Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms Article 11

When a Non-Life insurance enterprise cedes its major commercial fire insurance business or cargo insurance business, if the reinsurance is a type of non-proportional facultative reinsurance and each of portions is ceded to domestic non-life insurers, including but not limited to the arrangements of primary layer and policy deductible or self-insurance retention buy down/buyback, the reinsurers must include foreign reinsurance or insurance organization with a credit rating above a certain level from an international credit rating agency or professional reinsurance enterprises approved by the competent authority to engage exclusively in reinsurance business in the Republic of China and those organization or enterprises quote price based on original scope of cover and jointly assume at least 30 percent of the ceded business at the original coverage.If a Non-Life insurance enterprise fails to comply with the provisions in the preceding paragraph in ceding its business, in addition to being imposed disciplinary actions according to the Article 170-1 of the Insurance Act, and the various reserve funds and ratio of total adjusted net capital to risk-based capital calculation must comply with relevant regulations of the unqualified ceded reinsurance.