Regulations Governing Derivatives Transactions Conducted by Insurance Companies Article 14

The board of directors of the insurer shall ratify the important policies and procedures concerning the derivatives transactions and risk management and perform review thereof at least annually, and shall appoint an senior executive to take responsibility to administer the derivatives transactions in accordance with the following principles:1. The fulfilment of both the procedure for derivatives transactions and the regular review of the appropriateness thereof are actually being executed;2. The appointment of the dealers, the authorization of each dealer's limits and the identification of each dealer's knowledge or professional training is sufficient enough are essentially his/her duties;3. The identification of each accounting personnel’s and internal auditor’s knowledge or professional training is sufficient enough is essentially his/her duty;4. The supervision of transaction performance and the in-time reports to the board of directors concerning the abnormal profit and loss are carried out dutifully;5. The assessment of the positions of the derivatives, as well as the evaluation of whether the performance is in keeping with the preset strategies(including strategies for hedging, enhancing the investment efficiency and transactions of structured products) and whether the risk exposure may undermine the financial soundness of the company performance are implemented on a monthly basis;6. For transactions for enhancing the investment efficiency, the performance evaluation reports shall be compiled on a daily basis in accordance with the fair value and reported to the chairman, general manager, and the highest ranking supervisor of risk management. However, when criteria established under the proviso in Paragraph 2 Subparagraph 2 Item 2 of the preceding article are met, compilation and reporting shall be done at least on a monthly basis.