Deviations from Corporate Governance Best-Practice Principles for Insurance Companies. Implementation Status

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1 Chung Kuo Insurance Company, Limited Execution Status and Item 1.Shareholding Structure & Shareholders Rights (1)Method of handling shareholder suggestions or complaints (2)The Company s possession of a list of major shareholders and a list of ultimate owners of these major shareholders The Board of Directors shall exercise the functions of the Company s shareholders meeting. Dedicated personnel are delegated to be in charge of the operations of the Board and manage the relevant information. The Company was incorporated by only one institutional shareholder (owned by Mega Financial Holding Company 100%). The institutional shareholder appointed all of the Company s directors, and the institutional shareholder controlled the Company s corporate governance actually.

2 (3)Risk management mechanism and firewall between the Company and its affiliates 1. The Company has established the Risk Management Committee subordinated to the Board of Directors and the independent unit dedicated to risk control, which are responsible for defining the risk management policies and controlling the Company s entire risk, and also reporting the overview of risk management to the Board of Directors periodically to ensure the effective operation of the risk management system. 2. The assets and finance between the Company and its affiliates are managed independently. In order to prevent the Company from engaging in non-arm s length transactions with interested parties, avoid potential conflict of interest and ensure the interest and right of shareholders, customers and interested parties, the Company applies the Insurance Act, Financial Holding Company Act, Regulations Governing Loaning and Other Transactions

3 2.Composition and Responsibilities of the Board of Directors (1)Independent Directors (2)Regular evaluation of CPAs independence Between Insurance Companies and the Same Person, Same Interested Party or Same Enterprise and other laws and regulations related to interested parties. The Company has appointed two independent directors. The Company will assess the competence and independence of the certified public account retained by the Company on a yearly basis.

4 3.Communication Channel with Stakeholders 4.Operations of the Company s Nomination Committee, Compensation Committee, or other committees of the Board of Directors The communication between the Company and interested parties is handled by various business units and governed by the Regulations Governing Internal Operation and Conduct of Transactions with Interested Parties defined by the Company. The Company has established the Risk Management Committee primarily engaged in: 1. Defining the risk management policy and framework, and delegating its responsibilities to the relevant units; 2. Reviewing the risk management mechanism and risk management process ; 3. Reviewing the evaluation on capital adequacy and allocation and adjustment of risk capital; 4. Defining the risk measurement standards and establishing qualitative and quantitative management standards; submitting risk reports to the Board of Directors periodically, reflecting the status of risk management to the

5 Board of Director in a timely manner and proposing necessary suggestions about improvement; 5. Executing the decision about risk management made by the Board of Directors, and periodically reviewing the development, implementation and performance of the Company s entire risk management mechanism; 6. Working with various departments to carry out risk management activities and supervising the activities, and coordinating the multi-departmental interactions and communications; 7. Managing the Company s entire risk limit and various units risk limits, and changing or adjusting the type of risk, allocation of risk limit, and mode of risk acceptance, if necessary; 8. Reviewing the performance appraisal after adjustment on risk; 9. Reviewing the risk capital requirement and implementation

6 of internal models for quantification of various risks; 10. Reviewing the implementation and planning of risk management information system; 11. Other matters related to risk management. An independent director shall assume the position of Chairman of Committee. The Committee members shall consist of the two directors delegated by the Board of Directors, and the President, Executive vice president, and supervisors of Financial Management Dept., Actuarial Dept., Risk Management Dept., Information Service Dept., Investment Dept. and Administration Dept. Chief Audit Executive and the other unit supervisors of Head Office shall be the attendees present at the meeting. The Chairman, as the convener, shall call the Committee meeting once every three months. The Chairman may call a temporary meeting, if necessary.

7 5. If the Company has established corporate governance principles based on for Insurance Enterprises, please describe any discrepancy between the principles and their implementation The Company has defined its own corporate governance best-practice rules and conducted its corporate governance in accordance with the Best-Practice Principles. Therefore, there is no difference between the Company s rules and said Principles.