ 2,753		Claims reserve
		Reported but unpaid 325,150 105,686 69,185 751,959 17,362 541,193 93,143 1,971 171,796 2,077,445	IBNR 30,219 34,749 8,167 211,272 7,685 40,491 226,200 5,352 683,439 1,247,574	Total
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total				355,369 140,435 77,352 963,231 25,047 581,684 319,343 7,323 855,235
				3,325,019

(Continued)

52

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• 2) Reinsurance assets - the insurance ceded business for the policy holders with reported but unpaid or unreported claims

Item	December 31, 2021	December 31, 2021
	Reported but unpaid IBNR $ 481,638 15,857 92,935 43,037 67,448 10,863 172,197 55,925 8,358 1,669 282,456 8,354 32,119 45,580 13 1,138 71,404 232,401 $ 1,208,568 414,824 December 31, 2020		Total
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total Item			497,495 135,972 78,311 228,122 10,027 290,810 77,699 1,151 303,805
			1,623,392
		IBNR 6,566 20,622 2,565 37,215 2,872 8,037 85,918 911 306,126 470,832	Total
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total			172,939 115,786 64,134 175,591 10,931 258,284 138,324 965 374,963
			1,311,917

(Continued)

53

UNION INSURANCE CO., LTD. Notes to the Financial Statements

3) The net change of claim reserve and ceded reinsurance claim reserve

Item				For t	he years ended	December 31, 2021	December 31, 2021
	Direct und busin		erwrite ess Recover 351,230 132,881 75,598 951,224 23,283 578,526 316,489 7,065 625,276 3,061,572	Reinsuranc	e ceded-in Recover 4,139 7,554 1,754 12,007 1,764 3,158 2,854 258 229,959 263,447 he years ended	The net change in claim Reinsurance reserve Provision 298,726 497,495 23,866 135,972 16,385 78,311 283,576 228,122 (1,327) 10,027 145,285 290,810 (53,058) 77,699 (1,808) 1,151 (104,996) 303,805 606,649 1,623,392 December 31, 2020	Reinsurance	ceded-out Recover 172,939 115,786 64,134 175,591 10,931 258,284 138,324 965 374,963 1,311,917	The net change in ceded claim
	Provision $ 636,718 160,068 91,293 1,236,198 22,318 723,902 260,828 5,515 506,341 $ 3,643,181			Provision 17,377 4,233 2,444 10,609 1,402 3,067 5,457 - 243,898 288,487 For t					reserve
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total Item									324,556 20,186 14,177 52,531 (904) 32,526 (60,625) 186 (71,158)
									311,475
		Direct und busin	erwrite ess Recover 554,720 151,355 123,308 918,225 23,994 656,817 284,371 3,389 633,326 3,349,505	Reinsuranc	e ceded-in Recover 15,401 7,064 2,431 8,683 521 6,609 5,096 397 227,245 273,447	The net change in claim reserve (214,752) (17,984) (48,387) 36,323 532 (81,742) 29,876 3,537 (5,336) (297,933)	Reinsurance	ceded-out Recover 396,794 127,196 115,930 214,222 10,590 296,210 126,828 726 379,732 1,668,228	The net change in ceded claim
				Provision 4,139 7,554 1,754 12,007 1,764 3,158 2,854 258 229,959 263,447			Provision 172,939 115,786 64,134 175,591 10,931 258,284 138,324 965 374,963 1,311,917		reserve
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total									(223,855) (11,410) (51,796) (38,631) 341 (37,926) 11,496 239 (4,769)
									(356,311)

4) The movements in claim reserve and ceded claim reserve

Item	For the years ended December 31, 2021 2020 Claims reserve Ceded claim reserve Claims reserve Ceded claim reserve $ 3,325,019 1,311,917 3,622,952 1,668,147 3,931,668 1,623,392 3,325,019 1,311,917 (3,325,019) (1,311,917) (3,622,952) (1,668,228) - - - 81 $ 3,931,668 1,623,392 3,325,019 1,311,917	For the years ended December 31, 2021 2020 Claims reserve Ceded claim reserve Claims reserve Ceded claim reserve $ 3,325,019 1,311,917 3,622,952 1,668,147 3,931,668 1,623,392 3,325,019 1,311,917 (3,325,019) (1,311,917) (3,622,952) (1,668,228) - - - 81 $ 3,931,668 1,623,392 3,325,019 1,311,917
	2021 Claims reserve Ceded claim reserve $ 3,325,019 1,311,917 3,931,668 1,623,392 (3,325,019) (1,311,917) - - $ 3,931,668 1,623,392
	Claims reserve $ 3,325,019 3,931,668 (3,325,019) - $ 3,931,668	Claims reserve 3,622,952 3,325,019 (3,622,952) - 3,325,019
Beginning balance Provision Recovery Impairment loss reversed(recognized) Ending balance

(Continued)

54

UNION INSURANCE CO., LTD. Notes to the Financial Statements

The methodology for providing claims reserve is decided by actuaries and reported to the Authority. If there is any change, it should adopt the same procedures as fore mentioned. The Company submitted the method of claims reserve provision in the letter of (Wang) Zong Qi Zi No. 1920 on December 23, 2009, which has been approved by Financial Supervisory Commission, R.O.C. (Taiwan) Insurance Bureau Jin Guan Bao Cai Zi No. 09802245610. The relevant provision methods is explained as follows:

• 1) Regarding to the claims reserve for reported but not paid, it should be estimated based on actual situation by each case.

• 2) Regarding to the claims reserve for IBNR, it should be estimated based on the experience of claim loss development of each type insurance by actuary methodology.

• (iv) Premium deficiency reserve

The methodology for premium deficiency reserve provision is decided by actuaries and shall report to the Authority, same as afterward change. The Company reported the methodology for premium deficiency reserve provision on February 16, 2012 in the letter of (Wang) Zong Jing Suan No.0005, which has been approved by Financial Supervisory Commission, R.O.C. (Taiwan) Jin Guan Bao Cai Zi No. No.10102503930.

As of December 31, 2021 and 2020, the Company had no provision for premium deficiency reserve recognized.

(p) Income tax

• (i) The components of the Company's income tax in the years 2021 and 2020 were as follows:

Current income tax expenses Current period Adjustments for prior periods Income tax expenses	For the years ended December 31,	For the years ended December 31,
	2021 $ - 109,510 83 $ 109,593	2020 7,614 (3,659) 3,955

(Continued)

55

UNION INSURANCE CO., LTD. Notes to the Financial Statements

Reconciliation of income tax and profit before tax for the years ended December 31, 2021 and 2020 were as follows:

Profit excluding income tax Income tax using the Company’s domestic tax rate Adjustment items: Tax-exempt income Change in unrecognized temporary differences Usage of tax loss carry-forward Prior income tax (over) under estimated Additional tax on undistributed earnings Income basic tax Others Income tax expenses (ii) Deferred tax assets and liabilities 1) Unrecognized deferred tax assets Tax effect of deductible temporary differences The carryforward of unused tax losses Actuarial losses of defined benefit plans Unrecognized deferred tax assets 2) Unrecognized deferred tax liabilities Taxable temporary differences 3) Recognized deferred income tax liabilities: Land value-added tax	For the years ended December 31,	For the years ended December 31,
		2020 706,052 141,211 (32,698) 239 (102,768) (3,659) - 7,614 (5,984) 3,955 December 31, 2020 12,915 17,329 44,995 75,239 December 31, 2020 - December 31, 2020
		63,920

(Continued)

56

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• (iii) Assessment of tax

The Company's tax returns for the year through 2019 were assessed by the Taipei National Tax Administration tax authorities.

(q) Capital and other equity

• (i) Share capital

The Company's transfer $106,480 from retained earnings to common stocks distributed to shareholders was approved by the resolution of the shareholders’ meeting held on June 24, 2020; therefore, total of 10,648 thousand shares were issued. This issuance of shares was approved by the Financial Supervisory Commission, R.O.C. (Taiwan) on August 14, 2020. The committee approved the declaration to take effect. The base date for the capital increase was set on September 18, 2020. The relevant statutory registration procedures have been completed.

As of December 31, 2021 and 2020, the number of authorized ordinary shares were both $6,236,320 with par value of $10 per share, i.e. 623,632 thousand shares. The issued shares were both 223,608 thousand shares of common stock.

(ii) Retained earnings

• 1) Legal reserve

According to the Company Act, the Company is able to issue new stock or cash dividend from legal reserve if there is no deficit as long as the legal reserve is over 25% of the paid in capital.

• 2) Special reserve

Based on Financial Supervisory Commission Jin Guan Bao Cai Zi No.10102508861 on June 5, 2011, when the Company distributes retained surplus that transferred from the special reserve of unrealized revaluation increment $12,143, it should be accounted a decrease in other equity, with the same amount of the prior years’ inappropriate retained earning provision being equal to current year’s net income. The amount of decrease in other equity belonged to the prior accumulation, the same amount of special reserve should be not appropriated. However, the Company's has provisioned the special reserve based on former standard, the difference between the provision amount and the decrease in other equity has been provision special reserve. Then, if a reversal of shareholders’ equity contra account occurs, the reversed portion of the special reserve could be distributed as dividends.

According to the letter from the Financial Supervisory Commission Jin Guan Bao Cai Zi No. 10502066464 on July 13, 2016. The insurance industry should allocate a special surplus reserve from 0.5% to 1% of the net profit after tax when the 2016-2018 fiscal year surplus is distributed. Moreover, since 2017, the expense of employee transferring training, transferring occupation, and settle down during the development of financial technology should be reversal. As of December 31, 2021 and 2020, the special reserve distributed by the Company in accordance with the regulations were $2,510 and $2,798, respectively.

(Continued)

57

UNION INSURANCE CO., LTD. Notes to the Financial Statements

3) Undistributed retained earnings appropriated

Under the Company's Article of Incorporation, the Company's net income after deduction of income tax and losses (if any) and offset the prior years' deficits, should be provisioned 20% of remaining amount as legal reserve, except the legal reserve is equal to the capital. In addition to any remaining profit together with any undistributed retained earnings shall be distributed based on the Company considering the operating need and legal requirement to provision special reserve, the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

The Board of Directors is authorized to distribute all or parts of the dividends and bonuses in cash to the shareholders by a resolution decided by the Board, with at least two-thirds or a majority of the directors present in the board meeting.

The remuneration of non-executive director in the Company is authorized to the board's meeting to set rational remuneration, and do not attend the earning distribution. The Company belongs to property and casualty insurance, the enterprise development should cooperate with the Government's policy and risk based capital, the ability of underwriting and solvency have to be stronger. The Company's earning distribution policy has to consider the current and future investment environment, capital requirement, market competition situation and budget, etc., with the benefit of shareholders, balancing dividend and long term financial plan, etc. and then the earning distribution that the board's meeting set will provide to the shareholder's meeting. The earning distribution should be in form of cash or stock dividend to distribute, in addition to the amount of cash dividend should not be lower than 10% of stock dividend. However, the amount of par cash dividend is lower than $0.1, the dividend should use the form of stock dividend to distribute.

Earnings distribution for 2020 and 2019 was decided by the resolution adopted, at the general meeting of shareholders held on July 30, 2021 and June 24, 2020, respectively. The relevant dividend distributions to shareholders were as follows:

Dividends distributed to ordinary shareholders： Cash Shares Total	For the years ended December 31, 2020 2019 Allotment per share Total Amount Allotment per share Total Amount $ 0.80 178,886 0.88 187,405 - - 0.50 106,480 178,886 293,885	For the years ended December 31, 2020 2019 Allotment per share Total Amount Allotment per share Total Amount $ 0.80 178,886 0.88 187,405 - - 0.50 106,480 178,886 293,885	For the years ended December 31, 2020 2019 Allotment per share Total Amount Allotment per share Total Amount $ 0.80 178,886 0.88 187,405 - - 0.50 106,480 178,886 293,885
		2019
	Allotment per share $ 0.80 -	Allotment per share 0.88 0.50	Total Amount 187,405 106,480
			293,885

(Continued)

58

UNION INSURANCE CO., LTD. Notes to the Financial Statements

The amount of cash dividends on the appropriations of earnings for 2021 had been approved during the board meeting on March 24, 2022, as follow:

Dividends distributed to ordinary shareholders Cash	For the years ended December 31, 2021	For the years ended December 31, 2021
	Allotment per share $ 1.00	Total Amount
		223,608

The relevant information about distribution of retained earnings under the consent of the shareholders’ meeting, can be obtained on the website of Market Observation Post System.

(r) Earnings per share

The calculation of basic earnings per share and diluted earnings per share were shown as follows:

Basic earnings per share Net income attributable to ordinary shareholders of the Company Weighted average number of ordinary shares (thousands shares) Basic earnings per share (in dollars) Diluted earnings per share Net income attributable to ordinary shareholders of the Company Weighted average number of ordinary shares (thousands shares) Employee share options Weighted average number of ordinary shares (Dilutive potential common shares)(thousands shares) Diluted earnings per share (in dollars)	For the years ended December 31, 2021 2020 $ 696,668 702,097 223,608 223,608 $ 3.12 3.14 $ 696,668 702,097 223,608 223,608 1,763 1,732 225,371 225,340 $ 3.09 3.12	For the years ended December 31, 2021 2020 $ 696,668 702,097 223,608 223,608 $ 3.12 3.14 $ 696,668 702,097 223,608 223,608 1,763 1,732 225,371 225,340 $ 3.09 3.12
		2020
		702,097
		223,608
		3.14
		702,097
		223,608 1,732
		225,340
		3.12

(Continued)

59

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(s) Disclosure of acquisition cost of insurance contracts

Acquisition cost of insurance contracts

Item			For the years ended	For the years ended	For the years ended	December 31, 2021	December 31, 2021	December 31, 2021
	Commission expense $ 118,905 25,261 8,791 555,855 2,229 623,846 208,501 13,623 129,030 $ 1,686,041		Agent fee Charge - - - - - - - - - - - - - - - - - - - - For the years ended						Other cost - - - - - - - - - -	Total
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total Item										121,356 25,800 9,004 556,001 2,246 632,198 208,513 13,623 129,030
										1,697,771
			Agent fee - - - - - - - - - -		Charge - - - - - - - - - -		Reinsurance commission expense 5,165 629 384 244 13 9,204 93 - - 15,732		Other cost - - - - - - - - - -	Total
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total										124,756 21,283 13,550 516,973 2,745 610,114 190,428 6,025 132,652
										1,618,526

(Continued)

60

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• (t) Disclosure of insurance cost benefit analysis

• (i) Direct written business cost benefit analysis

Item		For the years ended December 31, 2021	For the years ended December 31, 2021	For the years ended December 31, 2021	For the years ended December 31, 2021	Gain (Loss) 330,017 133,546 55,516 569,259 25,827 1,002,887 327,359 17,298 303,306 2,765,015 Gain (Loss) 926,372 182,984 39,088 605,987 17,827 960,065 170,001 (1,164) 132,679 3,033,839
	Written premium $ 1,326,327 271,423 85,968 3,143,976 16,512 3,715,703 1,067,972 66,558 967,046 $ 10,661,485	The net change in unearned premium reserve Insurance contract acquisition cost Claims The net change in claims reverse (22,015) 118,905 613,932 285,488 13,691 25,261 71,738 27,187 (3,947) 8,791 9,913 15,695 87,565 555,855 1,646,323 284,974 (4,041) 2,229 (6,538) (965) 1,388 623,846 1,942,206 145,376 22,279 208,501 565,494 (55,661) 15,590 13,623 21,597 (1,550) (6,542) 129,030 660,187 (118,935) 103,968 1,686,041 5,524,852 581,609 For the years ended December 31, 2020
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total Item
		The net change in unearned premium reserve (27,861) 2,801 4,719 146,657 (447) 189,786 10,459 4,030 (500) 329,644	Insurance contract acquisition cost 119,591 20,654 13,166 516,729 2,732 600,910 190,335 6,025 132,652 1,602,794	Claims 458,216 53,268 91,447 1,632,461 44 1,977,531 598,697 14,540 718,341 5,544,545	The net change in claims reverse (203,490) (18,474) (47,710) 32,999 (711) (78,291) 32,118 3,676 (8,050) (287,933)
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total

(Continued)

61

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(ii) Reinsurance cost-benefit analysis

Item		For the years ended December 31, 2021	For the years ended December 31, 2021	For the years ended December 31, 2021	For the years ended December 31, 2021
	Reinsurance premium $ 80,320 7,161 1,250 1,844 1,146 35,421 5,546 - 299,770 $ 432,458	The net change in unearned premium reserve Reinsurance commission expense Reinsurance Claims The net change in claim reverse 7,920 2,451 364 13,238 (293) 539 652 (3,321) (355) 213 6,764 690 (93,652) 146 93,435 (1,398) (14) 17 983 (362) (2,042) 8,352 11,767 (91) (113) 12 7,318 2,603 - - - (258) 1,512 - 277,747 13,939 (87,037) 11,730 399,030 25,040 For the years ended December 31, 2020				Ceded in Gain (Loss)
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total Item						56,347 9,584 (6,062) 3,313 522 17,435 (4,274) 258 6,572 83,695
		The net change in unearned premium reserve 5,217 (163) 543 (104,055) - 1,735 (162) - 417 (96,468)	Reinsurance commission expense 5,165 629 384 244 13 9,204 93 - - 15,732	Reinsurance Claims 8,520 809 798 86,227 92 14,140 902 - 270,000 381,488	The net change in claim reverse (11,262) 490 (677) 3,324 1,243 (3,451) (2,242) (139) 2,714 (10,000)	Ceded in Gain (Loss)
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total						62,108 4,027 1,182 16,261 (241) 16,838 7,715 139 20,491 128,520

(Continued)

62

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(iii) Gain/Loss on reinsurance contracts

Item		For the years ended December 31, 2021	For the years ended December 31, 2021	For the years ended December 31, 2021	For the years ended December 31, 2021
	Reinsurance expense $ (884,294) (176,760) (59,337) (479,266) (6,725) (783,415) (290,950) (8,873) (408,888) $ (3,098,508)	The net change in unearned premium reserve Reinsurance commission received Claims recovered from reinsurers The net change in ceded claim reserve (15,931) 72,431 442,686 324,556 11,216 12,527 31,723 20,186 (3,591) 2,017 4,295 14,177 (71,463) 131,576 364,080 52,531 (2,355) 1,237 (570) (904) (82,612) 175,550 515,369 32,526 (921) 55,569 205,108 (60,625) 4,555 (243) 6,102 186 (3,924) - 393,918 (71,158) (165,026) 450,664 1,962,711 311,475 For the years ended December 31, 2020				Ceded out Gain (Loss)
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total Item						(60,552) (101,108) (42,439) (2,542) (9,317) (142,582) (91,819) 1,727 (90,052) (538,684)
		The net change in unearned premium reserve (26,873) 4,565 (810) (44,006) (138) 62,022 (917) 876 (299) (5,580)	Reinsurance commission received 124,197 10,778 1,772 145,433 1,790 236,650 57,624 1,276 - 579,520	Claims recovered from reinsurers 372,035 37,717 89,284 362,679 33 587,160 257,947 2,535 426,763 2,136,153	The net change in ceded claim reserve (223,855) (11,410) (51,796) (38,631) 341 (37,926) 11,496 239 (4,769) (356,311)	Ceded out Gain (Loss)
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance Total						(558,109) (124,743) (36,511) (86,481) (6,531) (126,284) 23,257 825 9,330 (905,247)

(Continued)

63

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(u) Disclosure of insurance contract risk

• (i) The purpose, policy, procedure and the managing method of risk related to the risk management of control insurance contract

• 1) The range of risk management in framework, organizational, accountability

  • a) Risk management of framework and organization

The Company's risk managing organizational framework includes the Board of Directors, Risk Management Committee, Risk Management Department, operating segments and Audit department.

• b) The responsibility of various unit are as follows:

• i) The Board of Directors

The Board of Directors is the highest decision making unit of risk management in the Company, which is responsible for approving risk management policy and framework, establishing the risk management culture, ensuring the effectiveness of risk management, and bear the ultimate responsibility of risk management.

• ii) Risk Management Committee

• In charge of making the risk management policy, framework, organization function, in order to establish the managing quality and quantity standard. To submit regularly the report of the executing the risk management to the Board of Directors, in case providing the necessary improve suggestion.

• To execute the Board of Directors' decision, and entirely and periodically oversee the development, establishment and executing performance.

• To assist and oversee various segments' risk management activities.

• To consider the environment to adjust the types of risk, risk limit allocating and the bearing method.

• To coordinate interaction and communication of the risk managing function between departments.

iii) Risk Management Department

1. To be responsible for risk monitoring, measuring, evaluating executive layer of routine affairs, which should be independent to the executing right of operating segments.

(Continued)

64

UNION INSURANCE CO., LTD. Notes to the Financial Statements

1. Should depend on the type of operating business to execute:

   • To assist and execute the Board setting risk management policies and strategies.

   • Accounting the Company risk appetite set risk tolerance

   • Summarize risk information, coordinated and communicated for carrying out policy and quota of each unit.

   • Risk management report is proposed regularly.

   • Monitor the risk of each operating segments regularly.

   • Assistance of pressure test.

   • Back testing.

   • Others

2. To deal with the violation of other units by the authorization of the Board of Directors or Risk Management Committee

3. iv) Operating segments

4. The responsibilities of operating segments supervisor to execute the risk management are as follows:

   • To be responsible for preparing daily risk report, taking actions.

   • To monitor related information of risk management and report to risk management department regularly.

5. The responsibilities of operating segments to execute the risk management are as follows:

   • To recognize risk, and to report the information of risk exposure situation.

   • To measure the influence of degree of risk occurred (quality and quantity), and response the accurate solution with passing the risk information.

   • Reviewing the effectiveness of the setting risk tolerance.

   • Monitor risk exposure and measure the risk exceed the tolerance.

   • To assist the risk modelling development, ensuring that the uses and hypothesis of measuring, modeling are rational and consist of the basis.

(Continued)

65

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• Ensure the effectiveness of internal control.

• Gather the information which is related to operational risk.

• v) Audit department

Based on incumbent related legal regulation, to audit the implementation of risk management of each department in the Company.

• 2) Scope and nature of risk reporting or measure system

The Company's insurance risk monitoring included the entire or individual deal process of operating segments and various insurance goods, such as business volume, loss rate change, business structure, etc., should be in accordance with the standard, the limit, the process of over limit and the authorization. Then, through operating segments supervisors report daily or regularly to higher management level and Risk Management Department to summarize.

The Company holds Risk Management Committee periodically to report officially the insurance risk management monitor for decision making by the operating level.

• 3) Procedures for risk assuming, measurement, monitoring and control, as well as adequate risk classification and the underwriting policy

The Company set the underwriting policy which is following the Company's target, client demand and market competition environment. The unit of underwriting should process danger options in accordance with the underwriting policy. In addition the underwriting should cooperate with operating in term of assessment of danger and choice of business, policy due to the organization become more and more big and the market become more competitive. To achieve the goal of good quality, higher quantity, faster receivable rolling and faster claim procedure which is customer focus, the Company should enhance the method of thinking and innovation in underwriting, operating, claim and managing.

• 4)

• The range of entire basic evaluation assessment of the enterprise and risk management

The entire risk as a basic identify the Company's insurance risk, includes the design and price set risk, underwriting risk, insurance risk, claim risk, catastrophic risk and reserve risk, etc., in accordance with the various insurance risk of insurance risk management.

• 5) Limiting insurance risk exposure and avoiding the concentrations of insurance risk

The business of retained, ceded in reinsurance, ceded out reinsurance of the Company is under "Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms" to establish the mechanism of risk management, and considering the risk bearing capacity, formulating a reinsurance risk management plan and implementing.

(Continued)

66

UNION INSURANCE CO., LTD. Notes to the Financial Statements

For the years ended December 31, 2021 and 2020, the amount of the retained risk limit per unit for each type of insurance is disclosed in the following table:

Insurance by Type Fire insurance Hull insurance Fishing vessel insurance Aviation insurance Marine cargo insurance Accident insurance Engineering insurance Casualty insurance Vehicle insurance Automobile liability insurance Other property insurance Health insurance Accident insurance - travel insurance	December 31, 2021 December 31, 2020 $ 400,000 350,000 100,000 100,000 50,000 50,000 200,000 200,000 500,000 300,000 200,000 200,000 300,000 300,000 360,000 360,000 30,000 30,000 120,000 120,000 300,000 300,000 4,000 4,000 240,000 240,000

• 6) The method of assets and liabilities management

The Company's assets and liabilities are coordinate with the factor of risk, including market risk, liquidity risk and insurance risk, which depend on the various risk management mechanism of monitor assets and liabilities cash flows, and using such as ratio of debt to assets, net debt to assets, etc., to entirely evaluate and analyze the appropriateness of managing assets and liabilities.

• 7) The illustration of management, monitor and control procedure of taking extra liabilities and equities promise when obtaining or providing on special events.

Under the Insurance Act, the Company’s risk based capital ratio (RBC) should be at least 200%. Otherwise, the Company would be required to raise additional capital within a certain period; in addition, the Company will be prohibited from appropriating its earnings. Moreover, the authorities will restrict the Company’ s operations and use of capital.

(Continued)

67

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(ii) Insurance risk information

1) Sensitivity analysis of insurance risk

Item		For the years	ended December 31, 2021
	Written premium $ 1,406,647 278,584 87,218 3,145,820 17,658 3,751,124 1,073,518 66,558 1,266,816	Expected rate of loss % 66.81 % 63.57 % 69.05 % 65.90 % 72.41 % 64.75 % 74.71 % 68.90 No applicable	Effect of profit or loss on 1% movement of expected rate of loss
			Before reinsurance After reinsurance 14,254 5,252 2,652 994 915 282 31,519 26,012 217 126 37,518 28,858 10,514 7,595 510 467 No applicable No applicable
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance

Item		For the years	ended December 31, 2020
	Written premium $ 1,342,576 247,025 102,940 2,936,834 20,552 3,688,467 1,007,916 27,107 1,268,744	Expected rate of loss % 66.79 % 63.55 % 69.66 % 66.07 % 72.40 % 64.77 % 75.60 % 81.60 No applicable	Effect of profit or loss on 1% movement of expected rate of loss
			Before reinsurance After reinsurance 13,733 5,428 2,444 826 977 219 28,942 23,383 210 123 34,969 25,848 9,976 6,938 231 199 No applicable No applicable
Fire insurance Marine insurance Land and air insurance Liability insurance Surety insurance Other property insurance Accident insurance Health insurance Compulsory automobile liability insurance

Note: Due to various insurance contract frameworks are difference, the impact of a one percent change in rate of expected loss is not linear relationship to incomes and losses.

(Continued)

68

UNION INSURANCE CO., LTD. Notes to the Financial Statements

2) Concentration of insurance risk

The risk of insurance risk concentration is controlled by reinsurance transfer method. For example, the risk caused by natural disasters is based on the RMS and AIR natural disaster model and the selected 250-year regression period is used as the basis for arranging the natural disaster reinsurance contract. Its content is used as a reference for setting key risk indicators for catastrophe.

a) The premium proportion of underwriting and ceded in reinsurance.

The insurance contracts which the Company underwrites are separated in various types of insurances, and not concentrated in any single type of insurance. The top 3 insurances in terms of proportion is voluntary automobile insurance, compulsory automobile liability insurance and accident insurance. The voluntary automobile insurance has the highest proportion accounts for 54.34% and 53.83% for 2021 and 2020, respectively. Although the proportion is slightly higher than other insurances, the loss experience of voluntary automobile insurance is stable and the risk variation is low. The remaining types of insurance are no risk concentration.

The premium proportion of underwriting insurance and ceded in reinsurance:

Type	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
	2021 Amount Percentage $ 677,072 % 6.10 196,504 % 1.77 166,720 % 1.50 6,028,065 % 54.34 1,266,816 % 11.42 344,969 % 3.11 432,633 % 3.90 17,658 % 0.16 62,576 % 0.56 1,073,518 % 9.68 722,518 % 6.51 28,761 % 0.26 66,558 % 0.60 9,575 % 0.09 $ 11,093,943 % 100.00		2020
	Amount $ 677,072 196,504 166,720 6,028,065 1,266,816 344,969 432,633 17,658 62,576 1,073,518 722,518 28,761 66,558 9,575 $ 11,093,943		Amount 628,648 176,782 169,467 5,728,134 1,268,744 336,375 486,219 20,515 42,850 1,007,916 709,421 31,487 27,107 8,496 10,642,161		Percentage
Fire insurance Marine cargo insurance Hull, fishing vessel and aviation insurance Voluntary automobile insurance Compulsory automobile liability insurance Liability insurance Engineering and nuclear insurance Surety and credit insurance Other property insurance Accident insurance Typhoon, flood and earthquake insurance Personal and commercial all-risk insurance Health insurance Overseas ceded-in reinsurance Total					% 5.91 % 1.66 % 1.59 % 53.83 % 11.92 % 3.16 % 4.57 % 0.19 % 0.40 % 9.47 % 6.67 % 0.30 % 0.25 % 0.08 % 100.00

(Continued)

69

UNION INSURANCE CO., LTD. Notes to the Financial Statements

b) Percentage of retained premium

The top 3 insurances with the highest proportion is voluntary automobile insurance, compulsory automobile liability insurance, accident insurance in term of retained business. The voluntary automobile insurance which has the highest proportion accounts for 64.30% and 63.53% for 2021 and 2020, respectively. The Company assesses the possibility of accumulated loss in order to arrange the contracts of reinsuring to diversify the risk. Therefore, there is no the situation of risk concentration.

In addition, the insurance which is likely to result in significant accumulated loss such as catastrophe insurance (earthquake, typhoon and flood) and the insurances are likely to result in accumulation are property insurance (fire insurance and engineering insurance), marine insurance and accident insurance should avoid the operating risk resulting from the underwriting risk concentration, the Company has bought catastrophe reinsurance contracts in advance for abovementioned insurances to diversify the risk.

The percentage of retained premium was as follows:

Type	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
	2021 Amount Percentage $ 313,483 % 3.92 116,498 % 1.46 12,609 % 0.16 5,141,238 % 64.30 857,928 % 10.73 217,658 % 2.72 195,385 % 2.44 10,933 % 0.14 51,820 % 0.65 782,568 % 9.79 201,813 % 2.52 28,193 % 0.35 57,685 % 0.72 7,624 % 0.10 $ 7,995,435 % 100.00		2020
	Amount $ 313,483 116,498 12,609 5,141,238 857,928 217,658 195,385 10,933 51,820 782,568 201,813 28,193 57,685 7,624 $ 7,995,435		Amount 339,970 94,500 12,982 4,690,764 856,379 217,775 166,830 11,993 32,810 705,023 194,486 30,705 23,006 5,909 7,383,132		Percentage
Fire insurance Marine cargo insurance Hull, fishing vessel and aviation insurance Voluntary automobile insurance Compulsory automobile liability insurance Liability insurance Engineering and nuclear insurance Surety and credit insurance Other property insurance Accident insurance Typhoon, flood and earthquake insurance Personal and commercial all-risk insurance Health insurance Overseas ceded-in reinsurance Total					% 4.61 % 1.28 % 0.18 % 63.53 % 11.60 % 2.95 % 2.26 % 0.16 % 0.44 % 9.55 % 2.63 % 0.42 % 0.31 % 0.08 % 100.00

(Continued)

70

UNION INSURANCE CO., LTD. Notes to the Financial Statements

c) Claims trend

For the year ended December 31, 2021

Occurrence year	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
1	35,468,198	2,724,767	2,593,826	3,019,920	3,505,019	4,231,875	3,846,573	4,548,623	4,201,280	4,120,597	4,742,417
2	35,385,434	2,990,271	2,885,933	3,216,949	3,615,016	4,483,260	4,058,010	4,804,267	4,901,074	4,890,228
3	35,436,279	2,954,427	2,855,978	3,161,079	3,557,644	4,338,968	3,989,815	4,784,261	4,774,671
4	35,322,695	2,934,992	2,837,248	3,151,586	3,530,087	4,331,187	3,997,617	4,714,228
5	35,297,200	2,908,274	2,835,816	3,151,839	3,505,206	4,348,353	3,972,187
6	35,279,780	2,881,191	2,830,761	3,130,980	3,518,795	4,300,980
7	35,251,157	2,880,642	2,834,001	3,155,004	3,501,489
8	35,233,142	2,875,661	2,849,616	3,128,978
9	35,219,765	2,900,934	2,833,969
10	35,509,280	2,877,029
11	35,193,324
Estimates	35,193,324	2,877,029	2,833,969	3,128,978	3,501,489	4,300,980	3,972,187	4,714,228	4,774,671	4,890,228	4,742,417
Actual	35,176,272	2,853,282	2,829,214	3,118,743	3,494,127	4,286,414	3,921,591	4,627,738	4,611,354	4,540,681	2,954,797
Subtotal	17,052	23,747	4,755	10,235	7,362	14,566	50,596	86,490	163,317	349,547	1,787,620
Reconciliations	-	-	-	-	-	-	-	-	-	-	-
Total amount recognized in balance sheet	17,052	23,747	4,755	10,235	7,362	14,566	50,596	86,490	163,317	349,547	1,787,620

For the year ended December 31, 2020

Occurrence year	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
1	31,856,311	3,422,196	2,724,767	2,593,826	3,019,920	3,505,019	4,231,875	3,846,573	4,548,623	4,201,280	4,053,992
2	32,046,002	3,619,245	2,990,271	2,885,933	3,216,949	3,615,016	4,483,260	4,058,010	4,804,267	4,843,061
3	31,766,189	3,712,638	2,954,427	2,855,978	3,161,079	3,557,644	4,338,968	3,989,815	4,730,282
4	31,723,641	3,646,063	2,934,992	2,837,248	3,151,586	3,530,087	4,331,187	3,964,421
5	31,676,632	3,633,221	2,908,274	2,835,816	3,151,839	3,505,206	4,320,542
6	31,663,979	3,618,015	2,881,191	2,830,761	3,130,980	3,500,447
7	31,661,765	3,613,200	2,880,642	2,834,001	3,129,167
8	31,637,957	3,612,072	2,875,661	2,834,283
9	31,621,070	3,611,620	2,877,806
10	31,608,145	3,582,469
11	31,608,398
Estimates	31,608,398	3,582,469	2,877,806	2,834,283	3,129,167	3,500,447	4,320,542	3,964,421	4,730,282	4,843,061	4,053,992
Actual	31,593,052	3,578,711	2,849,059	2,829,528	3,118,932	3,493,254	4,293,122	3,903,485	4,541,350	4,447,550	2,901,504
Subtotal	15,346	3,758	28,747	4,755	10,235	7,193	27,420	60,936	188,932	395,511	1,152,488
Reconciliations	-	-	-	-	-	-	-	-	-	-	-
Total amount recognized in balance sheet	15,346	3,758	28,747	4,755	10,235	7,193	27,420	60,936	188,932	395,511	1,152,488

• 3) Credit risk of insurance contracts

• a) Credit risk

  • i) Compliance with the “Regulations Governing the Provision of Unauthorized Reinsurance Reserves for Insurance Company” No.5, the transaction with unauthorized reinsurers shall be represented in the notes of financial statements and the content shall include:

    1. The summary of unauthorized reinsurance contracts and types of reinsurance.

(Continued)

71

UNION INSURANCE CO., LTD. Notes to the Financial Statements

1. The reinsurance premium expense of unauthorized reinsurance contracts.

2. General description of the amount of unauthorized reserve and its components.

3. ii) The abstract and related insurance of unauthorized reinsurance contracts in the Company were as follows:

As of December 31, 2021,

Company Annotation

Asia Capital Reinsurance Group Pte Ltd.

Asia Capital Reinsurance Group Pte Ltd. (Hong Kong Branch)

Trust International Insurance and Reinsurance CO.B.S.C (C) Trust Re Mugatlal Bhagwandas Boda & Company

Facultative reinsurance of each kind of insurance Treaty and Facultative reinsurance of each kind of insurance Treaty and Facultative reinsurance of each kind of insurance. Treaty reinsurance of engineering insurance

As of December 31, 2020

Company Annotation Asia Capital Reinsurance Group Pte Ltd. Facultative reinsurance of each kind of insurance Asia Capital Reinsurance Group Pte Ltd. (Hong Treaty and Facultative Kong Branch) reinsurance of each kind of insurance Trust International Insurance and Reinsurance Treaty and Facultative CO. B.S.C. (C) Trust Re reinsurance of each kind of insurance Tugu Insurance Company Limited, HK Facultative reinsurance of marine insurance Mugatlal Bhagwandas Boda & Company Treaty reinsurance of engineering insurance

(Continued)

72

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• iii) For the years ended December 31, 2021 and 2020, the reinsurance premium expenses (reversal) for unauthorized reinsurance in the Company amounted to $(95) and $(908), respectively.

• iv) The principle summary of amounts and component items of unauthorized reinsurance reserve in the Company was as follows:

Unearned premium reserve Claims recoverable from reinsurers of paid claims overdue in nine month Claims recoverable from reinsurers reported but unpaid The unauthorized reinsurance reserves- Total	December 31, 2021 $ - - 4,465 $ 4,465	December 31, 2020
		3 13 4,520
		4,536

b) Liquidity risk

The Company's liquidity risk includes capital liquidity risk and market liquidity risk of insurance contracts, via monitoring and managing the liquidity risk of risk management to maintain the sufficient liquidity when the occasion events and raise the balance of assets income investment.

To ensure the operating stability, the Company needs the sufficient liquidity assets that can immediately into cash in case the needs of premium deficiency or unexpected claim duty increase sharply.

c)

Market risk

The market risk of insurance contracts in the Company includes interest rate risk, foreign currency risk and price risk. The monitoring market risk includes the overall and individual transaction processes of each trading unit and each financial product, such as change in positions, change in profit and loss, trading patterns and trading targets, etc., which should be carried out within the scope of the Company including quota, stop loss and over limit treatment. The competent authority shall conduct risk reporting according to its responsibilities and the risk management department shall regularly report the market risk monitoring table to the operating management and report to the risk management committee and the Board of Directors regularly.

(Continued)

73

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(v) Financial instruments

(i) Credit risk

1) Credit risk exposure

Maximum credit risk exposure were as follows:

Cash and cash equivalents Receivables Financial assets measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets measured at amortized cost Other financial assets Reinsurance contract assets Other assets Total	December 31, 2021 $ 3,648,227 680,984 1,879,359 2,080,399 1,396,058 2,427,420 3,860,017 702,841 $ 16,675,305	December 31, 2020
		2,386,542 667,810 1,966,543 2,356,484 1,493,894 2,121,637 3,920,832 637,804
		15,551,546

The Company does not involve into lending business. The financial assets are mainly receivables, reinsurance contract assets and investment projects in the open market. The credit risk is controlled by the limit method and the risk status of the counterparty is assessed regularly.

(Continued)

74

UNION INSURANCE CO., LTD. Notes to the Financial Statements

2) Impairment loss of receivables

The expected credit losses of receivables were as follows:

Notes receivable: Expected credit loss rate Carrying amount Expected credit loss amount Premiums receivable: Expected credit loss rate Carrying amount Expected credit loss amount Other receivables: Carrying amount Expected credit loss amount Notes receivable: Expected credit loss rate Carrying amount Expected credit loss amount Premiums receivable: Expected credit loss rate Carrying amount Expected credit loss amount Other receivables: Carrying amount Expected credit loss amount		December 31, 2021	December 31, 2021
	Not overdue 0.12% $ 246,374 292 0.53% $ 259,771 1,379 $ 142,856 2,275	Overdue under 90 days Overdue for91- 270 days 100% 100% 21 - 21 - 2%~10% 2%~10% 11,741 24,031 380 1,014 2,605 2,856 1,559 2,351 December 31, 2020		Overdue 271 over days Total 100% 1,137 247,532 1,137 1,450 10%~100% 1,214 296,757 1,214 3,987 28,197 176,514 28,197 34,382
	Not overdue 0.13% $ 236,665 297 0.31% $ 232,571 720 $ 157,247 2,034	Overdue under 90 days 100% 184 184 2%~10% 17,727 909 2,285 1,178	Overdue for91- 270 days 100% - - 2%~10% 27,284 2,060 3,442 2,213	Overdue 271 over days Total 100% 1,137 237,986 1,137 1,618 10%~100% 1,246 278,828 1,246 4,935 24,179 187,153 24,179 29,604

(Continued)

75

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• 3) The movement in loss allowance and information of credit quality of financial assets at amortized cost

• a) The movement in loss allowance

Beginning balance Changes Ending balance			For	the year ended	D	ecember 31, 2	02	1
	12-month ECL stage 1		Lifetime ECL (assessed on collective) stage 2 - - -	Lifetime ECL (assessed on individual) stage 3		The provision of impairment in accordance with IFRS9 (subtotal)		The provision of impairment in accordance with Guidelines for Handling Assessment of Assets, Loans Overdue, Receivable on Demand and Bad Debts by Insurance Enterprises. - - -	Total
	$ 873 (219) $ 654			- - -		873 (219) 654			873 (219)
									654

For the year ended December 31, 2020

Beginning balance Changes Ending balance	12-month ECL stage 1		Lifetime ECL (assessed on collective) stage 2 - - -	Lifetime ECL (assessed on individual) stage 3		The provision of impairment in accordance with IFRS9 (subtotal)		The provision of impairment in accordance with Guidelines for Handling Assessment of Assets, Loans Overdue, Receivable on Demand and Bad Debts by Insurance Enterprises. - - -	Total
	$ 949 (76) $ 873			- - -		949 (76) 873			949 (76)
									873

• b) The information of credit quality

Financial assets at amortized cost (including statutory deposit) Financial assets at amortized cost (including statutory deposit)										D	e	cember 31, 2021	cember 31, 2021
				stage1								stage2					stage3		Allowance impairment loss	Total
		Low-risk		Moderate- risk		High-risk		Total		Low-risk		Moderate- risk	High-risk		Total
		$ 1,820,353		-		-		1,820,353		-	e	- cember 31, 202	- 0		-		-		654	1,819,699
										D
				stage1								stage2					stage3		Allowance impairment loss	Total
		Low-risk		Moderate- risk		High-risk		Total		Low-risk		Moderate- risk	High-risk		Total
		$ 1,860,619		-		-		1,860,619		-		-	-		-		-		873	1,859,746

(Continued)

76

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(ii) Liquidity risk

The following table shows the maturity date of financial liabilities. The Company does not anticipate that the cash flow of the maturity analysis will occur significantly earlier, or the actual amount will be significantly different.

			December 31, 2021	December 31, 2021
	Amount $ 2,849 178,446 620,083 436,307 18,257 6,730 3,754 $ 1,266,426	Contract undiscounted cash amount 2,849 178,446 620,083 436,307 18,545 6,730 3,754 1,266,714	Overdue under 3 months 182 178,446 577,166 400,982 3,662 1,161 3,754 1,165,353	Overdue for 3 - 9 months 135 - 40,301 35,000 6,596 1,382 - 83,414	Overdue for 9 - 12 months 53 - - 10 2,728 149 - 2,940	Overdue over 12 months
						2,479 - 2,616 315 5,559 4,038 -
Payables Claims payable Commissions payable Due to ceding companies Other payables Lease liabilities Other liabilities Guarantee deposits received Reinsurance liability reserve deposits Total
						15,007

			December 31, 2020	December 31, 2020
	Amount $ 2,753 172,896 662,257 418,844 7,863 4,814 11,963 $ 1,281,390	Contract undiscounted cash amount 2,753 172,896 662,257 418,844 7,950 4,814 11,963 1,281,477	Overdue under 3 months 723 172,896 631,236 382,531 2,638 - 11,963 1,201,987	Overdue for 3 - 9 months 1,170 - 24,567 35,524 3,225 1,565 - 66,051	Overdue for 9 - 12 months 16 - - 159 735 1 - 911	Overdue over 12 months
						844 - 6,454 630 1,352 3,248 -
Payables Claims payable Commissions payable Due to ceding companies Other payables Lease liabilities Other liabilities Guarantee deposits received Reinsurance liability reserve deposits Total
						12,528

(Continued)

77

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• (iii) Foreign currency risk

• 1) Exposure about foreign currency risk

The amounts of the original currency (in thousands) exposed to the significant foreign currency exchange rate risk were as follows:

Financial assets Monetary items USD EUR JPY HKD KRW CNY GBP THB Financial liability Monetary items USD KRW Important rate:	December 31, 2021 December 31, 2020 $ 6,777 4,641 63 59 120 26 50 383 153 54 40 - 25 20 1,322 1,811 4,040 2,777 365 117

USD EUR JPY HKD KRW CNY GBP THB	Rates
	December 31, 2021 December 31, 2020 $ 27.68 28.48 31.32 35.02 0.2405 0.2763 3.55 3.67 0.0235 0.0264 4.34 4.38 37.30 38.90 0.8347 0.9556

(Continued)

78

UNION INSURANCE CO., LTD. Notes to the Financial Statements

2) Sensitivity analysis

As of December 31, 2021 and 2020, with all other variable factors that remain constant, when NTD increases 1% compared to other currency, the amount of the Company's comprehensive income will increase as follows:

USD(increases 1%) EUR(increases 1%) HKD(increases 1%) CNY(increases 1%) GBP(increases 1%) THB(increases 1%)	December 31, 2021 December 31, 2020 $ 606 531 16 21 1 14 1 - 7 8 9 17

Conversely, if there is a decrease of 1% compared to other currency based on all other variables remain the same, there will be the same amount but opposite direction of influence as of December 31, 2021 and 2020.

(iv) Interest rate risk

1) Summary

The amounts of interest bearing financial instruments related to interest rate risk on the reporting date were as follows:

Variable interest rate instrument: Term deposit	Carring Amount	Carring Amount
	December 31, 2021 $ 457,000	December 31, 2020
		1,568,125

• 2) Sensitivity Analysis of variable interest rate financial instruments

Based on the carrying amount of those financial instruments on the reporting date, assuming they are held for one year, and all other variable factors remaining constant, when interest rate change 10 basis points, the Company’s net income will increase or decrease as follows:

Increase 10 basis points Decrease 10 basis points	December 31, 2021 December 31, 2020 $ 457 1,568 (457) (1,568

(Continued)

79

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• (v) Fair value and hierarchy information

• 1) Fair value information

  • a) General description

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction among market participants at the measurement date.

• b) Definition of fair value hierarchy

i) Level 1

The input of Level 1 is the public quote of the same financial instrument in an active market. An active market is a market that meets all the conditions listed below: Products traded in the market is of homogeneity; it is able to reach buyer and seller anytime in the market and the price information can be accessed by the public. Listed stock, OTC stock, beneficiary certificates, as well as equity and derivative instruments with public quote in an active market possessed by the Company belong to Level 1.

ii) Level 2

The input of Level 2 refers to observable price except public quote in an active market, including direct observable input parameters (such as price) or indirect observable input parameters (derivation from price).

iii) Level 3

The input of level 3 is the parameters of measuring fair value, which is from neither on direct market data nor from the counter party.

(Continued)

80

UNION INSURANCE CO., LTD. Notes to the Financial Statements

2) Based on fair value measurement

a) Hierarchy information of fair value

The Company's financial instruments measured at fair value are evaluated on a recurring basis. The financial assets and liabilities measured at fair value were as follows:

Assets and liabilities Total Repeatable fair value measurement Non-derivative financial assets and liabilities Financial assets at fair value through profit or loss Beneficiary certificates $ 131,006 Real estate investment trust beneficiary certificates 342,856 Stocks 1,405,497 Financial assets at fair value through other comprehensive income Stocks 2,080,399 Assets and liabilities Total Repeatable fair value measurement Non-derivative financial assets and liabilities Financial assets at fair value through profit or loss Beneficiary certificates $ 52,666 Real estate investment trust beneficiary certificates 353,825 Stocks 1,560,052 Financial assets at fair value through other comprehensive income Stocks 2,356,484		December	31, 2021
		Quoted prices in active markets for identical assets (Level 1) 131,006 342,856 1,405,497 2,065,027 December	Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) - - - - - - - 15,372 31, 2020
		Quoted prices in active markets for identical assets (Level 1) 52,666 353,825 1,560,052 2,342,540	Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) - - - - - - - 13,944

(Continued)

81

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• b) Valuation techniques of fair value measurement

The valuation of non-derivative financial instruments are based on transparent offer price as fair value if there is existence of active market. The basic of fair value is the market price announced by stock exchange, OTC, etc., the listed stocks and OTC stocks as equity instruments, and debt instruments in active market.

If obtaining frequently and timely transparent offers from stock exchange, brokers, securities underwriter, industrial union and set price service organization or supervisor organization that means the price is actual and frequent fair market deal that is the transparent offer price as fair value in the active market. If the conditions above mentioned are fail, the market is considered as non active market. Generally, the difference between bid ask is big and significant or with the volume of deal is few would be indicated that non active market. The equity of non transparent offer price shall be evaluated by valuation techniques by using the Market approach public company comparable with the discount of lack equity liquidity.

• c) Transfer between Level 1 and Level 2

There is no transfer between Level 1 and Level 2 for the years ended December 31, 2021 and 2020.

• d) Movements of financial assets at fair value classified into Level 3

Name				Fo	r the year ended D	ecember 31, 2021
		Balance at the beginning of the year $ 13,944	Gains and losse	s on valuation Recognized in other comprehensive income 1,428 Fo	Incre	ase Transferred from Level 3 - ecember 31, 2020	Decr	ease Transferred out Level 3 -	Balance at the end of the year
			Recognized in profit or loss -		Purchase or issue - r the year ended D		Sale, disposal or settlement -
Financial assets at fair value through other comprehensive income Name									15,372
		Balance at the beginning of the year $ 13,524	Gains and losse	s on valuation Recognized in other comprehensive income 420	Incre	ase Transferred from Level 3 -	Decr	ease Transferred out Level 3 -	Balance at the end of the year
			Recognized in profit or loss -		Purchase or issue -		Sale, disposal or settlement -
Financial assets at fair value through other comprehensive income									13,944

(Continued)

82

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• e) Quantified information of fair value measurement for significant unobservable inputs (Level 3)

The Company’s Level 3 fair value measurements are financial assets at fair value through other comprehensive income – equity instruments investment.

The Company's equity instruments investment without active market include multiple significant unobservable inputs. Those unobservable inputs of equity instrument without active market are independent from each other, thus, they are not correlative. Since the correlation between significant unobservable inputs and fair value cannot be fully measured in practical, the quantified information is not disclosed.

Items Financial assets at fair value through other comprehensive income - equity instruments without an active market	Evaluation Market method	significant unobservable inputs relationship between significant unobservable inputs and the fair value ‧ Price to Book Ratio ‧ Discount for lack of marketability ‧ The higher price to book ratio is, the higher fair value is. ‧ The higher discount for lack of marketability is, the lower the fair value is.

• f) Fair value measurement to Level 3, and the sensitivity analysis of the substitutable appropriate assumption made on fair value

The fair value measurement that the Company made for the financial instruments is deemed reasonable; however, different valuation models or inputs could result in different valuation results. Specifically, if the valuation input of financial instruments classified in the Level 3 changes by 1%, the effects on other comprehensive income are as follows:

Change in fair value recognized in other comprehensive income

Favorable December 31, 2021 Financial assets fair value through other comprehensive income $ 154 December 31, 2020 Financial assets fair value through other comprehensive income $ 139	Unfavorable (154) (139)

(Continued)

83

UNION INSURANCE CO., LTD. Notes to the Financial Statements

Favorable and unfavorable movements of the Company refer to the fluctuation of fair value, and the fair value is calculated through the valuation technique according to the unobservable inputs to different extent. If the fair value of a financial instrument is affected by more than one input, the above table only illustrates the effect as a result of one single input, and the correlation and variance among multiple inputs are not listed here.

(vi) Financial instruments not measured at fair value

1) Fair value information

The carrying amounts of financial instruments not measured at fair value, such as cash and cash equivalents, account receivables, reinsurance contract assets, account payables and other financial liabilities that are approximate to the fair value in the Company does not disclose the fair value, except for below items:

Item	Carrying amount Fair value $ 1,819,699 1,831,958 856,508 1,770,222 1,859,746 1,893,480 791,880 1,695,676
December 31, 2021 Financial assets Financial assets at amortized cost (included statutory deposits) Investment Property December 31, 2020 Financial assets Financial assets at amortized cost (included statutory deposits) Investment Property

• 2) Fair value information

Fair value information
Item Total Financial assets at amortized cost (included statutory deposits) $ 1,831,958 Investment property 1,770,222		December 31, 2021
		Quoted prices in active markets for identical assets (Level 1) - -	Significant other observable inputs (Level 2) Significant unobservabl e inputs (Level 3) 1,831,958 - - 1,770,222

(Continued)

84

UNION INSURANCE CO., LTD. Notes to the Financial Statements

Item Total Financial assets at amortized cost (included statutory deposits) $ 1,893,480 Investment property 1,695,676		December 31, 2020	December 31, 2020
		Quoted prices in active markets for identical assets (Level 1) - -	Significant other observable inputs (Level 2) Significant unobservabl e inputs (Level 3) 1,893,480 - - 1,695,676

• 3) Valuation techniques

The valuation assumption and methods of financial instruments not measured at fair value is used by the Company were as follows:

• a) The fair value of short-term financial commodity is estimated by the carrying amount of balance sheet. The carrying amount is the reasonable basis to estimate the fair value, because the maturity date of the commodity is near. The method applied on cash and equivalent cash, accounts receivables and accounts payables.

• b) Financial assets at amortized cost (bond investments without active market)

If investments assets measured at amortized cost have transaction price or quotes of the market makers, use the recent transaction price and quotes as the basis of estimating fair value. If without market value, discounted cash flow method or the quotes of the counterparties are used to calculate fair value or the quoted prices of the counter party.

• c) The refundable deposits and guarantee deposits have no specific maturity date, as a result, using the carrying amount on the balance sheet as the fair value.

• d) The fair value of investment property is assessed by the market practices.

• 4) Transfer between Level 1 and Level 2

There were no transfer in 2021 and 2020.

• (w) Financial risk management

• (i) Overview

  • 1) Credit risk

Credit risk is that borrowers failing to make payments, including pre settlement risk and settlement risk. The settlement risk is the counterparties' violation, and the problem of their liquidity limit and procedure. The pre settlement risk is that during the period of deal, the counterparties cannot perform their obligation of the contract, resulting in the risk of loss.

(Continued)

85

UNION INSURANCE CO., LTD. Notes to the Financial Statements

2) Liquidity risk

The liquidity risk indicates that the deficiency of trading volume or lack of trading counterparties results in the risk of finished trade out of expecting timing.

• 3) Market risk

Market risk includes foreign exchange rates and interest rates. The risk of foreign exchange rates comes from the change of price of foreign currency, includes the change of value, and the change of relationship between currencies, and currency depreciation. The risk of interest rates comes from the change of bond's price, i.e. yield curve risk, when the shape of yield curve risk changes, the risk will occur.

• (ii) The framework of risk management

Please refer to Note(6)(u)(i)1).

• (iii) Credit risk

• 1) The financial assets are classification of credit risk quantity as an assessment of loss. The Company' internal credit risk is classified as low risk, moderate risk and high risk as definition as follows:

  • a) Low risk: The issuers or the counterparties are rated as robust or above to fulfill their obligation of the contracts. Even under various negative news or disadvantageous economic conditions, the companies are capable of dealing with the situations.

  • b) Medium risk: The issuers or the counterparties have lower capability of fulfilling their obligation, disadvantage operation, financial and economic conditions, resulting in weaken capability of dealing with the situations.

  • c) High risk: The possibility that the issuers or counterparties fulfill their obligation is remote and mainly relies on the business environment. Negative news or disadvantageous economic conditions will lower their ability and willingness to fulfill their obligation.

  • d) The impaired items represent the amount of loss allowance provided for financial assets based on the regulations of accounting standards. Under the principle of prudence, the impaired amount is able to reflect the current value of the impaired assets.

• 2) Determining the credit risk has increased significantly since initial recognition

  • a) At each reporting date, the Company assessed all the financial instruments applicable for IFRS 9 to determine whether the credit risk has increased significantly since the initial recognition. In order to make this assessment, the Company considers reasonable and supportable information (including forward looking information) that is indicative of significant increases in credit risk since initial recognition. The criteria include external credit rating, overdue status, credit spreads, and other market information related to the issuers or debtors.

(Continued)

86

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• b) Low credit risk: If it is determined that the credit risk of a financial instrument at the reporting date is low, it can be assumed that the credit risk of the financial instrument has not increased significantly since the date of initial recognition. Judgment criteria: external credit rating above investment grade (Baa3).

• 3) Measuring the expected credit losses

• a) The methods and assumptions

  • If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company shall measure the allowance for impairment of the financial instrument using the 12 month expected credit losses; if the credit risk on a financial instrument has increased significantly since initial recognition, the Company shall measure the allowance for impairment using the lifetime expected credit losses.

  • In order to measure expected credit losses, the Company considers the default probability (Probability of default, "PD") of financial assets or issuers or debtors, and loss given default rate ("LGD") multiplying the exposure at default (“ EAD” ), taking into account the time value of money as well evaluate 12 month and lifetime loss.

  • Default probability is the probability that the issuers or the debtors defaults, and the loss given default rate is the rate of loss caused by default by the issuers or debtors. The relevant indicators used by the Company are based on the default rate and loss given default rate published by Moody's.

  • The Company measures the Exposure at default based on the amortized cost of financial instruments plus accrued interest.

• 4) Consideration of forward-looking information

The Company obtains forward-looking information which it takes into consideration when determining whether the credit risk of financial instruments has increased significantly since initial recognition and assessing the expected credit losses. The default probability used for impairment assessment of the Company is based on the information which already includes forward-looking general economic information published by Moody's.

(iv) Liquidity risk

The Company's approach to managing liquidity is to ensure that there is sufficient liquidity to support the liabilities which is going to expire. The investment targets all have an active market. Financial assets are expected to be sold at a price close to fair value and the own operating capital are sufficient to support the demand for funds needed.so there is no liquidity risk due to the inability to make funds.

(Continued)

87

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(v) Market risk

The goal of market risk management is to control the market risk exposure to an acceptable level and optimize investment returns. The Company uses VAR values to measure price risk. Regularly compare the holding of investment targets with market prices and strictly observe the restrictions on stop-loss. The investment targets do not involve emerging market and commodity risks. It's only foreign currency financial assets and liabilities expose to foreign currency risk and Interest rate risk. The Company conducts stress tests and sensitivity analysis for exchange rate and interest rate risk to ensure that the maximum loss does not endanger the Company's operations.

(x) Capital Management

The policy of the Board of Directors is to maintain robust capital base, and to uphold the confidence of investors, creditors and the market, as well as to support the development of future operations. The capital includes the Company's share capital, capital reserve and undistributed surplus. The Board of Directors controls the rate of return on capital and controls the level of common stock dividends.

As of December 31, 2021, the method of capital management of the Company remains the same.

• (y) Structured entities not included in the financial statements

• (i) The Company possesses the equities of the following structured entities which are not included in the financial statements. The fund is from the Company and an outside third party:

Types of structured entity	Characteristic and purpose Equity owned by the Company Invests in assets securitization products of commercial real estate. Asset backed securities issued by the entity
Assets securitization products- REITS

• (ii) The carrying amount of the assets related to the structured entities recognized by the Company but not yet included in the financial statements on December 31, 2021 and 2020, were as follows:

follows:
	Asset securitization
December 31, 2021		products-REITS
Assets possessed by the Company
－Financial assets at fair value through profit or loss	$	342,856
Total assets possessed by the company	$	342,856
	Asset securitization
December 31, 2020		products-REITS
Assets possessed by the Company
－Financial assets at fair value through profit or loss	$	353,825
Total assets possessed by the company	$	353,825

(Continued)

88

UNION INSURANCE CO., LTD. Notes to the Financial Statements

The maximum exposure of the possible loss from the entity is the carrying amount of the assets possessed.

• (iii) The Company did not provide any financial support for the asset securitization products not included in the financial statements for the years ended December 31, 2021 and 2020.

(7) Related-party transactions:

• (a) Final controller

Mr. Tsai Yan Ming is the Company final controller.

• (b) Names and relationship of related parties

The followings are entities that have had transactions with related party during the periods covered in the financial statements.

Name of Related Party

Want Want Co., Ltd.

Want Chia Enterprises Co.,Ltd. H.Y. Tsai Co., Ltd. Tsai Ho Want Enterprises Co., Ltd. Want Want Constructions Co., Ltd. Digital Commercial Times Inc. CTI Television Incorporation Co., Ltd. China Times Culture Co., Ltd. China Times Travel Service Co., Ltd. China Television Company Co., Ltd. Touche Innovative Media Co., Ltd. China Times Study Services Co Ltd. Media Sphere Communications Ltd. K Venture Co,. Ltd.

TY Star Network Technology Co., Ltd. Cnplus Production, Inc. Want Tai Media Co., Ltd.

I Lan Foods Ind. Co., Ltd.

First Family Enterprise Co., Ltd.

Want Pu Trading Limited, Taiwan Branch (B.V.I)

Newwing Limited, Taiwan Branch (B.V.I) Twitcher Taiwan Limited, Taiwan Branch (B.V.I)

San Want Hotel Co., Ltd.

Relationship with the Company Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party

Material related party Material related party

Material related party

(Continued)

89

UNION INSURANCE CO., LTD. Notes to the Financial Statements

Name of Related Party

Shao Yuan Co., Ltd. Jia Peng Development Co., Ltd. Ho Yuan Want Co., Ltd. Taiwan Marketing Logistics Co., Ltd. Hao Want Co., Ltd. Wulai Tourism Co., Ltd. Ren Want Co., Ltd. Apollo Marketing Research Co.,Ltd. Earth Want Co., Ltd. IBF Securities Co., Ltd. International Bills Finance Corp. Nuowant Biomedical Technology Co., Ltd. CTV Charities Aid Foundation Commercial Culture Co., Ltd.

Hongkong Hai Tian Aquaculture Holdings Limited, Taiwan Branch (Previous Company Name：HongKong Da Want Aquaculture Holdings Limited, Taiwan Branch)

Relationship with the Company

Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party Material related party

All directors, supervisors, managers, chairman of the board, general managers are the Company's related parties.

• (c) Compensation of key management personnel

Short-term employee benefits Short-term employee benefits-paid leave Post-employment benefits Total	For the years ended December 31,	For the years ended December 31,
	2021 $ 41,554 523 546 $ 42,623	2020
		46,487 626 821
		47,934

(Continued)

90

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(d) Significant transactions with related parties were as follows:

(i) The details of written premium, account receivables, and prepaid expenses were as follows:

1) Written premium

Written premium Other related parties Key management personnel Total 2) Account receivables Premiums receivable: Other related parties Key management personnel Total	For the years ended December 31,	For the years ended December 31,
	2021 Amount $ 16,925 864 $ 17,789 December 31, 2021 $ 214 6 $ 220	2020
		Amount
		17,111 818
		17,929
		December 31, 2020 516 - 516

The terms of transactions were similar to those of non related parties.

3) Prepaid expenses

Prepaid expenses: Other related parties General expense: Related parties Other related parties Rental revenue: Related parties Key Management personnel	December 31, 2021 December 31, 2020 $ - 4,003 For the years ended December 31,	December 31, 2020
		4,003
	2021 2020 $ 7,051 4,798 For the years ended December 31,	2020
		4,798
	2021 $ 60	2020
		-

(ii) General expense:

(iii) Rental revenue:

(Continued)

91

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(8) Pledged assets:

As of December 31, 2021 and 2020, the assets pledged or guarantee were as follows:

Pledged Assets	December 31, 2021 $ 167,000 423,641 $ 590,641	December 31, 2020 Purpose of pledge 167,000 Guarantee for the insurance business 365,852 Guarantee for operating business, suit, and contract performance 532,852
Other financial assets - Time deposit Financial assets at amortized cost Total

(9) Commitments and contingencies:

• (a) The Company had several significant insurance lawsuits and was required to pay indemnities of $154,810, of which approximately $110,986 were reinsured. The remain had been accrued. These cases have not been resolved with District Court of Appeal as of December 31, 2021.

• (b) In order to improve computer equipment and IT systems, the Company is in contract with several IT companies. As of December 31, 2021, there is $71,416 unpaid.

(10) Losses Due to Major Disasters:None.

(11) Subsequent Events:None.

(12) Other:

• (a) A summary of employee benefits, depreciation and amortization:

	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
Function Nature	2021			2020
	Operating costs	Operating expense	Total	Operating costs	Operating expense	Total
Employees Benefits:
Salaries	348,399	760,919	1,109,318	361,667	779,705	1,141,372
Labor and health insurance	-	83,637	83,637	-	77,988	77,988
Pension	-	41,735	41,735	-	41,488	41,488
Remuneration of directors	-	23,241	23,241	-	23,122	23,122
Others	-	45,688	45,688	-	44,905	44,905
Depreciation	4,226	46,778	51,004	4,262	49,735	53,997
Amortization	-	17,462	17,462	-	17,301	17,301

(Continued)

92

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(b) Disclosure of earned retention premium by compulsory and non-compulsory insurance

Item		For the year ended	For the year ended	December 31, 2021	December 31, 2021
	Premium Revenue (1) $ 967,046 9,694,439 $ 10,661,485	Reinsurance Premium (2) Reinsurance Expense (3) 299,770 408,888 132,688 2,689,620 432,458 3,098,508 For the year ended		Net change in unearned premium reserve (4)=(1)+(2)-(3) Net change in unearned premium reserve(5) 857,928 (1,106) 7,137,507 183,063 7,995,435 181,957 December 31, 2020		Retention of earned premium (6)=(4)-(5) 859,034 6,954,444
Compulsory insurance Non-compulsory insurance Total Item
						7,813,478
		Reinsurance Premium (2) 293,622 125,650 419,272	Reinsurance Expense (3) 412,365 2,846,664 3,259,029	Net change in unearned premium reserve (4)=(1)+(2)-(3) 856,379 6,526,753 7,383,132	Net change in unearned premium reserve(5) 216 238,540 238,756	Retention of earned premium (6)=(4)-(5) 856,163 6,288,213
Compulsory insurance Non-compulsory insurance Total
						7,144,376

• (c) Disclosure of self-claim by compulsory and non-compulsory insurance

Item	For	the year ended December 31, 2021	the year ended December 31, 2021
	Claim (included related expenses) (1) $ 660,187 4,864,665 $ 5,524,852 For	Reinsurance claim (2) Claims recovered from reinsurers (3) 277,747 393,918 121,283 1,568,793 399,030 1,962,711 the year ended December 31, 2020		Retained claim payment (4)=(1)+(2)-(3)
Compulsory insurance Non-compulsory insurance Total Item				544,016 3,417,155
				3,961,171
		Reinsurance claim (2) 270,000 111,488 381,488	Claims recovered from reinsurers (3) 426,763 1,709,390 2,136,153	Retained claim payment (4)=(1)+(2)-(3)
Compulsory insurance Non-compulsory insurance Total				561,578 3,228,302
				3,789,880

(Continued)

93

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• (d) Reserves accrued and recovered for compulsory automobile and motorcycle insurance:

For the years ended December 31, 2021

Type	Beginning	Provision	Recovered	Ending	Note
Unearned premium reserve Compulsory automobile liability insurance Compulsory motorcycle liability insurance Special reserve Compulsory automobile liability insurance Compulsory motorcycle liability insurance Claim reserve Compulsory automobile liability insurance Compulsory motorcycle liability insurance	$ 394,655 141,925 (300,611) 300,611 667,234 188,001	399,078 132,472 86,256 4,535 569,388 180,851	394,655 141,925 62,574 10,274 667,234 188,001	399,078 132,472 (276,929) 294,872 569,388 180,851
Total	$ 1,391,815	1,372,580	1,464,663	1,299,732

(Continued)

94

UNION INSURANCE CO., LTD. Notes to the Financial Statements

For the years ended December 31, 2020

Type	Beginning	Provision	Recovered	Ending	Note
Unearned premium reserve Compulsory automobile liability insurance Compulsory motorcycle liability insurance Special reserve Compulsory automobile liability insurance Compulsory motorcycle liability insurance Claim reserve Compulsory automobile liability insurance Compulsory motorcycle liability insurance	$ 381,506 155,157 (329,245) 329,245 663,646 196,925	394,655 141,925 35,350 - 667,234 188,001	381,506 155,157 6,716 28,634 663,646 196,925	394,655 141,925 (300,611) 300,611 667,234 188,001
Total	$ 1,397,234	1,427,165	1,432,584	1,391,815

• (e) Balance sheet and operating revenue and cost of compulsory automobile liability insurance:

• (i) Balance sheet of compulsory automobile liability insurance:

	Amount	Amount		Amount	Amount
Items	December 31, 2021	December 31, 2020	Items	December 31, 2021	December 31, 2020
Asset			Liabilities
Cash and bank deposit	$ 728,157	727,228	Claims payable	$ 163	58
Notes receivable	7,860	7,876	Reinsurance indemnity payable	70,785	71,546
Premiums receivable	9,466	10,230	Unearned premium reserves	531,550	536,580
Claim recoverable from reinsures	51,658	70,141	Claims reserves	750,239	855,235
Due from reinsurers and cedingcompanies	49,805	48,867	Special reserves	17,943	-
Reserve - ceded unearned premiums	219,878	223,802
Reserve - ceded claim	303,805	374,963
Temporary payments	51	312
Total assets	$ 1,370,680	1,463,419	Total liabilities	$ 1,370,680	1,463,419

(Continued)

95

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(ii) Operating revenue and cost of compulsory automobile liability insurance:

	For the years ended December 31,	For the years ended December 31,
Item	2021	2020
Operating revenue	572,972	567,727
Direct insurance premium revenue	681,456	687,257
Reinsurance premium	299,770	293,622
Premium	981,226	980,879
Less: Reinsurance expense	(408,888)	(412,365)
Net change in unearned premium reserve	1,106	(216)
Retained earned premium	573,444	568,298
Interest income	(472)	(571)
Operating costs	590,695	567,727
Insurance claim payment	660,187	718,341
Reinsurance claim payment	277,747	270,000
Less: Claim recovered from reinsurers	(393,918)	(426,763)
Retained claim payment	544,016	561,578
Net change in claim reserve	(33,838)	(567)
Net change in special reserve	80,517	6,716

(Continued)

96

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• (f) The amounts of the Company expecting to recover (paid) within (over) 12 months of the balance sheet date were as follows:

sheet date were as follows:
Assets	December 31, 2021
	Within 12 months Over 12 months $ 3,648,227 - 680,984 - 1,879,359 - - 2,080,399 - 1,396,058 2,300,920 126,500 - 18,127 - 856,508 3,466,616 393,401 - 1,262,061 - 120,574 50,112 741,091 $ 12,026,218 6,994,719 December 31, 2021		Total
Cash and cash equivalents Receivables Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at amortized cost Other financial assets Right-of-use assets Investment property Reinsurance assets Property and equipment Intangible assets Other assets Total assets Liabilities			3,648,227 680,984 1,879,359 2,080,399 1,396,058 2,427,420 18,127 856,508 3,860,017 1,262,061 120,574 791,203
			19,020,937
	Within 12 months $ 1,232,275 102,936 10,202,544 - 12,760 - 14,777 $ 11,565,292	Over 12 months 5,410 - 755,930 179,077 5,497 63,920 4,038 1,013,872	Total
Accounts payable Current tax liabilities Insurance liabilities Provisions Lease liabilities Deferred tax liabilities Other liabilities Total liabilities			1,237,685 102,936 10,958,474 179,077 18,257 63,920 18,815
			12,579,164

(Continued)

97

UNION INSURANCE CO., LTD. Notes to the Financial Statements

Assets	December 31, 2020	December 31, 2020
	Within 12 months Over 12 months $ 2,386,542 - 667,810 - 302 - 1,966,543 - - 2,356,484 40,037 1,453,857 1,949,664 171,973 - 7,810 - 791,880 3,515,764 405,068 - 1,165,781 - 136,982 - 728,235 $ 10,526,662 7,218,070 December 31, 2020		Total
Cash and cash equivalents Receivables Current tax assets Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at amortized cost Other financial assets Right-of-use assets Investment property Reinsurance assets Property and equipment Intangible assets Other assets Total assets Liabilities			2,386,542 667,810 302 1,966,543 2,356,484 1,493,894 2,121,637 7,810 791,880 3,920,832 1,165,781 136,982 728,235
			17,744,732
	Within 12 months $ 1,248,822 180 9,610,980 - 6,526 - 24,873 $ 10,891,381	Over 12 months 7,928 - 715,682 214,043 1,337 63,920 3,248 1,006,158	Total
Accounts payable Current tax liabilities Insurance liabilities Provisions Lease liabilities Deferred tax liabilities Other liabilities Total liabilities			1,256,750 180 10,326,662 214,043 7,863 63,920 28,121
			11,897,539

(Continued)

98

UNION INSURANCE CO., LTD. Notes to the Financial Statements

• (g) Other disclosures in accordance with regulations governing the preparation of financial reports by insurance enterprises:

• (i) The details of the market values of investments which were held for investment purpose by the discretionary investment trust fund：Refer to Note 6(f).

• (ii) Information regarding to discontinued operations: None.

• (iii) Material revolutions of adjustments of organization and management policy: None.

• (iv) Material influence because of the regulations changed: None.

• (v) The Loan because of paying large amount of claims: None.

• (h) Disclosure in accordance to "catastrophe special reserve and equalization special reserve", "the special reserve for resident earthquake insurance" and "the special reserve for nuclear insurance":

For the years ended December 31, 2021 and 2020, the influence for not applying the notification on net income, liabilities, and equity of the Company resulted in an increase of $111,532, an increase of $116,212, a decrease of $111,532, a decrease of $116,212, an increase of $111,532, an increase of $116,212, respectively. The influence on the Company for not applying the notification resulted in an increase in the EPS by $0.50 and $0.52, respectively.

(Continued)

99

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(13) Other disclosures:

• (a) Information on significant transactions:

The following is the information on significant transactions required by the “ the Regulations Governing the Preparation of Financial Reports by Insurance Enterprises” for the Company:

• (i) Acquisition of individual real estate with amount exceeding the lower of NT$100 million or 20% of the capital stock:

Acquisition of individual real estate with amount exceeding the	Acquisition of individual real estate with amount exceeding the	Acquisition of individual real estate with amount exceeding the	Acquisition of individual real estate with amount exceeding the	Acquisition of individual real estate with amount exceeding the	Acquisition of individual real estate with amount exceeding the	Acquisition of individual real estate with amount exceeding the	lower of NT$100 million or 20% of the capital stock:	lower of NT$100 million or 20% of the capital stock:	lower of NT$100 million or 20% of the capital stock:	lower of NT$100 million or 20% of the capital stock:	lower of NT$100 million or 20% of the capital stock:	lower of NT$100 million or 20% of the capital stock:	lower of NT$100 million or 20% of the capital stock:
							(In Thousands of New Taiwan Dollars)
Name of company	Name of property	Occurrence date	Amount	Amount Paid	Counterparty	Relationship	Previous transfer information, as the counterparty is a related party				Reference price	Purpose and usage	Others
							Owner	Relations with the issiuer	Transfer date	Amount
The Company	2F, No.467, Sec. 6, Zhongxiao E. Rd., Nangang Dist., Taipei City	2021.5.11	167,020	167,020	Natural person	Not related party	-	-	-	-	Appraisal report	Owner- occupied property	None

• (ii) Disposal of individual real estate with amount exceeding the lower of NT$100 million or 20% of the capital stock: None.

• (iii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: None.

• (iv) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock: None.

• (v) Trading in derivative instruments: None.

• (b) Information on investees:None.

• (c) Information on investment in mainland China:None.

• (d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Tsai Ho Want Enterprises Co., Ltd.	49,961,671	% 22.34
Want Chia Enterprises Co., Ltd.	48,480,873	% 21.68
Want Want Co., Ltd.	46,689,943	% 20.88

• Notes: The information on major shareholders,which is provided by the Taiwan Depository & Clearing Corporation, summarized the shareholders who held over 5% of total non-physical common stocks and preferred stocks (including treasury stocks) on the last business date of each quarter. The registered non-physical stocks be different from the capital stocks disclosed in the financial statement due to different calculation basis.

(Continued)

100

UNION INSURANCE CO., LTD. Notes to the Financial Statements

(14) Segment information:

• (a) General information

The Company primarily conducts its business in property insurance, which is the single mostly significant business unit for the Company, furthermore major decisions are based on the business activity’ s company-wide report to determine performance evaluation and the allocation of information, therefore it is not necessary to individually disclose operational information of reportable segments.

• (b) Region information

The Company's business is primarily located in Taiwan.

• (c) Important client information

The Company does not receive premium revenue from any single customer which exceeds 10% of the direct written premiums received and there is no need to disclose major customer information.

101

Union Insurance Co., LTD.

Statement of cash and cash equivalents

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Description	Amount
Cash: Cash on hand Petty cash Demand deposits Checking deposits Foreign currency deposits Time deposits Cash equivalents: Bonds purchased under resale agreements Total	Included original currency (in thousands) and exchange rate: USD 5,415 @ 27.6800 HKD 50 @ 3.5500 GBP 22 @ 37.3000 JPY 120 @ 0.2405 AUD 22 @ 20.0800 EUR 63 @ 31.3200 CNY 1 @ 21.6200 SGD 4 @ 20.4600 THB 1,173 @ 0.8347 Due date from Jan. 05, 2022 to Mar. 05, 2022, interest rate from 0.10% to 0.41% Due date from Jan. 03, 2022 to Jan. 19, 2022, interest rate from 0.19% to 0.30%	$ 500 13,050 2,252,660 3,711 154,412 446,479 777,415 $ 3,648,227

102

Union Insurance Co., LTD.

Statement of notes receivable

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Customer	Description	Amount	Note
Non-Related Parties
A company	$	18,717
B company		15,815
Others		213,000	Each customer
			balance is less than
			5% of account
			balance.
Less: Loss allowance		(1,450)
Total (net)	$	246,082
	Statement of premiums receivable
Customer	Description	Amount	Note
Related Parties
Other related parties	$	214
Key management personnel		6
Non-Related Parties
C company		57,605
Others		238,932	Each customer
			balance is less than
			5% of account
			balance.
		296,757
Less: Loss allowance		(3,987)
Total (net)	$	292,770

103

Union Insurance Co., LTD.

Statement of other receivables

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Description	Amount $ 34,900 4,483 39,383 33,658 (30,928) 2,730 67,951 34,615 907 (3,454) 100,019 $ 142,132	Note Each item amount is less than 5% of account balance.
Interests receivable Overdue commissions of premium refund receivables Less: Loss allowance for overdue commissions of premium refund receivables Other receivables Less: Loss allowance for other receivables Total	Bond interest Time deposit interest Subtotal Subtotal From credit card From convenience store Others Subtotal

104

Union Insurance Co., LTD.

Statement of financial assets at fair value through profit or loss

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Description	Shares/ Units - 459,000 - 5,644,203 18,911,000	Par Value	Principal Amount - 4,590 - 56,442 -	Rate - - - - -	Acquisition Cost 125,254 256,427 901,070 296,010 325,074 1,903,835 (24,476) 1,879,359	Fair	Value Total 131,006 282,285 1,123,212 - 342,856 1,879,359	Change in fair value attributable to change in credit risk Note - - - - -
						Unit Price - 615.00 - - 18.13
		$ - 10 - 10 -

105

Union Insurance Co., LTD.

Statement of financial assets at fair value through other comprehensive

income

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Financial assets Name Domestic listed stock and OTC stocks Taiwan Cement Corp. 2nd Preferred Shares Cathay Financial Holding Co., Ltd. Preferred Stock A Cathay Financial Holding Co., Ltd. Preferred Stock B Taishin Financial Holding CO., LTD. Class E Preferred Shares Taishin Financial Holding CO., LTD. Class E Preferred Shares Ⅱ CTBC Financial Holding CO., LTD. Preferred Shares C Chailease Holding CO., LTD. Class A Preferred Shares Others(less than 5%) Subtotal Domestic unlisted stocks Minchali Metal Industry CO., LTD. Total	Description	Shares/ Units	Par Value $ 10 10 10 10 10 10 10 - 10	Principal Amount 27,850 50,000 27,090 63,280 20,000 83,330 29,900 - 14,000	Loss Allowance - - - - - - - - - - -	Allowance Adjustments for Valuation 3,180 14,500 9,482 18,554 3,800 13,333 3,965 (1,442) 65,372 14,112 79,484	Acquisition Cost 141,083 300,000 162,541 317,463 100,000 499,980 299,520 179,068 1,999,655 1,260 2,000,915	Fair Value Unit Price Total Note 51.80 144,263 62.90 314,500 63.50 172,022 53.10 336,017 51.90 103,800 61.60 513,313 101.50 303,485 - 177,627 2,065,027 10.98 15,372 2,080,399
								Unit Price 51.80 62.90 63.50 53.10 51.90 61.60 101.50 - 10.98
		2,785,000 5,000,000 2,709,011 6,328,000 2,000,000 8,333,000 2,990,000 - 1,400,000

106

Union Insurance Co., LTD.

Statement of financial assets measured at amortized cost

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Bonds Name	Description	Quantity	Par Value	Principal Amount	Rate	Loss Allowance	Loss Allowance		(Discount) Premium Unamortised		Book Value Note 50,111 100% of securities serving 298,957 76.5% of securities serving 49,720 100% of securities serving 49,904 76.00% of securities serving 121,661 47.00% of securities serving 570,353 299,888 79,935 169,826 199,926 99,963 99,918 949,456 99,963 199,927 299,890 (423,641) 1,396,058
Central Government Construction Bonds: Bond A7 issued in 2002 Bond A3 issued in 2003 Bond A2 issued in 2006 Bond A7 issued in 2006 Bond A8 issued in 2012 Subtotal Corporate Bonds: NAN SHAN Life Insurance Subordinated Corporate Bonds 2016 1 SHIN KONG Life Insurance Subordinated Corporate Bonds 2016 1 Mercuries Life Insurance Subordinated Corporate Bonds 2016 1 Taiwan Life Insurance Subordinated Corporate Bonds 2017 1 NAN SHAN Life Insurance Subordinated Corporate Bonds 2018 1 SHIN KONG Life Insurance Subordinated Corporate Bonds 2018 1 Subtotal Financial Bonds: First Commercial Bank Subordinated Financial Bonds issued in 2018 2 HUA NAN Commercial Bank Subordinated Financial Bonds issued in 2019 1 Subtotal Less: Guarantee for operating business and suit Total	Due on 2022.08.16. Interests paid once a year Due on 2023.02.18. Interests paid once a year Due on 2026.02.24. Interests paid once a year Due on 2026.11.10. Interests paid once a year Due on 2042.08.24. Interests paid once a year Cumulative without due date 〞 〞 〞 〞 〞 Debenture Bonds, non-cumulative without due date 〞	- - - - - - - - - - - - -	- - - - - - - - - - - - -	$ 50,000 300,000 50,000 50,000 100,000 550,000 300,000 80,000 170,000 200,000 100,000 100,000 950,000 100,000 200,000 300,000 (414,500) $ 1,385,500	% 3.750 % 2.500 % 1.875 % 2.125 % 1.625 % 3.500 % 3.800 % 3.700 % 3.450 % 3.300 % 3.500 % 2.360 % 1.950		- - - - - - (112) (65) (174) (74) (37) (82) (544) (37) (73) (110) (654)		111 (1,043) (280) (96) 21,661 20,353 - - - - - - - - - - (9,141) 11,212

107

Union Insurance Co., LTD.

Statement of other financial assets

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Description	Amount	Note
Time deposit－initial maturity date over than three months Less: Securities serving as deposits paid (Note) Total		$ 2,594,420 (167,000) $ 2,427,420

Note: Securities serving as deposits paid are kinds of guarantee deposits paid which transfer from the time deposits pledged as collateral.

Statement of changes in right-of-use assets

Item	Beginning Balance $ 27,162 5,434 $ 32,596	Increased 21,821 4,436 26,257	Decreased 21,602 5,435 27,037	Ending Balance Note 27,381 4,435 31,816
Buildings and constructions Transportation equipment

108

Union Insurance Co., LTD.

Statement of changes in accumulated depreciation of

right-of-use assets

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item	Beginning Balance $ 20,835 3,951 $ 24,786	Increased 13,385 2,289 15,674	Decreased 21,336 5,435 26,771	Ending Balance Note 12,884 805 13,689
Buildings and constructions Transportation equipment

109

Union Insurance Co., LTD.

Statement of changes in investment property

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Beginning Balance	Beginning Balance	Total 681,525 187,636 869,161		Addition	Total 53,931 33,061 86,992		Decrease	Total (7,569) (3,593) (11,162)		Ending Balance	Total 727,887 217,104 944,991	Collateral pledge
	Initial Recognition Amount $ 681,525 187,636 $ 869,161	Accumulated Changes in Fair Value - - -		Initial Recognition Amount 53,931 33,061 86,992	Accumulated Changes in Fair Value - - -		Initial Recognition Amount (7,569) (3,593) (11,162)	Accumulated Changes in Fair Value - - -		Initial Recognition Amount 727,887 217,104 944,991	Accumulated Changes in Fair Value - - -
Land and improvement Buildings and constructions Total													None 〞

Note

110

Union Insurance Co., LTD.

Statement of changes in accumulated depreciation of investment property

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Buildings and constructions	Beginning Balance $ 73,140		Addition Provision Reclassification 4,226 8,400	Addition Provision Reclassification 4,226 8,400		Decrease Sold and Scrap Reclassification - (1,600)	Decrease Sold and Scrap Reclassification - (1,600)		Ending Balance Note 84,166
			Provision 4,226			Sold and Scrap -

Note: Provision depreciated by using the straight-line method over useful life of 20 to 61 years.

111

Union Insurance Co., LTD.

Statement of changes in accumulated impairment of

investment property

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Land and improvement Buildings and constructions Total	Beginning Balance $ 2,359 1,782 $ 4,141		Addition - 176 176		Decrease - - -		Ending Balance Note 2,359 1,958 4,317

112

Union Insurance Co., LTD.

Statement of claims and payments recoverable from

reinsurers

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Description	Amount $ 6,927 6 799 480 80,620 4,553 44,700 15,691 41,936 594 9,128 8,044 874 9,842 (1,701) 141 21,571 8 2,451 2,289 255 89 $ 249,297	Note
Yearly renewable term commercial fire insurance Domestic transportation insurance Marine cargo insurance Fishing vessel insurance Personal automobile physical damage insurance Commercial automobile physical damage insurance Personal automobile liability insurance Commercial automobile liability insurance Compulsory personal automobile liability insurance Compulsory commercial automobile liability insurance Compulsory motorcycle liability insurance General liability insurance Professional indemnity insurance Engineering insurance Guarantee insurance Other property insurance Accident insurance Personal all risks insurance Typhoon and flood insurance Health insurance Commercial earthquake insurance Overdue claims recoverable from reinsurers Total

113

Union Insurance Co., LTD.

Statement of due from and due to reinsurers and

ceding companies

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Description	Debit	Description		Credit 25,962 21,743 17,876 13,906 8,277 8,872 96,636 521,836 1,611 620,083	Note
ERIF Insurance Broker Ltd. Elicon Risk Services Ltd. WOCA Insurance Broker Ltd. Foreign exchange gains (losses) and others Subtotal Reinsurance receivable Reinsurance commission receivable Overdue from ceding companies Total (net)	$ 69,583 39,658 38,031 3,964 151,236 78,663 8,638 5,834 $ 244,371	Miller Insurance Services LLP- UK Aon Taiwan Ltd. Arthur J. Gallagher (UK) Linited Marsh Ltd., Taiwan Branch Central Reinsurance Corporation Foreign exchange gains (losses) and others Subtotal Reinsurance payable Reinsurance commission payable			Each customer account balance is less than 5% of account balance.

114

Union Insurance Co., LTD.

Statement of change in property and equipment

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Land Buildings and constructions Computer equipment Transportation equipment Other equipment Leasehold improvements Total	Beginning Balance $ 825,946 480,196 183,601 579 51,799 2,004 $ 1,544,125		Addition Purchase Reclassification 136,007 7,569 47,956 3,593 8,686 - - - 3,214 - - - 195,863 11,162	Addition Purchase Reclassification 136,007 7,569 47,956 3,593 8,686 - - - 3,214 - - - 195,863 11,162	Decrease Sold and Scrap Reclassification - (53,931) - (32,686) (1,647) - - - (705) - - - (2,352) (86,617)	Decrease Sold and Scrap Reclassification - (53,931) - (32,686) (1,647) - - - (705) - - - (2,352) (86,617)	Ending Balance 915,591 499,059 190,640 579 54,308 2,004 1,662,181	Collateral or pledge Note None 〞 〞 〞 〞 〞
			Purchase 136,007 47,956 8,686 - 3,214 - 195,863		Sold and Scrap - - (1,647) - (705) - (2,352)

115

Union Insurance Co., LTD.

Statement of changes in accumulated depreciation of property and equipment

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Buildings and constructions Computer equipment Transportation equipment Other equipment Leasehold improvements Total	Beginning Balance $ 161,810 155,754 564 42,041 858 $ 361,027		Addition Provision Reclassification 14,097 1,600 12,444 - 15 - 4,090 - 458 - 31,104 1,600	Addition Provision Reclassification 14,097 1,600 12,444 - 15 - 4,090 - 458 - 31,104 1,600	Decrease Sold and Scrap Reclassification - (8,400) (1,647) - - - (705) - - - (2,352) (8,400)	Decrease Sold and Scrap Reclassification - (8,400) (1,647) - - - (705) - - - (2,352) (8,400)	Ending Balance Note 169,107 Note 166,551 〞 579 〞 45,426 〞 1,316 〞 382,979
			Provision 14,097 12,444 15 4,090 458 31,104		Sold and Scrap - (1,647) - (705) - (2,352)

Note: Both buildings and structures and miscellaneous equipment are depreciated by using the straight line method over useful life of 21 to 60 years and 3 to 9 years, respectively.

116

Union Insurance Co., LTD.

Statement of changes in accumulated impairment of

property and equipment

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Land Buildings and constructions Total	Beginning Balance $ 15,196 2,121 $ 17,317	Addition - - -	Decrease - - -	Reclassification - (176) (176)	Ending Balance Note 15,196 1,945 17,141

Statement of changes in intangible assets

Items	Beginning Balance $ 70,403 48,605 17,974 $ 136,982	Addition 5,700 - - 5,700	Decrease (14,135) (3,327) (4,646) (22,108)	Reclassification Note 61,968 Note 1, 2 45,278 Note 3, 4 13,328 Note 5 120,574
Computer software Golf club card Other intangible assets - others Total

Note 1: Cost of computer software is amortized by straight line method over useful life of 3 to 12 years.

• Note 2: The increase of $855 is addition, and the decrease of $14,135 is amortization expense.

• Note 3: The decrease of $3,327 is amortization expense.

• Note 4: Cost of golf club card is amortized by using the straight line method over useful life of 10 to 20 years.

• Note 5: In accordance with IFRS 4, the intangible asset recognized was the difference from the fair value of the contractual insurance rights acquired and insurance obligations assumed to a liability measured in accordance with the insurer's accounting policies for insurance contracts that it issues. The subsequent measurement of this asset shall be consistent with the measurement of the related insurance liability.

117

Union Insurance Co., LTD.

Statement of other assets

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Description	Amount $ 334,572 262,336 69,748 36,069 702,725 85,481 2,997 $ 791,203	Note
Gurantee deposits Suspense payment Others Total	Operation Performance bond Membership Others Subtotal		Each item amount is less than 5% of account balance. Each item amount is less than 5% of account balance.

118

Union Insurance Co., LTD.

Statement of insurance and reinsurance indemnity

payables

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Personal automobile physical damage insurance Personal automobile liability insurance Commercial automobile liability insurance Compulsory personal automobile liability insurance Compulsory commercial automobile liability insurance Compulsory motorcycle liability insurance General liability insurance Engineering insurance Surety insurance Accident insurance Personal all risks insurance Commercial all risks insurance Health insurance Total	Description	Amount
		$ 51 154 5 143 3 17 227 4 1 538 1,604 50 52 $ 2,849

Note: All of the above are direct businesses.

119

Union Insurance Co., LTD.

Statement of other payables

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Description	Amount $ 273,069 46,200 319,269 38,943 31,228 46,867 78,095 $ 436,307	Note
Accrued expenses Accrued taxes Other payables Total	Salary compensation and year- end bonus Others Subtotal Stock settlement Others Subtotal		Each item amount is less than 5% of account balance. Each item amount is less than 5% of account balance.

120

Union Insurance Co., LTD.

Statement of changes in unearned premium reserve

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Total:

Insurance	Beginning Balance		Net Change		Other Change		Ending Balance Note 72,666 68,798 245,133 322 11,133 50,536 22,239 11,034 31,142 1,538,822 83,397 1,120,649 316,324 318,763 80,315 132,472 141,085 20,936 616,537 3,635 7,799 27,898 408,680 116,083 10,825 91,681 149,573 26,511 134,989 5,859,977 Ending Balance Note 4,394 220 671 129,704 134,989
Yearly renewable term dwelling fire insurance Long-term dwelling fire insurance Yearly renewable term commercial fire insurance Long-term commercial fire insurance Domestic transportation insurance Marine cargo insurance Hull insurance Fishing vessel insurance Aviation insurance Personal automobile physical damage insurance Commercial automobile physical damage insurance Personal automobile liability insurance Commercial automobile liability insurance Compulsory personal automobile liability insurance Compulsory commercial automobile liability insurance Compulsory motorcycle liability insurance General liability insurance Professional indemnity insurance Engineering insurance Nuclear risks insurance Surety insurance Other property insurance Accident insurance Commercial earthquake insurance Personal all risks insurance Typhoon and flood insurance Policy-oriented earthquake insurance Yearly health insurance Overseas ceded-in reinsurance Total Overseas Ceded-in Reinsurance Insurance	$ 70,496 91,741 240,913 500 11,694 44,930 12,881 12,615 34,528 1,551,395 68,431 1,063,375 307,251 315,013 79,642 141,925 122,135 18,676 627,748 4,260 11,854 20,386 386,514 120,536 9,548 95,921 145,266 10,921 226,597 $ 5,847,692 Beginning Balance		2,170 (22,943) 4,220 (178) (561) 5,606 9,358 (1,581) (3,386) (12,573) 14,966 57,274 9,073 3,750 673 (9,453) 18,950 2,260 (11,211) (625) (4,055) 7,512 22,166 (4,453) 1,277 (4,240) 4,307 15,590 (91,608) 12,285 Net Change		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Other Change
Fire insurance Hull insurance Aviation insurance Other liability insurance Total	$ 2,018 205 1,026 223,348 $ 226,597		2,376 15 (355) (93,644) (91,608)		- - - - -

121

Union Insurance Co., LTD.

Statement of changes in unearned premium reserve

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Ceded-out:

Insurance	Beginning Balance		Net Change		Other Change		Ending Balance Note 33,023 106,820 69 1,113 41,852 22,187 9,244 27,609 257,361 12,631 137,086 44,058 133,246 37,621 49,011 52,583 7,172 378,254 3,976 4,018 40,613 54,616 - 47,079 131,366 6,541 103,808 1,742,957 Ending Balance Note 218 402 103,188 103,808
Long-term dwelling fire insurance Yearly renewable term commercial fire insurance Long-term commercial fire insurance Domestic transportation insurance Marine cargo insurance Hull insurance Fishing vessel insurance Aviation insurance Personal automobile physical damage insurance Commercial automobile physical damage insurance Personal automobile liability insurance Commercial automobile liability insurance Compulsory personal automobile liability insurance Compulsory commercial automobile liability insurance Compulsory motorcycle liability insurance General liability insurance Professional indemnity insurance Engineering insurance Surety insurance Other property insurance Accident insurance Commercial earthquake insurance Personal all risks insurance Typhoon and flood insurance Policy-oriented earthquake insurance Health insurance Overseas ceded-in reinsurance Total Overseas Ceded-in Reinsurance Insurance	$ 43,395 107,556 112 1,169 39,132 12,835 10,113 30,898 319,781 12,269 156,275 50,801 133,076 37,749 52,977 39,536 7,156 398,959 6,331 3,861 41,534 59,190 6 49,704 128,947 1,986 162,635 $ 1,907,983 Beginning Balance		(10,372) (736) (43) (56) 2,720 9,352 (869) (3,289) (62,420) 362 (19,189) (6,743) 170 (128) (3,966) 13,047 16 (20,705) (2,355) 157 (921) (4,574) (6) (2,625) 2,419 4,555 (58,827) (165,026) Net Change		- - - - - - - - - - - - - - - - - - - - - - - - - - - - Other Change
Hull insurance Aviation insurance Other liability insurance Total	$ 205 648 161,782 $ 162,635		13 (246) (58,594) (58,827)		- - - -

122

Union Insurance Co., LTD.

Statement of changes in loss reserve

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Total:

Insurance	Beginning Balance		Net Change		Other Change		Ending Balance Note 18,535 1,144 588,386 15 5,688 32,497 115,137 15,833 85,840 417,448 44,438 800,245 313,328 477,070 92,318 180,851 118,912 10,737 254,004 444 23,720 9,519 266,285 39,646 1,046 3,694 5,515 9,373 3,931,668 Ending Balance Note 2,675 90 744 37 33 2,209 3,585 9,373
Yearly renewable term dwelling fire insurance Long-term dwelling fire insurance Yearly renewable term commercial fire insurance Long-term commercial fire insurance Domestic transportation insurance Marine cargo insurance Hull insurance Fishing vessel insurance Aviation insurance Personal automobile physical damage insurance Commercial automobile physical damage insurance Personal automobile liability insurance Commercial automobile liability insurance Compulsory personal automobile liability insurance Compulsory commercial automobile liability insurance Compulsory motorcycle liability insurance General liability insurance Professional indemnity insurance Engineering insurance Nuclear risks insurance Surety insurance Other property insurance Accident insurance Commercial earthquake insurance Personal all risks insurance Typhoon and flood insurance Health insurance Overseas ceded-in reinsurance Total Overseas Ceded-in Reinsurance Insurance	$ 24,338 1,342 280,922 232 5,839 17,413 87,585 33,919 70,651 314,240 26,972 661,768 221,922 565,435 101,799 188,001 71,313 4,385 229,685 186 25,047 8,534 319,343 39,213 1,994 8,856 7,323 6,762 $ 3,325,019 Beginning Balance		(5,803) (198) 307,464 (217) (151) 15,084 27,552 (18,086) 15,189 103,208 17,466 138,477 91,406 (88,365) (9,481) (7,150) 47,599 6,352 24,319 258 (1,327) 985 (53,058) 433 (948) (5,162) (1,808) 2,611 606,649 Net Change		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - Other Change
Fire insurance Marine cargo insurance Hull insurance Automobile insurance Engineering insurance Aviation insurance Other liability insurance Total	$ 466 102 1,416 38 35 862 3,843 $ 6,762		2,209 (12) (672) (1) (2) 1,347 (258) 2,611		- - - - - - - -

123

Union Insurance Co., LTD.

Statement of changes in loss reserve

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Ceded-out:

Insurance	Beginning Balance		Net Change		Other Change		Ending Balance Note 46 483,431 1 379 13,579 111,108 11,285 77,932 97,045 7,585 144,165 44,027 187,938 37,739 78,128 38,010 1,920 185,949 10,027 116 77,699 12,131 115 1,886 1,151 1,623,392
Long-term dwelling fire insurance Yearly renewable term commercial fire insurance Long-term commercial fire insurance Domestic transportation insurance Marine cargo insurance Hull insurance Fishing vessel insurance Aviation insurance Personal automobile physical damage insurance Commercial automobile physical damage insurance Personal automobile liability insurance Commercial automobile liability insurance Compulsory personal automobile liability insurance Compulsory commercial automobile liability insurance Compulsory motorcycle liability insurance General liability insurance Professional indemnity insurance Engineering insurance Guarantee insurance Other property insurance Accident insurance Commercial earthquake insurance Personal all risks insurance Typhoon and flood insurance Health insurance Total	$ 275 158,685 60 269 6,276 84,017 25,493 63,865 87,146 5,340 118,329 36,778 257,812 46,840 70,311 19,787 697 164,934 10,931 795 138,324 11,930 69 1,989 965 $ 1,311,917		(229) 324,746 (59) 110 7,303 27,091 (14,208) 14,067 9,899 2,245 25,836 7,249 (69,874) (9,101) 7,817 18,223 1,223 21,015 (904) (679) (60,625) 201 46 (103) 186 311,475		- - - - - - - - - - - - - - - - - - - - - - - - - -

124

Union Insurance Co., LTD.

Statement of changes in special reserves

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Beginning Balance $ 131,559 (432,170) 300,611 82,796 722,414 217,474 127,111 4,156 $ 1,153,951		Net Change 61,761 (38,079) (5,739) - (2,787) (2,278) - - 12,878		Other Change - - - - - - - - -	Ending Balance Note 193,320 (470,249) 294,872 82,796 719,627 215,196 127,111 4,156 1,166,829
Compulsory personal automobile liability insurance Compulsory commercial automobile liability insurance Compulsory motorcycle liability insurance Nuclear risks insurance Commercial earthquake insurance Typhoon and flood insurance Policy-oriented earthquake insurance Others(Note) Total

Note: In 2013, the determination of cost of real estate and equipment based on the International Financial Reporting Standards No. 1 that approved by the Financial Supervisory Commission, the Company chose the exemption that the revaluation reserve of land and buildings according to the Generally Accepted Accounting Principles of the Republic of China, and transferred it to retained earnings. However, according to the standard of the Preparation of Financial Reports by Insurance Enterprises, the revaluation reserve that estimated by the cash flow discount approach via contractual rent of the investment real estate target as the upper limit adjustment to define the cost and the value added part. Then, to fill the unrecognized pension loss, the unrecognized transition net payment obligation, the increase on defined benefit obligation based on the change of actuarial assumptions, and the employee's paid leave liability, those adjustments increased the special by $4,156.

125

Union Insurance Co., LTD.

Statement of changes in special reserves (special reserves for

catastrophic event and fluctuation of risk)

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Beginning Balance		Provision		Recovery		Ending Balance Note 78,437 10,571 73,729 1,146 10,560 88,694 8,264 7,941 4,976 468,473 7,337 152,707 27,518 141,921 4,244 140,851 42,401 9,210 719 18,694 296,223 321,317 12,637 8,906 256,115 219,383 14,843 13,131 2,440,948 Ending Balance Note 6,710 625 1,692 1 163 600 943 59 2,338 13,131
Yearly renewable term dwelling fire insurance Long-term dwelling fire insurance Yearly renewable term commercial fire insurance Long-term commercial fire insurance Domestic transportation insurance Marine cargo insurance Hull insurance Fishing vessel insurance Aviation insurance Personal automobile physical damage insurance Commercial automobile physical damage insurance Personal automobile liability insurance Commercial automobile liability insurance General liability insurance Professional indemnity insurance Engineering insurance Nuclear risks insurance Guarantee insurance Credit insurance Other property insurance Accident insurance Commercial earthquake insurance Personal all risks insurance Commercial all risks insurance Typhoon and flood insurance Policy-oriented earthquake insurance Yearly health insurance Overseas ceded-in reinsurance Total Overseas Ceded-in Reinsurance Items	$ 74,521 14,586 70,023 1,221 8,831 83,628 8,352 6,984 4,376 418,534 8,360 120,564 23,189 164,843 5,528 126,532 39,613 7,170 718 17,481 276,414 280,820 10,217 8,906 222,770 191,945 11,722 12,642 $ 2,220,490 Beginning Balance		10,273 1,141 7,051 35 1,729 5,066 7 957 600 49,939 1,019 32,143 4,329 8,329 92 14,319 2,788 2,040 8 1,213 31,724 40,497 2,420 - 33,345 27,438 3,121 676 282,299 Provision		(6,357) (5,156) (3,345) (110) - - (95) - - - (2,042) - - (31,251) (1,376) - - - (7) - (11,915) - - - - - - (187) (61,841) Recovery
Fire insurance Marine cargo insurance Hull insurance Fishing vessel insurance Automobile insurance Engineering insurance Aviation insurance Other property insurance Other liability insurance Total	$ 6,435 710 1,707 1 163 600 909 59 2,058 $ 12,642		275 11 76 - - - 34 - 280 676		- (96) (91) - - - - - - (187)

126

Union Insurance Co., LTD.

Statement of changes in special reserves (special reserves for travel insurance)

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Beginning Balance		Provision		Recovery -	Ending Balance
Accident insurance	$ -		4,289			4,289

127

Union Insurance Co., LTD.

Calculation of special reserves (special reserves for catastrophic event and

fluctuation of risk) allocated

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Insurance Yearly renewable term dwelling fire insurance Long-term dwelling fire insurance Yearly renewable term commercial fire insurance Long-term commercial fire insurance Domestic transportation insurance Marine cargo insurance Hull insurance Fishing vessel insurance Aviation insurance Personal automobile physical damage insurance Commercial automobile physical damage insurance Personal automobile liability insurance Commercial automobile liability insurance General liability insurance Professional indemnity insurance Engineering insurance Nuclear risks insurance Guarantee insurance Credit insurance Other property insurance Accident insurance Commercial earthquake insurance Personal all risks insurance Commercial all risks insurance Typhoon and flood insurance Policy-oriented earthquake insurance Health insurance Overseas ceded-in reinsurance	Retained Earned premium $ 130,210 12,432 176,286 133 20,761 93,356 189 6,003 7,221 2,500,369 127,461 1,815,611 541,066 240,115 11,431 179,547 6,969 12,633 - 44,466 747,424 94,653 26,910 - 72,483 34,285 44,487 40,404 $ 6,986,905	Retained Earned premium $ 130,210 12,432 176,286 133 20,761 93,356 189 6,003 7,221 2,500,369 127,461 1,815,611 541,066 240,115 11,431 179,547 6,969 12,633 - 44,466 747,424 94,653 26,910 - 72,483 34,285 44,487 40,404 $ 6,986,905	Expected Claim Expected Probability of Loss Expected Claim Amount % 55.90 72,786 % 70.40 8,752 % 62.47 110,132 % 74.00 99 % 60.50 12,560 % 60.50 56,478 % 68.30 129 % 69.30 4,160 % 72.30 5,220 % 65.40 1,635,214 % 65.00 82,849 % 65.40 1,187,493 % 65.14 352,461 % 70.68 169,712 % 67.30 7,693 % 59.30 106,471 % - - % 72.41 9,148 % 66.30 - % 66.30 29,481 % 74.71 558,399 % 63.40 60,008 % 71.51 19,245 % 65.30 - % 63.26 45,851 % - - % 68.90 30,652 % - 26,993 4,591,986	Expected Claim Expected Probability of Loss Expected Claim Amount % 55.90 72,786 % 70.40 8,752 % 62.47 110,132 % 74.00 99 % 60.50 12,560 % 60.50 56,478 % 68.30 129 % 69.30 4,160 % 72.30 5,220 % 65.40 1,635,214 % 65.00 82,849 % 65.40 1,187,493 % 65.14 352,461 % 70.68 169,712 % 67.30 7,693 % 59.30 106,471 % - - % 72.41 9,148 % 66.30 - % 66.30 29,481 % 74.71 558,399 % 63.40 60,008 % 71.51 19,245 % 65.30 - % 63.26 45,851 % - - % 68.90 30,652 % - 26,993 4,591,986	Expected Claim Expected Probability of Loss Expected Claim Amount % 55.90 72,786 % 70.40 8,752 % 62.47 110,132 % 74.00 99 % 60.50 12,560 % 60.50 56,478 % 68.30 129 % 69.30 4,160 % 72.30 5,220 % 65.40 1,635,214 % 65.00 82,849 % 65.40 1,187,493 % 65.14 352,461 % 70.68 169,712 % 67.30 7,693 % 59.30 106,471 % - - % 72.41 9,148 % 66.30 - % 66.30 29,481 % 74.71 558,399 % 63.40 60,008 % 71.51 19,245 % 65.30 - % 63.26 45,851 % - - % 68.90 30,652 % - 26,993 4,591,986		Retained Claim payment 13,218 69 123,978 (147) 2,303 45,382 230 (1,814) 3,585 1,385,750 85,402 1,040,672 407,619 116,314 9,413 47,002 - (5,322) (61) 28,262 377,344 1,346 864 - (2,959) - 13,544 33,581			Special Reserve Provi	Special Reserve Provi	Special Reserve Provi	si	on
			Expected Probability of Loss % 55.90 % 70.40 % 62.47 % 74.00 % 60.50 % 60.50 % 68.30 % 69.30 % 72.30 % 65.40 % 65.00 % 65.40 % 65.14 % 70.68 % 67.30 % 59.30 % - % 72.41 % 66.30 % 66.30 % 74.71 % 63.40 % 71.51 % 65.30 % 63.26 % - % 68.90 % -					Provision Rate % 3.00 % 1.00 % 5.00 % 5.00 % 3.00 % 5.00 % 5.00 % 5.00 % 7.00 % 1.00 % 1.00 % 1.00 % 1.00 % 1.00 % 1.00 % 5.00 % - % 3.00 % 3.00 % 3.00 % 1.67 % 7.00 % 1.00 % 3.00 % 7.00 % - % 3.00		Standard Provision 3,906 124 8,814 6 623 4,668 9 300 505 25,004 1,274 18,156 5,411 2,401 115 8,978 - 379 - 1,334 12,495 6,626 269 - 5,074 - 1,335 632	Less than Expected Claim Provision 8,935 1,302 - 37 1,538 1,664 - 896 245 37,420 - 22,023 - 8,010 - 8,921 3,485 2,171 8 182 27,159 43,996 2,757 - 36,607 34,298 2,566 213 244,433			Effects of Income Tax (2,568) (285) (1,763) (8) (432) (1,266) (2) (239) (150) (12,485) (255) (8,036) (1,082) (2,082) (23) (3,580) (697) (510) - (303) (7,930) (10,125) (606) - (8,336) (6,860) (780) (169) (70,572)	Total Provision 10,273 1,141 7,051 35 1,729 5,066 7 957 600 49,939 1,019 32,143 4,329 8,329 92 14,319 2,788 2,040 8 1,213 31,724 40,497 2,420 - 33,345 27,438 3,121 676
		$ 6,986,905			4,591,986		3,725,575			108,438		244,433			282,299

Overseas Ceded-in Reinsurance

Insurance Fire insurance Marine argo insurance Hull insurance Fishing vessel insurance Automobile insurance Engineering insurance Aviation insurance Other property insurance Other liability insurance	Retained Earned premium $ 4,681 96 (2) - 29 - 610 - 34,990 $ 40,404	Retained Earned premium $ 4,681 96 (2) - 29 - 610 - 34,990 $ 40,404	Expected Claim Expected Probability of Loss Expected Claim Amount % 62.47 2,925 % 60.50 58 % 68.30 - % 69.30 - % 65.40 19 % 59.30 - % 72.30 441 % 66.30 - % 67.30 23,550 26,993	Expected Claim Expected Probability of Loss Expected Claim Amount % 62.47 2,925 % 60.50 58 % 68.30 - % 69.30 - % 65.40 19 % 59.30 - % 72.30 441 % 66.30 - % 67.30 23,550 26,993	Expected Claim Expected Probability of Loss Expected Claim Amount % 62.47 2,925 % 60.50 58 % 68.30 - % 69.30 - % 65.40 19 % 59.30 - % 72.30 441 % 66.30 - % 67.30 23,550 26,993		Retained Claim Payment 2,197 (4) (633) - 58 3 8,071 - 23,889			Special Reserve Provi	Special Reserve Provi	Special Reserve Provi	si	on
			Expected Probability of Loss % 62.47 % 60.50 % 68.30 % 69.30 % 65.40 % 59.30 % 72.30 % 66.30 % 67.30					Provision Rate % 0.05 % 0.05 % 0.05 % 0.05 % 0.01 % 0.05 % 0.07 % 0.03 % 1.00		Standard Provision 234 5 - - - - 43 - 350	Less than Expected Claim Provision 109 9 95 - - - - - - 213			Effects of Income Tax (68) (3) (19) - - - (9) - (70) (169)	Total Provision 275 11 76 - - - 34 - 280
		$ 40,404			26,993		33,581			632		213			676

128

Union Insurance Co., LTD.

Calculation of special reserves (special reserves for catastrophic event and

fluctuation of risk) recovered

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Insurance Yearly renewable term dwelling fire insurance Long-term dwelling fire insurance Yearly renewable term commercial fire insurance Long-term commercial fire insurance Domestic transportation insurance Marine cargo insurance Hull insurance Fishing vessel insurance Aviation insurance Personal automobile physical damage insurance Commercial automobile physical damage insurance Personal automobile liability insurance Commercial automobile liability insurance General liability insurance Professional indemnity insurance Engineering insurance Nuclear risks insurance Guarantee insurance Credit insurance Other property insurance Accident insurance Commercial earthquake insurance Personal all risks insurance Commercial all risks insurance Typhoon and flood insurance Policy-oriented earthquake insurance Health insurance Overseas ceded-in reinsurance Overseas Ceded-in Reinsuranc	Previous Accumulated Special Reserve $ 74,521 14,586 70,023 1,221 8,831 83,628 8,352 6,984 4,376 418,534 8,360 120,564 23,189 164,843 5,528 126,532 39,613 7,170 718 17,481 276,414 280,820 10,217 8,906 222,770 191,945 11,722 12,642 $ 2,220,490 e Previous Accumulated Special Reserve $ 6,435 710 1,707 1 163 600 909 59 2,058 $ 12,642	Previous Accumulated Special Reserve $ 74,521 14,586 70,023 1,221 8,831 83,628 8,352 6,984 4,376 418,534 8,360 120,564 23,189 164,843 5,528 126,532 39,613 7,170 718 17,481 276,414 280,820 10,217 8,906 222,770 191,945 11,722 12,642 $ 2,220,490 e Previous Accumulated Special Reserve $ 6,435 710 1,707 1 163 600 909 59 2,058 $ 12,642		Previous Accumulated Special Reserve added Provision 84,794 15,727 77,074 1,256 10,560 88,694 8,359 7,941 4,976 468,473 9,379 152,707 27,518 173,172 5,620 140,851 42,401 9,210 726 18,694 308,138 321,317 12,637 8,906 256,115 219,383 14,843 13,318				Special	Special	Reserve Recovery				Total Recoverable amount Accumulated Special Reserve (6,357) 78,437 (5,156) 10,571 (3,345) 73,729 (110) 1,146 - 10,560 - 88,694 (95) 8,264 - 7,941 - 4,976 - 468,473 (2,042) 7,337 - 152,707 - 27,518 (31,251) 141,921 (1,376) 4,244 - 140,851 - 42,401 - 9,210 (7) 719 - 18,694 (11,915) 296,223 - 321,317 - 12,637 - 8,906 - 256,115 - 219,383 - 14,843 (187) 13,131 (61,841) 2,440,948 Total Recovery Accumulated Special Reserve - 6,710 (96) 625 (91) 1,692 - 1 - 163 - 600 - 943 - 59 - 2,338 (187) 13,131	Total Recoverable amount Accumulated Special Reserve (6,357) 78,437 (5,156) 10,571 (3,345) 73,729 (110) 1,146 - 10,560 - 88,694 (95) 8,264 - 7,941 - 4,976 - 468,473 (2,042) 7,337 - 152,707 - 27,518 (31,251) 141,921 (1,376) 4,244 - 140,851 - 42,401 - 9,210 (7) 719 - 18,694 (11,915) 296,223 - 321,317 - 12,637 - 8,906 - 256,115 - 219,383 - 14,843 (187) 13,131 (61,841) 2,440,948 Total Recovery Accumulated Special Reserve - 6,710 (96) 625 (91) 1,692 - 1 - 163 - 600 - 943 - 59 - 2,338 (187) 13,131
						More than Expected Claim Recovery - - (4,181) - - - (101) - - - (2,552) - - - (1,720) - - - - - - - - - - - - -		More than Retained Earned Premium Recovery (7,946) (6,445) - (138) - - (18) - - - - - - (39,064) - - - - (8) - (14,894) - - - - - - (234)		Special Reserve Recovered for Serious Accident - - - - - - - - - - - - - - - - - - - - - - - - - - - -		Effects of Income Tax 1,589 1,289 836 28 - - 24 - - - 510 - - 7,813 344 - - - 1 - 2,979 - - - - - - 47
				2,502,789		(8,554)		(68,747)		-		15,460
				Previous Accumulated Special Reserve added Provision 6,710 721 1,783 1 163 600 943 59 2,338						Reserve Recovery
Insurance Fire insurance Marine cargo insurance Hull insurance Fishing vessel insurance Automobile insurance Engineering insurance Aviation insurance Other property insurance Other liability insurance
						More than Expected Claim Recovery - - - - - - - - -		More than Retained Earned Premium Recovery - (120) (114) - - - - - -		Special Reserve Recovered for Serious Accident - - - - - - - - -		Effects of Income Tax - 24 23 - - - - - -
															6,710 625 1,692 1 163 600 943 59 2,338
		$ 12,642		13,318		-		(234)		-		47			13,131

129

Union Insurance Co., LTD.

Statement of provisions

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Provisions for employee benefits

Description

Amount Note $ 179,077

130

Union Insurance Co., LTD.

Statement of lease liabilities

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item	Description	Leasing Term 2019.04.01~2024.10.31 2021.04.28~2024.09.26	Discount Rate	Ending Balance Note $ 14,600 3,657 $ 18,257
Buildings and constructions Transportation equipment			1.80%~2.10% 2.80%

Statement of deferred tax liabilities

Items	Description	Amount $ 63,920	Note
Provisions for land value-added tax

131

Union Insurance Co., LTD.

Statement of other liabilities

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Description	Amount $ 1,452 6,556 174 3,754 6,563 316 $ 18,815	Note
Premiums received in advance Guarantee deposits Reinsurance liability reserve deposits Suspense receipts Others Total	Leasehold Others		Each item amount is less than 5% of account balance

132

Union Insurance Co., LTD.

Statement of retained earned premium income

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Insurance	Written Premium		Reinsurance Premium		Reinsurance Expense		Retained Premium	Provision Method		Net Change in Unearned Premiums Reserve		Retained Earned Premium Note 130,210 7,786 176,286 133 20,761 93,356 189 6,003 7,221 2,500,369 127,461 1,815,611 541,066 198,080 11,431 179,547 12,633 21,585 22,881 - 759,481 94,653 26,910 72,483 46,650 4,681 96 (2) 29 610 34,990 6,969 600,161 96,871 162,002 34,285 7,813,478
Yearly renewable term dwelling fire insurance Long-term dwelling fire insurance Yearly renewable term commercial fire insurance Long-term commercial fire insurance Domestic transportation insurance Marine cargo insurance Hull insurance Fishing vessel insurance Aviation insurance Personal automobile physical Damage insurance Commercial automobile physical Damage insurance Personal automobile liability insurance Commercial automobile liability insurance General liability insurance Professional indemnity insurance Engineering insurance Guarantee insurance Other property insurance, accident Other property insurance- automobile Agricultural insurance Accident insurance Commercial earthquake insurance Personal all risks insurance Typhoon and flood insurance Health insurance Overseas ceded-in reinsurance－ fire insurance Overseas ceded-in reinsurance－ marine cargo insurance Overseas ceded-in reinsurance－ hull insurance Overseas ceded-in reinsurance－ automobile insurance Overseas ceded-in reinsurance－ aviation insurance Overseas ceded-in reinsurance－ other liability insurance Nuclear risks insurance Compulsory personal automobile liability insurance Compulsory commercial automobile liability insurance Compulsory motorcycle liability insurance Policy-oriented earthquake insurance Total	$ 132,380 (165) 524,407 - 24,011 169,106 76,947 25,370 61,957 3,059,691 167,393 2,154,975 645,908 314,988 28,105 400,199 16,512 33,062 29,058 456 1,067,972 229,630 25,844 183,348 66,558 - - - - - - - 676,853 137,680 152,513 256,727 $ 10,661,485		- (15) 20,465 - - 3,387 - 2,446 - 41 - 47 10 1,718 158 26,090 1,146 - - - 5,546 8,671 2,917 7,966 - 7,057 96 1,232 29 1,250 (89) 6,344 193,380 35,234 71,156 36,176 432,458		- (41) 363,630 - 3,755 76,251 76,753 22,524 54,834 509,515 25,328 262,948 89,036 112,723 14,588 237,248 6,725 10,300 - 456 290,950 143,528 568 120,447 8,873 - - 1,232 - 748 (29) - 266,492 75,242 67,154 256,730 3,098,508		132,380 (139) 181,242 - 20,256 96,242 194 5,292 7,123 2,550,217 142,065 1,892,074 556,882 203,983 13,675 189,041 10,933 22,762 29,058 - 782,568 94,773 28,193 70,867 57,685 7,057 96 - 29 502 (60) 6,344 603,741 97,672 156,515 36,173 7,995,435	Note 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞		2,170 (7,925) 4,956 (133) (505) 2,886 5 (711) (98) 49,848 14,604 76,463 15,816 5,903 2,244 9,494 (1,700) 1,177 6,177 - 23,087 120 1,283 (1,616) 11,035 2,376 - 2 - (108) (35,050) (625) 3,580 801 (5,487) 1,888 181,957

Note : The provision methods of unearned premiums reserve are determined by an actuary according to the characteristics of each insurance, and are stated in the instruction of insurance commodity calculation, and shall not be changed without the approval of the competent authority. The Company has submitted the provision method of unearned premiums reserve on Letter (Wang) Zong Jing Suan No. 1112 on October 24, 2011, and has been approved by Financial Supervisory Commission, R.O.C. (Taiwan) Insurance Bureau Jin Guan Bao Cai Zi No. 10002518120.

133

Union Insurance Co., LTD.

Statement of interest income

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Description	Amount $ 54,979 16,026 2,652 $ 73,657	Note
Government bonds, financial bonds, and corporate bonds Cash in banks Others Total	Imputed-interest for deposit		Each item amount is less than 5% of account balance.

Statement of gain (loss) on financial assets and liabilities at fair value through profit or loss

Items	Description	Amount	Note
Equity instrument Liability instrument	Realized gains (losses) Valuation gains (losses) Realized gains (losses) Valuation gains (losses)	$ 357,531 (3,799) 21,728 (7,882) $ 367,578

134

Union Insurance Co., LTD. Statement of realized gain (loss) on financial assets at fair value through other comprehensive income For the year ended December 31, 2021 (Expressed in thousands of New Taiwan Dollars)

Items Amount Note Equity instrument: Cash dividends $ 73,713 Statement of foreign exchange gain (loss) Items Description Amount Note Valuation for foreign currency deposits $ (50) Statement of gain (loss) on investment property

Items	Amount $ 25,027 (4,226) $ 20,801	Note
Rental revenue Depreciation expense Total

135

Union Insurance Co., LTD.

Statement of expected credit loss and reversal on

investment

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Government bonds Financial bonds Corporate bonds	Impairment Losses $ - - - $ -	Reversal of Impairment Iosses Note 141 13 65 219

Statement of other operating income or cost

Items	Description	Amount $ 9,851 $ 9,851 $ 11,047 21,322 90 $ 32,459	Note
Income: Exchange gains－ non-investment Total Costs: Exchange losses－ non-investment Reserve for industry stability fund Others Total

136

Union Insurance Co., LTD.

Statement of retained claims payments

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Insurance	Claim(included related expense)		Reinsurance claim		Claims recovery from reinsurers	Retained claim payment Note 18,891 28 149,598 2,548 38,207 970 1,460 3,070 1,295,120 70,625 932,805 325,905 88,371 4,460 44,402 (4,985) (61) 1,621 25,015 367,704 1,120 1,815 1,928 15,495 45 8 22 59 5 6,764 24,137 3 337,868 57,236 148,912 3,961,171
Yearly renewable term dwelling fire insurance Long-term dwelling fire insurance Yearly renewable term commercial fire insurance Domestic transportation insurance Marine cargo insurance Hull insurance Fishing vessel insurance Aviation insurance Personal automobile physical damage insurance Commercial automobile physical damage insurance Personal automobile liability insurance Commercial automobile liability insurance General liability insurance Professional indemnity insurance Engineering insurance Guarantee insurance Credit insurance Other property insurance, Other property insurance, Accident insurance Commercial earthquake insurance Personal all risks insurance Typhoon and flood insurance Health insurance Overseas ceded-in reinsurance－ fire insurance Overseas ceded-in reinsurance－ marine cargo insurance Overseas ceded-in reinsurance－ hull insurance Overseas ceded-in reinsurance－ automobile insurance Overseas ceded-in reinsurance－ engineering insurance Overseas ceded-in reinsurance－ aviation Insurance Overseas ceded-in reinsurance－ other liability insurance Nuclear risks insurance Compulsory personal automobile liability insurance Compulsory commercial automobile liability insurance Compulsory motorcycle liability insurance Total	$ 18,891 - 586,872 2,831 44,150 17,599 9,989 7,082 1,707,853 87,919 1,134,873 390,972 114,829 5,649 117,496 (6,538) - 2,643 25,015 565,494 3,115 1,280 5,054 21,597 - - - - - - - - 475,230 86,337 98,620 $ 5,524,852		- 28 291 - 85 - 537 - - - 3 2 622 - 10,916 983 (61) 3 - 7,318 - 842 - - 45 8 22 59 5 6,764 92,808 3 146,176 23,213 108,358 399,030		- - 437,565 283 6,028 16,629 9,066 4,012 412,733 17,294 202,071 65,069 27,080 1,189 84,010 (570) - 1,025 - 205,108 1,995 307 3,126 6,102 - - - - - - 68,671 - 283,538 52,314 58,066 1,962,711

137

Union Insurance Co., LTD.

Statement of commission expenses

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Description	Amount $ 21,746 (17) 50,341 3,755 23,556 416 1,289 5,036 539,757 30,384 380,407 114,662 109,455 4,663 14,912 56,732 4,054 37,983 2,229 9,797 208,501 16,673 5,925 15,226 14,936 13,623 $ 1,686,041	Note
Commission expense from underwriting: yearly renewable term dwelling fire insurance Long-term dwelling fire insurance Yearly renewable term commercial fire insurance Domestic transportation insurance Marine cargo insurance Hull insurance Fishing vessel insurance Aviation insurance Personal automobile physical damage insurance Commercial automobile physical damage insurance Personal automobile liability insurance Commercial automobile liability insurance Compulsory personal automobile liability insurance Compulsory commercial automobile liability insurance Compulsory motorcycle liability insurance General liability insurance Professional indemnity insurance Engineering insurance Guarantee insurance Other property insurance Accident insurance Commercial earthquake insurance Personal all risks insurance Typhoon and flood insurance Policy-oriented earthquake insurance Health insurance Total

138

Union Insurance Co., LTD.

Statement of commission expenses

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Description	Amount $ (7) 625 102 348 8 3 1 161 13 7,833 382 17 11 12 288 291 253 62 1,327 $ 11,730	Note
Reinsurance commission expense: Long-term dwelling fire insurance Yearly renewable term commercial fire insurance Marine cargo insurance Fishing vessel insurance Personal automobile physical damage insurance Personal automobile liability insurance Commercial automobile liability insurance General liability insurance Professional indemnity insurance Engineering insurance Nuclear risks insurance Guarantee insurance Other property insurance Accident insurance Commercial earthquake insurance Personal all risks insurance Typhoon and flood insurance Policy-oriented earthquake insurance Reinsurance assumed business Total

139

Union Insurance Co., LTD.

Statement of finance costs

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items		Description
Deferred interest expense Interest expense of lease liability Total Items
Salary expense Taxes Entertainment expense Advertisement expense Handling fee Others Total	Employee salary and year-end bonuses Value-added and stamp tax

140

Union Insurance Co., LTD.

Statement of administrative expenses

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Description	Amount $ 208,964 63,988 19,899 104,082 $ 396,933	Note Each item amount is less than 5% of account balance.
Salary expense Professional service expense Postage expense Others Total	Employee salary and year-end bonuses

141

Union Insurance Co., LTD.

Summary of employee benefits, depreciation, depletion and amortization expenses by functional

account

For the year ended December 31, 2021 and 2020

(Expressed in thousands of New Taiwan Dollars)

Function Nature	2021	2021		2020	2020	2020
	Operating costs	Operating expense	Total	Operating costs	Operating expense	Total
Employees Benefits
Salaries	348,399	760,919	1,109,318	361,667	779,705	1,141,372
Labor and health insurance	-	83,637	83,637	-	77,988	77,988
Pension	-	41,735	41,735	-	41,488	41,488
Remuneration of directors	-	23,241	23,241	-	23,122	23,122
Others	-	45,688	45,688	-	44,905	44,905
Depreciation	4,226	46,778	51,004	4,262	49,735	53,997
Amortization	-	17,462	17,462	-	17,301	17,301

An additional information on the numbers of employees and employee benefits of The Company for 2021 and 2020 were as follow:

Employees Numbers of directors-non-employees Average expense employee benefits Average employee salary expense Adjustment to average employee salaries and wages Supervisor's remuneration

Remuneration policy (includes directors,managers and employees):

• (1) Directors and appointed managers:

• (a) It is handled in accordance with the Company’ s "Salary and Remuneration Committee Organizational Rules", "Performance and Salary and Remuneration Evaluation Methods for Directors and Managers" and " Performance System and Evaluation Mechanism for the Chairman and General Manager ".

(b) Directors:

• (i) The salary and remuneration of the Company’ s directors is based on a monthly salary system, and transportation fees are paid based on actual attendance of the board of directors and their respective functional committees.

142

• (ii) The remuneration of the chairman of the Board also includes an annual performance bonus and is handled in accordance with the "Performance System and Evaluation Mechanism for the Chairman and General Manager".

• (iii) The remuneration of the Company's directors (including transportation fees) is based on the provisions of the Articles of Incorporation, and the amount is authorized to be paid by the Board of Directors according to usual standards of the industry.

• (c) Appointed managers:

• (i) The remuneration of appointed managers is based on a monthly salary system plus various bonuses; they are in nature to motivate or reward appointed managers ; and depend on the Company's overall operating performance during the year and the achievement of the unit. They include year-end and variable performance bonuses, etc.

• (ii) The remuneration of the general manager is handled in accordance with the content stipulated in the appointment contract, and "Performance System and Evaluation Mechanism for the Chairman and General Manager".

• (iii) The remuneration of the Company's appointed managers is based on the regulations of the Articles of Incorporation, which shall be submitted to the Board of Directors for discussion.

• (d) Regarding the distribution of flexible bonuses to the Company’s directors and appointed managers, the Company’ s overall operating results for the year and the comprehensive evaluation of the operating performance of the units under its jurisdiction shall be considered. Reasonableness and fairness and the provisions of the Articles of Incorporation shall be paid attention to during the evaluation.

• (e) The salary and remuneration of the directors and appointed managers of the Company shall be discussed by the salary and remuneration committee before the board of directors resolution.

(2) Employee:

The employees' annual salary includes 12-months salary, year-end bonus and employee compensation. Year-end bonuses are paid based on the Company's operating performance and individual employee performance for the year; employee compensation is based on the Company's Articles of Incorporation. If the Company makes a profit during the year, one to five percent shall be allocated as employee compensation. However, if the Company still has accumulated losses, it shall first make up for the accumulated losses before the balance can be allocated and distributed.

143

Union Insurance Co., LTD.

Statement of non-operating income and expenses

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Description	Amount $ 13,156 1,653 1,053 (3,688) (30) $ 12,144	Note
Recovery claim Reclassification of overdue liabilities to income Miscellaneous income Recovery service expense Other expense Total			Each item amount is less than 5% of account balance. Each item amount is less than 5% of account balance.

(English Translation of Other Disclosures in Financial Reports and Report Originally Issued in Chinese) UNION INSURANCE CO., LTD.

Other Disclosures in Financial Reports For the Year Ended December 31, 2021

144

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KPMG

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Union Insurance Co., LTD. Review Report of Other Disclosures in Financial Reports

To the Board of Directors Union Insurance Co., LTD.:

We have audited the financial statements of Union Insurance Co., LTD. for the year ended December 31, 2021. Our audit was made in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and Republic of China generally accepted auditing standards, and we issued the audit report thereon on March 24, 2022. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The attached “ Other Disclosures in Financial Reports” (Other Disclosures) is prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Insurance Enterprises. We have reviewed the information included in the Other Disclosures in accordance with article 25 of Regulations Governing the Preparation of Financial Reports by Insurance Enterprises.

Based on our review, the Other Disclosures in Financial Reports of Union Insurance Co., LTD. for the year ended December 31, 2021, are in accordance with the Regulations Governing the Preparation of Financial Reports by Insurance Enterprises. The financial information disclosed is consistent with the basic financial statements, and does not need any modification.

The engagement partners on the reviews resulting in this independent auditors’ review report are WU, CHENG YEN and CHUNG, TAN TAN.

KPMG

Taipei, Taiwan (Republic of China) March 24, 2022

Notes to Readers

The accompanying other disclosures in financial reports are intended only to present the financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such other disclosures in financial reports are those generally accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying other disclosures in financial reports are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and other disclosures in financial reports, the Chinese version shall prevail.

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

145

(English Translation of Other Disclosures in Financial Reports and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards UNION INSURANCE CO., LTD.

Other Disclosures in Financial Reports For the year ended December 31, 2021

(1) Information on business conditions

• (a) Significant business matters

• (i) Acquisition or merger: None.

• (ii) Demerger: None.

(iii) Change in management rights (equity) reaching 10% or more: None.

• (iv) Transfer of business: None.

• (v) Investments in affiliated enterprises arising over the most recent 5 fiscal years

				(In Thousands of New Taiwan Dollars/shares)	(In Thousands of New Taiwan Dollars/shares)	(In Thousands of New Taiwan Dollars/shares)	(In Thousands of New Taiwan Dollars/shares)	(In Thousands of New Taiwan Dollars/shares)	(In Thousands of New Taiwan Dollars/shares)	(In Thousands of New Taiwan Dollars/shares)
Year Name of investee	2	021	20	20	2	019	2	018	2017
	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares
China Insurance (Thai) Public Company Limited	-	-	-	-	39,080	3,743	38,794	3,743	41,140	3,743

Note: On December 30, 2019, the Board of Directors of the Company approved to sell China Insurance (THAI) Public Company Ltd., the subsidiary of the Company. All shares would be transferred in January 2020.

• (vi) Reorganization: None

(vii) Acquisition or disposal of major assets arising over the most recent 5 fiscal years

• 1) Acquisition of major assets

(In Thousands of New Taiwan Dollars)

Type of property	Acquisition date	Acquisition date	Amount	Counterparty	Relationship	Previous transfer information, as the counterparty is a related party	Previous transfer information, as the counterparty is a related party	Previous transfer information, as the counterparty is a related party	Previous transfer information, as the counterparty is a related party	Reference for price	Purpose of acquisition	Current condition
	Date of contract	Occurrence date				Counterparty	Relations with the Company	Date	Amount
Property	2021.5.12	2021.8.4	167,020	Natural person	Non related parties	-	-	-	-	Appraisal report	Owner- occupied property	Owner- occupied roperty

2) Disposal of major assets: None

(viii) Significant changes in operation method (including sales system) or business activity

The Company's main business is property insurance, engaging in the sales of various insurances and related business operations. There was no major change in the last five years.

(Continued)

146

(b) Remuneration to directors, supervisors, president, vice presidents, and Chairmen of the board and presidents rehired as consultants after retiring from the insurance enterprise or its affiliate enterprises and related information

• (i) Remuneration paid to directors, supervisors, president, vice presidents, and consultants

1) Remuneration to directors (include independent directors)

																						(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Tit	le	Name				Remuneratio	n of directors					Ratio of total (A+B+C+D)	remuneration to net income			Relev	ant remunera	tion received by di	rectors who	are also e	mployees			Ratio of total (A+B+C+D net i	remuneration +E+F+G) to ncome		Compensation paid to directors from an invested company other than the Company’s subsidiary
			Comp	ensation (A)	Retireme	nt pension (B)	Bonus to	directors (C)	Business e	xecution fee (D)					Salary, bonu	ses, and allowances (E)	Retireme	nt pension (F)		Employe	es’ compensation	(G)
			The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Co	mpany	All com the cons	panies in olidated	The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Co	mpany	All companies in financial s	the consolidated tatements	The Co	mpany	All com the cons	panies in olidated
											Total	Ratio	Total	Ratio					Cash	Stock	Cash	Stock	Total	Ratio	Total	Ratio
Director	Director of the Board	WANT-WANT Co., Ltd.	11,800	-	-	-	6,500	-	1,731	-	20,031	% 2.88	-	-	7,452	-	108	-	249	-	-	-	27,840	% 4.00	-	-	None
	President of the Board	WANT-WANT Co., Ltd. (legal representative, HUNG, CHI- HSIUNG)
	Director of the Board	WANT-WANT Co., Ltd. (legal representative, SYU,SHIH-WEI)
	Director of the Board	WANT-WANT Co., Ltd. (legal representative, HSU, HAI-LUN)
	Director of the Board	WANT-WANT Co., Ltd. (legal representative, MA, CHIA- YING)
	Director of the Board	WANT-WANT Co., Ltd. (legal representative, LIU, CHIH- MING)
Independent Director	Independent Director	WANG,TUNG- LIANG	2,340	-	-	-	-	-	870	-	3,210	% 0.46	-	-	-	-	-	-	-	-	-	-	3,210	% 0.46	-	-	None
	Independent Director	KUO, PING- SHEN
	Independent Director	MA, YU-FENG

Except listed above, there are 0 thousand dollars remuneration for services directors provided to all companies in financial statements, such as being consultants who are non-employees.

Note1: The relationship between the policy, the regulation, the structure, and the standard of remuneration paid to independent directors and the amount of remuneration:

(1) According to Art. 36.2 of the Articles of Incorporation of the Company, the remuneration paid to independent directors is reasonably decided by the Board. Independent directors would not participate in earning distribution. Regarding to the amount of remuneration(including the amount of reward for driver), by Art. 28 of the Articles of Incorporation of the Company, is decided by the Board, which refers to the standard of the same trade.

• (2) According to the regulation of remuneration paid to directors and functional committee members, independent directors are given fixed payment without participating in earning distribution.

• (3) According to the regulation of performance and remuneration of directors and managers, they sould follow the principle of sustainable development and stable profits and keep from high-risk operating modle and high-volatility investment strategy.

Note2: Employment data of the year 2021.

Note3: Retirement pension contains provision and payment.

Note4: The amount of reward for driver of $1,564 was exclued.

(Continued)

147

Range of remuneration

Range of remuneration
Range of remuneration paid to directors	Name of directors
	Total of remuneration (A+B+C+D)		Total of remuneration (A+B+C+D+E+F+G)
	The Company	All companies in the consolidated financial statements (H)	The Company	All companies in the consolidated financial statements (I)
Under TWD 1,000,000	Legal representative of WANT-WANT Co., Ltd.,； SYU,SHIH-WEI； HSU, HAI-LUN； MA, CHIA-YING； LIU,CHIH-MING	-	Legal representative of WANT-WANT Co., Ltd.,： SYU,SHIH-WEI； HSU, HAI-LUN； MA, CHIA-YING	-
TWD 1,000,000 (included)～TWD 2,000,000 (excluded)	WANG, TUNG-LIANG； KUO, PING-SHEN； MA,YU-FENG；	-	WANG, TUNG-LIANG； KUO, PING-SHEN； MA,YU-FENG；	-
TWD 2,000,000 (included)～TWD 3,500,000 (excluded)	-	-	-	-
TWD 3,500,000 (included)～TWD 5,000,000 (excluded)	-	-	-	-
TWD 5,000,000 (included)～TWD 10,000,000 (excluded)	WANT-WANT Co., Ltd.	-	WANT-WANT Co., Ltd. and Legal representative of WANT-WANT Co., Ltd.,： LIU,CHIH-MING	-
TWD10,000,000 (included)～TWD 15,000,000 (excluded)	Legal representative of WANT-WANT Co., Ltd.,： HUNG,CHI-HSIUNG	-	Legal representative of WANT-WANT Co., Ltd.,： HUNG,CHI-HSIUNG	-
TWD15,000,000 (included)～TWD 30,000,000 (excluded)	-	-	-	-
TWD30,000,000 (included)～TWD 50,000,000 (excluded)	-	-	-	-
TWD50,000,000 (included)～TWD100,000,000 (excluded)	-	-	-	-
Over TWD100,000,000	-	-	-	-
Total	9 people	-	9 people	-

Note: Listing legal director and representative respectively.

• 2) Remuneration paid to supervisors: None.

(Continued)

148

3) Remuneration paid to president and vice presidents

(In Thousands of New Taiwan Dollars)

Title	Name		Salary (A)	Retire	ment pension (B)	Bonuses,	and Allowances (C)	Employees’ compensation (D)	Employees’ compensation (D)	Employees’ compensation (D)	Employees’ compensation (D)	Ratio of total remuneration (A+B+C+D) to net income	Ratio of total remuneration (A+B+C+D) to net income	Ratio of total remuneration (A+B+C+D) to net income	Ratio of total remuneration (A+B+C+D) to net income	Compensation paid to president and vice presidents from an invested company other than the Company’s subsidiary
		The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Company		All companies in financial s	the consolidated tatements	The Company		All companies in the consolidated
								Cash	Stock	Cash	Stock	Amount	Ratio	Amount	Ratio
President	LIU, CHIH- MING	10,737	-	546	-	7,413	-	686	-	-	-	19,382	% 2.78	-	-	None
Vice President	TSAO, SHENG- KUANG
Vice President	WU,FU- CHENG
Vice President	PAN, SHAO- YUN(Note 1)
Chief Audit Officer	WANG, LI- HUNG
Chief Compliance Officer	KO, CHING- HUA

Note1: Dismissed on May 1, 2021.

Note2: The amount of reward for driver of $980 was excluded.

Note3: Retirement pension contains provision and payment.

(Continued)

149

Range of remuneration

Range of remuneration
Range of remuneration paid to president and vice presidents	Name of president and vice presidents
	The Company	All companies in the consolidated financial statements (E)
Under TWD 1,000,000	-	-
TWD 1,000,000 (included)～TWD 2,000,000 (excluded)	PAN, SHAO-YUN；
TWD 2,000,000 (included)～TWD 3,500,000 (excluded)	KO, CHING-HUA； WANG, LI-HUNG； WU, FU-CHENG；	-
TWD 3,500,000 (included)～TWD 5,000,000 (excluded)	TSAO, SHENG-KUANG	-
TWD 5,000,000 (included)～TWD 10,000,000 (excluded)	LIU, CHIH-MING；	-
TWD10,000,000 (included)～TWD 15,000,000 (excluded)	-	-
TWD15,000,000 (included)～TWD 30,000,000 (excluded)	-	-
TWD30,000,000 (included)～TWD 50,000,000 (excluded)	-	-
TWD50,000,000 (included)～TWD100,000,000 (excluded)	-	-
Over TWD100,000,000	-	-
Total	6 people	-

4) Top 5 managers' remuneration of the listed insurance companies : Not applicable.

(Continued)

150

5) Employees’ compensation distributed to managers

	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Item	Title	Name	Bonus - in Stock	Bonus - in Cash	Total	Ratio of total amount to net income (%)
Management	President	LIU,CHIH-MING	-	3,532	3,532	% 0.51
	Vice President	TSAO, SHENG- KUANG
	Vice President	WU,FU-CHENG
	Chief Audit Officer	WANG,LI-HUNG
	Chief Compliance Officer	KO, CHING-HUA
	Senior Manager	CHEN,TAI-LUNG
	Senior Manager	LAI,HUNG-TE
	Senior Manager	HUANG,CHIN-PIN
	Manager	CHANG,HUI-KUO
	Senior Manager	LAI,SUNG-YEN
	Senior Manager	LO,YU-CHENG
	Manager	YEN,HSU-NAN
	Senior Manager	LAI,TUNG-I
	Manager	LIN,CHING HSIN
	Manager	WU,PI-TU
	Senior Manager	YEN,KUO-CHUNG
	Manager	CHENG,KUO JUNG
	Manager	LU, TSUNG HSUN (Note 4)
	Senior Manager	HSU,JUI-LIN
	Manager	SU, CHIEN-JUNG (Note 3)
	Manager	LAI,CHIN FANG
	Manager	TSENG,MEI-HUI
	Manager	WU,SHU CHUAN
	Senior Manager	TSAI,WAN-HUA
	Manager	CHANG,SUNG TSE
	Manager	LIN,HOUNG HUA
	Manager	LIU,SEN JUNG
	Manager	LI,HUI YING
	Manager	LIN,TSANG CHING
	Senior Manager	HSU,CHE CHANG
	Senior Manager	TSUI, CHUAN SHENG
	Manager	HUNG,KUO CHUN
	Manager	WU,HSING-KUN
	Senior Manager	WU,TA-CHUN
	Senior Manager	LI,WEN-JUI
	Manager	HSU,CHUN-YU
	Manager	WU,YI CHENG
	Manager	HSU,MIN YUAN
	Chief Financial Officer	HSUEH, CHANG HSIAO
	Chief Accounting Officer	KUO, FEI WEN

Note 1: Employment data on December 31, 2021.

Note 2: Estimated with percentage which is calculated by actual payment last year.

Note 3: Dismissed on January 1, 2022.

Note 4: Dismissed on March 1, 2022.

(Continued)

151

  - 6) Chairmen of the board and presidents rehired as consultants after retirement: None.

• (ii) The Company’s chairman, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPA or at an affiliated enterprise: None.

• (c) Labor-management relations

• (i) Agreements between labor and management and the implementation

  • 1) Employee benefit policies

The Company established Employees' Welfare Committee, which is comprised of employees recommend. They hold various of welfare activities in accordance with Rules for Employees' Welfare.

• 2) Professional development and training

The Company provides employees systematic and professional education training in concert with interdisciplinary learning program, multiple training program, and selflearning program.

• 3) Retirement programs

In compliance with the Labor Standards Act and Labor Pension Act, the Company shall make a monthly contribution to the labor pension reserve funds and labor pension funds. The calculation of the defined benefit obligations is performed annually by a qualified actuary with actuarial report to protect the workers' rights and interests.

• 4) Other major agreements: None.

• (ii) Loss sustained as a result of labor disputes in the most recent 3 fiscal years: None.

(iii) Violation of the Labor Standards Act found during the labor inspection: None.

• (d) Cyber Security Management

• (i) Implementation of Cyber Security Management

  • 1) Structure of cyber security risk management

The Company has established the Cyber Security Management Promotion Committee, which is responsible for the discussion and resolution of matters related to the cyber security management system. The cyber security management promotion committee includes the cyber security executive team, the cyber security audit team and the cyber security incident notification team. The cyber security executive team is responsible for planning, establishment, implementation, maintenance, review and continuously improving the Company's cyber security management system in accordance with the resolutions of the Committee. The cyber security audit team is responsible for evaluating the implementation and compliance of the cyber security management system and conducting audits. The cyber security incident notification team performs cyber incident reporting and business continuity management projects.

(Continued)

152

2) Policy of cyber security

To ensure a normal, safe and stable operation of the Company's information system services, the cyber security management system that regulates the maintenance and operation process of the Company's information platform is the highest guideline to establish secure and reliable information system services, to ensure the confidentiality, integrity and availability of information assets, to meet the requirements of relevant laws and regulations, to maintain the continuous operation of the information platform, to reduce information operation risks, and to protect the rights of information system service users.

a) Information Security Policy Statement

The ultimate goal of the Company's information security work is to ensure the safety and effective operation of the information processing operations of the information platform through the management of personnel, operations and information technology, as well as to prevent security incidents affecting the confidentiality, integrity and availability of information during the information processing operations in order to protect the privacy rights of customers and personal information.

• i) The Information Management Promotion Committee was established to be responsible for the establishment and promotion of the Company's information security management system.

• ii) Evaluate the relevant laws and regulations and operational requirements, conduct information risk assessment of information assets, determine information operation security requirements, establish operation standard procedures, and adopt appropriate information security measures to ensure information asset security.

• iii) Establish an evaluation or assessment system based on the roles and functions of personnel, and conduct information security education and training and promotional activities according to actual needs.

• iv) Grant access rights to information assets according to business needs, taking into account the limit of authorization, segregation of authorization and responsibility, as well as independence review.

• v) Establish information on security incident management procedures to ensure proper incident response, control and handling, develop business continuity plans, as well as conduct regular drills to ensure the continued operation on information systems or services.

• vi) Handle and protect personal information and intellectual property rights in accordance with the relevant provisions of the Personal Information Protection Act and the Intellectual Property Rights.

• vii) Perform information security audits regularly to review the implementation of the information security management system.

• viii) All employees of the Company shall be responsible for information security and comply with the relevant information security management regulations.

• ix) The policy shall be effective upon announcement after being approved by the Board of Directors, and shall also be effective upon amendment.

(Continued)

153

• b) Information Security Goal

  • i) The Company aims to protect the confidentiality, integrity and availability of information assets in order to:

    1. Maintain the business continuity of the information platform maintenance process.

    2. Protect the information assets related to the information platform maintenance process from improper or illegal use, and stop hackers, viruses, and other intrusive and destructive behaviors.

    3. Establish standard operating procedures for information platform maintenance processes to avoid human errors and accidents, as well as to enhance the awareness of information security among employees.

  • ii) This policy shall be evaluated at least once a year to reflect the latest developments in relevant laws and regulations, technology and the Company's business, and shall be revised as appropriate.

• 3) Specific Management Solutions

• a) The Information Security Promotion Committee shall convene a management review meeting at least once a year, and if necessary, an ad hoc meeting.

• b) The minutes of the meeting which the management reviews should include the following:

  • i) Status of implementation of resolutions at the previous management review meeting: Follow-up on the issues resolved at the previous meeting.

  • ii) Changes on internal and external issues related to information security management system: Review on the entire identification results of the organization.

  • iii) Feedback on information security performance, including the following trends:

    1. Non-conforming items and corrective measures: Proper handling of information on safety events and improvement operations.

    2. Supervision and measurement results.

    3. Audit results: Information security internal and external audit results and suggested improvement items.

    4. Achievement of information on security objectives: Implementation of status report regarding the information security objectives.

  • iv) Feedback from observers: Suggestions from employees, third parties and other stakeholder groups.

  • v) Risk assessment results and status of risk management plan: Risk assessment and feedback review.

  • vi) Opportunities for continuous improvement: Suggestions for improving information security that can be provided.

(Continued)

154

  - c) The conclusion of the minutes of the meeting should include that the output of the management review should include decisions related to continuous improvement concerning opportunities and any need for changes on the information security management system.

  - d) Management review is an important activity of the information security management system, and the review records should be handled in accordance with the record management requirements of the information security management system.

• 4) Input resources for Ares security management

  • a) WAF information security device protection

  • b) HiNet DDoS protection

  • c) Annual evaluation on information security evaluation

  • d) Annual exercises on social engineering

  • e) Annual implementation of ISO27001 certification

  • f) Import of Microsoft WVD two-factor certificate

  • g) Introduction on privilege tools

  • h) Adaption of employee account behavior pattern analysis system

  • i) Adaption of credit card identification mechanism

• (ii) Losses due to significant information security incidents in the most recent year: None.

• (iii) Impact of Ares security risk on the Company's financial operations and measures to address it.

The Company has established internal operation regulations related to information security to strengthen the implementation of internal audit and internal control. It promptly controls any information security incidents to effectively reduce any damage in order to protect customer data security and achieve sustainable business operation.

• (e) Changes in president, chief audit officer and actuaries in the most recent 2 years

• (i) Changes in president, chief audit officer: None

• (ii) Changes in qualified actuaries

The Company's Board of Directors approved on October 30, 2020 that the appointed actuary was switched from chief actuary LIN, CHIN-YUAN, to manager WU, YI-CHENG. This case was approved by the governmental authority for review on February 23, 2021.

• (f) Changes in the method for provision of all kinds of reserves: None.

• (g) The situation in the most recent year where its shareholders meeting has adopted the resolution to carry out capital increase or decrease or its Board of Directors (council) has adopted the resolution to issue new shares but the application (or filing) has not been approved (or has not been approved for record) by the FSC, or where its application for capital change registration has not been approved by the Ministry of Economic Affairs: None.

(Continued)

155

• (h) Cases of claim payment and claim recovery from reinsurer involving amount exceeding NT$20 million in the most recent 3 years and financial impact analysis

	For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2021
Insurance		Insurance Claim Payment (A)		Claims Recoverable from Reinsurers (B)		Retained Claim Payment (C)=(A)-(B)
Commercial fire insurance Hull insurance						22,500 7 22,507
Insurance	Insurance Claim Payment (A)			Claims Recoverable from Reinsurers (B)		Retained Claim Payment (C)=(A)-(B)
Accident insurance Commercial fire insurance						7,000 78,300 85,300
Insurance		Insurance Claim Payment (A)		Claims Recoverable from Reinsurers (B)		Retained Claim Payment (C)=(A)-(B)
Commercial fire insurance Engineering insurance	208,000 54,000 $ 262,000			158,000 50,970 208,970		50,000 3,030 53,030

(i) Names of reinsurers to whom the reinsurance premium expenses paid in the most recent year account for more than 1% of total premium income and the credit rating of those reinsurers

Reinsurer	Credit Rating Credit Rating Agency A S & P A+ S & P AA- S & P
Central Reinsurance Corporation Transatlantic Reinsurance Company, Hong Kong Branch Swiss Re Asia Pte. Ltd, Hong Kong Branch

(Continued)

156

(j) Entrust credit rating agency to rating reinsurers

The Company entrusted Taiwan Ratings to make the credit rating in connection with financial condition and issuer. On September 22, 2021, the result of Taiwan Ratings is twAA, and the credit rating vision is stable. On September 22, 2021, the result of Standard & Poor ’s is A-, and the credit rating vision is stable. On June 4, 2021, the result of A.M. Best Company is A-, and the credit rating vision is stable.

(2) Market price of securities, dividend and dispersion of ownership

• (a) Per share market price, net worth, earnings per share, dividends in the past 2 years

	(New Taiwan Dollars/in Thousands of shares)	(New Taiwan Dollars/in Thousands of shares)	(New Taiwan Dollars/in Thousands of shares)	(New Taiwan Dollars/in Thousands of shares)
Item	Year		2021	2020
Market price per share	Highest		22.20	22.90
	Lowest		19.10	15.60
	Average		20.23	19.49
Net worth per share	Before distribution		28.81	26.15
	After distribution		27.81	25.35
Earnings per share	Weighted average number of ordinary shares		223,608	223,608
	Earningsper share		3.12	3.14
Dividends per share	Cash dividend		1.00	0.80
	Issuance of bonus shares	Stock dividend from retained earnings	-	-
		Stock dividend from capital reserve	-	-
	Accumulated undistributed dividends		-	-
Analysis of return on investment	Price-earnings ratio		6.48	6.21
	Price-dividend ratio		20.23	24.36
	Cash dividendyield		% 4.94	% 4.10

(Continued)

157

(b) Dispersion of ownership

• (i) Common shares

Common shares	Common shares	Common shares
Ordinary Par Value Per Share NT10 As of			December 31, 2021
Class of Shareholding	Number of Shareholders	Shareholding	Percentage
1～999 1,000～5,000 5,001～10,000 10,001～15,000 15,001～20,000 20,001～30,000 30,001～40,000 40,001～50,000 50,001～100,000 100,001～200,000 200,001～400,000 400,001～600,000 600,001～800,000 800,001～1,000,000 1,000,001or over	8,640 3,470 705 282 138 161 77 47 109 56 21 18 3 4 8	1,679,045 7,265,693 5,148,501 3,375,032 2,485,730 3,996,481 2,726,106 2,124,794 7,615,671 7,910,174 5,785,135 8,824,157 1,878,757 3,947,191 158,845,533	0.7509 % 3.2493 % 2.3025 % 1.5094 % 1.1116 % 1.7873 % 1.2191 % 0.9502 % 3.4058 % 3.5375 % 2.5872 % 3.9463 % 0.8402 % 1.7652 % 71.0375 %
Total	13,739	223,608,000	100.00 %

• (ii) Preferred shares: The Company have no preferred share.

• (c) Net change in shareholding of directors, supervisors, managerial officers, and shareholders with 10% shareholdings or more.

• (i) Net change in shareholding of directors, supervisors, managerial officers, and shareholders with 10% shareholdings or more

Title	Name	2021	2021	As ofFebruary 28, 2022	As ofFebruary 28, 2022
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Senior manager	CHEN, TAI- LUNG	(6,000)	-	-	-
Manager	WU,PI-TU	(6,054)	-	-	-

Note 1: Employment data on December 31, 2021.

(Continued)

158

(ii) Shares Transferring

(ii) Shares Transferring	(ii) Shares Transferring	(ii) Shares Transferring	(ii) Shares Transferring	(ii) Shares Transferring	(ii) Shares Transferring	(ii) Shares Transferring
(New Taiwan Dollars, Shares)
Name	Reason for transfer	Date of transaction	Transferee	Relationship between transferee and the Company as well as the Company’s directors, supervisors, and shareholders holding more than 10% of the entire shares	Shares	Transaction Price
None	-				-

(iii) Shares Pledge

(iii) Shares Pledge	(iii) Shares Pledge	(iii) Shares Pledge	(iii) Shares Pledge	(iii) Shares Pledge	(iii) Shares Pledge	(iii) Shares Pledge	(iii) Shares Pledge	(iii) Shares Pledge
(New Taiwan Dollars, Shares)
Name	Reason for pledge	Date of transaction	Transferee	Relationship between transferee and the Company as well as the Company’s directors, supervisors, and shareholders holding more than 10% of the entire shares	Shares	Shares holding (%)	Shares pledged (%)	Pledged amount
None					-	- %	- %	-

• (d) Information for shelf registration: Not applicable.

(Continued)

159

(3) Financial Information

• (a) Concise balance sheet and statement of comprehensive income

• (i) Concise Balance Sheet from 2017 to 2021

			(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars
Year Item			**Financial summary for the most recent fiveyears **				(Note 1)
			2021	2020	2019	2018	2017
Cash and cash equivalents			3,648,227	2,386,542	2,117,261	2,268,129	2,585,164
Account receivables			680,984	667,810	858,220	888,537	711,557
Assets classified as held-for- sale			-	-	39,080	-	-
Financial assets and loans			8,639,744	8,730,438	8,344,160	7,793,073	7,002,017
Reinsurance assets			3,860,017	3,920,832	4,149,186	4,510,868	4,151,807
Propertyand equipment			1,262,061	1,165,781	1,127,260	1,037,396	816,841
Intangible assets			120,574	136,982	133,831	134,484	74,893
Other assets			809,330	736,347	764,990	708,472	880,406
Total assets			19,020,937	17,744,732	17,533,988	17,340,959	16,222,685
Accountspayable			1,237,685	1,256,750	1,283,230	1,209,944	1,254,165
Liabilities related to assets classified as held-for-sale			-	-	-	-	-
Financial liabilities			-	-	-	-	-
Insurance liabilities and reserve for insurance with nature of financial instrument			10,958,474	10,326,662	10,404,545	10,899,072	10,284,374
Provisions			179,077	214,043	233,432	275,649	254,150
Other liabilities			203,928	100,084	194,940	118,486	115,590
Total liabilities	Before distribution		12,579,164	11,897,539	12,116,147	12,503,151	11,908,279
	After distribution		12,802,772	12,076,425	12,303,552	12,694,815	12,057,351
Ordinaryshare			2,236,080	2,236,080	2,129,600	2,129,600	2,129,600
Capital surplus			-	-	-	-	-
Retained earnings	Before distribution		4,126,209	3,552,655	3,164,913	2,652,316	2,171,062
	After distribution		3,902,601	3,373,769	2,871,028	2,460,652	2,021,990
Other equityinterest			79,484	58,458	123,328	55,892	13,744
Total equity	Before distribution		6,441,773	5,847,193	5,417,841	4,837,808	4,314,406
	After distribution		6,218,165	5,668,307	5,230,436	4,646,144	4,165,334

Note 1: Financial summary for the most recent five years has been audited by CPA.

(Continued)

160

(ii) Concise comprehensive income statement from 2017 to 2021

	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Year Item	Financial summary for the most recent fiveyears(Note 1)
	2021	2020	2019	2018	2017
Operatingrevenue	8,809,911	8,237,782	8,065,998	7,695,690	7,220,409
Operatingcost	6,004,143	5,509,703	5,346,030	5,160,294	4,727,178
Operatingexpense	2,011,651	2,054,189	2,032,547	1,942,719	1,834,876
Non-operating income and expense	12,144	32,162	13,930	34,069	5,103
Income before tax	806,261	706,052	701,351	626,746	663,458
Net income(after tax)	696,668	702,097	703,782	605,620	663,458
Other comprehensive income	76,798	(82,387)	67,915	55,757	45,305
Earnings per share (Note 2) (in New Taiwan dollars)	3.12	3.14	3.15	2.84	3.12

Note 1: Financial summary for the most recent five years has been audited by CPA.

Note 2: Earnings(Loss) per share is calculated by retrospective-adjusted weighted average number of ordinary shares. If capital increase by retained earning or share premium, or capital decrease due to reverse share split happened, the shares will be retrospective-adjusted according to ratio of increased and decreased capital, regardless of the outstanding period.

(b) Financial ratios analysis

Item	Year	Financial ratios analysis for the most recent fiveyears(Note 1)	Financial ratios analysis for the most recent fiveyears(Note 1)	Financial ratios analysis for the most recent fiveyears(Note 1)	Financial ratios analysis for the most recent fiveyears(Note 1)	Financial ratios analysis for the most recent fiveyears(Note 1)
		2021	2020	2019	2018	2017
Business analysis (%)	Rate of change in direct written premiums	4.29	3.96	0.08	8.12	7.21
	Rate of change in claims paid	(0.36)	(1.38)	15.65	(3.47)	10.92
	Rate of change in net premiums	8.29	5.45	(0.28)	5.21	15.58
	Rate of net value	33.87	32.95	30.90	27.90	26.59
Profitability analysis (%)	Return on assets	3.81	3.99	4.05	3.62	4.21
	Return on equity	11.34	12.47	13.72	13.23	16.75
	Net return on fund	3.47	3.24	2.91	2.04	2.18
	Return on investment	3.16	2.93	2.63	1.84	1.96
	Net combined ratio	95.49	96.03	96.83	93.39	93.21
	Net expense ratio	41.02	42.17	42.90	40.80	40.79
	Net loss ratio	54.47	53.86	53.93	52.59	52.42
Overall operation analysis (%)	Net premiums to shareholders’ equity	124.12	126.27	129.24	145.13	154.68
	Gross premiums to shareholders’ equity	172.22	182.00	188.89	211.63	223.90
	Net reinsurance commission to equity	5.13	7.85	8.69	10.11	10.85
	Reserves to equity	170.12	176.61	192.04	225.29	238.37
	Rate of change in equity	10.17	7.92	11.99	12.13	19.66
	Expense rate	33.63	34.70	35.08	33.97	34.19

Note 1: Financial summary for the most recent five years has been audited by CPA.

(Continued)

161

The reason why change in financial business indicator for the most recent two years

• (i) Rate of change in net premiums:

The increase in the rate of change in net premiums resulted from the fact that the written premium on automobile insurance benefited from the promotion of various car manufacturers and the government's replacement subsidy program.

• (ii) Net reinsurance commission to equity ratio:

  • Net reinsurance commission to equity ratio decreased due to the decrease in auto reinsurance commission income driven by the decrease in auto reinsurance ceded ratio.

• (c) Other significant information sufficient to enhance understanding of its financial position, financial performance and cash flows or trends of change (e.g. the effects of exchange rate fluctuation): None.

(4) Financial position and financial performance analysis

• (a) Financial position analysis

Financial position analysis	Financial position analysis	Financial position analysis	Financial position analysis	Financial position analysis
(In Thousands of New Taiwan Dollars)
Year Item	2021	2020	Difference
			Amount	%
Cash and cash equivalents	3,648,227	2,386,542	1,261,685	52.87
Account Receivables	680,984	667,810	13,174	1.97
Assets classified as held-for-sale	-	-	-	-
Financial assets and loans	8,639,744	8,730,438	(90,694)	(1.04)
Reinsurance assets	3,860,017	3,920,832	(60,815)	(1.55)
Property and equipment	1,262,061	1,165,781	96,280	8.26
Intangible assets	120,574	136,982	(16,408)	(11.98)
Otherassets	809,330	736,347	72,983	9.91
Totalassets	19,020,937	17,744,732	1,276,205	7.19
Accounts payable	1,237,685	1,256,750	(19,065)	(1.52)
Liabilities related to assets classified asheld-for-sale	-	-	-	-
Financial liabilities	-	-	-	-
Insurance liabilities and reserve for insurance with nature of financial instrument	10,958,474	10,326,662	631,812	6.12
Provisions	179,077	214,043	(34,966)	(16.34)
Other liabilities	203,928	100,084	103,844	103.76
Total liabilities	12,579,164	11,897,539	681,625	5.73
Capitalstock	2,236,080	2,236,080	-	-
Capitalsurplus	-	-	-	-
Retained earnings	4,126,209	3,552,655	573,554	16.14
Otherequityinterest	79,484	58,458	21,026	35.97
Totalequity	6,441,773	5,847,193	594,580	10.17

(Continued)

162

Analysis of change over 20%:

(i) Cash and cash equivalents:

The increase in the current period compared with the previous period was mainly due to profits from investment portfolio and continued growth in the property insurance market as a result of a significant increase in cash and cash equivalents.

(ii) Other liabilities:

The increase in the current period compared with the previous period was mainly due to the decrease in the deductible loss carryforward, resulting in an increase in tax liabilities.

• (iii) Other equity interest:

The financial assets measured at fair value through other comprehensive income resulted in the increase in unrealized gains.

• (b) Financial performance analysis

Financial performance analysis	Financial performance analysis	Financial performance analysis	Financial performance analysis	Financial performance analysis
(In Thousands of New Taiwan Dollars)
Year Item	2021	2020	Change in amount	Change of rate (%)
Operatingrevenue	8,809,911	8,237,782	572,129	6.95
Operatingcost	6,004,143	5,509,703	494,440	8.97
Operatingexpense	2,011,651	2,054,189	(42,538)	(2.07)
Income from operation	794,117	673,890	120,227	17.84
Non-operatingincome and expense	12,144	32,162	(20,018)	(62.24)
Profit (loss) from continuing operations before tax	806,261	706,052	100,209	14.19
Tax(income)expense	109,593	3,955	105,638	2,671.00
Profit (loss) from continuing operations	696,668	702,097	(5,429)	(0.77)

Analysis of change over 20%:

• (i) Income from operation:

The increase in the current period compared with the previous period was mainly due to the growth of the overall general property insurance market driven by the increase in retained premium income.

(ii) Non-operating income and expense:

The decrease in the current period compared with the previous period was mainly due to the receipt of the second creditor's rights allocation from Walsun Insurance Ltd in the prior period.

• (iii) Income tax expense:

The increase in the current period compared with the previous period was mainly due to the decrease in the deductible loss carryforward resulting in an increase in tax expense.

(Continued)

163

(5) CPA information

• (a) Information on Accountants’ Fees

• (i) Audit fees and non-audit fees paid to the CPA, to the accounting firm of the CPA, and to any affiliated enterprise of such accounting firms.

	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Accounting firm	Name of accountant	Audit period	Audit fee	Non-audit fee	Total	Note
KPMG	WU, CHENG- YEN CHUNG, TAN- TAN 2 2	021.01.01~ 021.12.31	3,950	16,500	20,450	Change of accountant in accordance with the organizational restructuring of the firm

Non-audit services mainly include tax compliance audit and project services.

• (ii) Alter the CPA Firm and the audit fee in altering year is less than that in the previous year: None.

• (iii) The audit fee is reduced by over 10% compared with the previous year: None.

• (b) Alternation of CPA.

• (i) About the Former CPA

About the Former CPA
Date of change	2021.3.26
Reasons and explanation of changes	In accordance with the organizational restructuring of the firm
State whether the appointment is terminated or rejected by the consignor or CPAs	Status		CPA	Consignor
	Appointment terminated automatically		
	Appointment rejected (discontinued)
Other issues (except for unqualified issues) in the audit reports within the last two years	None
Is there any disagreement in opinion with the issuer	Yes		Accounting principles orpractices
			Disclosure of financial statements
			Audit scope or steps
			Other
	No	
	Explanation
Other revealed matters (Disclosure according to Article 24.2.1.4 of the Regulations Governing the Preparation of Financial Reports by Insurance Enterprises.)	None

164

(ii) About successor CPA

About successor CPA
Name of the accountingfirm	KPMG
Name of CPA	WU, CHENG-YEN & CHUNG, TAN-TAN
Date of appointment	2021.3.26
Consultation results and opinions on accounting treatments or principles with respect to specified transactions and the company’s financial reports that the CPA might issueprior to the engagement	None
Successor CPA’s written opinion of disagreement toward the former CPA	None

• (iii) The former accountant's response to the matters required by Article 24.2.1 and Article 24.2.2.3 of the Regulations Governing the Preparation of Financial Reports by Insurance Enterprises: None.

Union Insurance Co., LTD.

Chairman: HUNG, CHI-HSIUNG

President: LIU, CHIH-MING

Chief Accounting Officer: KUO, FEI-WEN