Regulations Governing Foreign Investments by Insurance Companies Article 16

An insurer may put its foreign investment assets under the custody of a custodian institution or under its own custody in accordance with the Regulations Governing Book-Entry Operations for Centrally Deposited Securities, and in addition, the custodian institution shall be TDCC or a domestic financial institution, or a branch of a foreign financial institution in Taiwan with a credit rating equivalent to A- or above from a local or foreign credit rating agency in the most recent year. However, this restriction shall not apply if it is approved by the competent authority and the insurer may appoint a foreign financial institution meeting the following requirements as the custodian:1. Having been established for more than three years and having a branch or subsidiary in Taiwan that has been approved to conduct custody business;2. Having a credit rating equivalent to A- or above for the most recent year from a domestic or foreign credit rating agency; and3. A bank ranking in the world’s top 500 by assets or net worth for the most recent year or an institution with more than US$500 billion assets under custody.An insurer whose ratio of total adjusted net capital to risk-based capital for the most recent period is under the regulatory standard shall put its foreign assets under the custody of TDCC or a domestic financial institution or the branch of a foreign financial institution in Taiwan whose ratio of its capital to risk-weighted assets for the most recent period meets the regulatory requirements.An insurer shall put its investments in foreign currency denominated listed or over-the-counter certificates of domestic stocks, bonds or Sukuk under custody in accordance with the Regulations Governing Book-Entry Operations for Centrally Deposited Securities.An insurer with its foreign investment limit reaching 35% or higher of its funds or with its overall foreign investment reaching or above US$1 billion shall put all its foreign securities, except those representing interests in offshore funds and those from special-purpose money trust funds conducted by financial institutions, under the custody of not more than five custodian institutions, excluding TDCC.Where an insurer entrusts an overseas custodian for the custody of its overseas assets, the institution being appointed to handle its discretionary account and the entrusted custodian institution shall belong to different financial institutions, and in addition, the execution and modification of the overseas custodian agreement and changes to the authorized signatories on the custodial account must be approved by the insurer's board of directors, and the insurer shall ensure that the custodian agreement contains the following provisions:1. If deemed necessary, the competent authority may dispatch personnel or order the insurer to appoint an accountant or other professionals to examine the insurer's overseas assets under the custody of the custodian institution and to submit a report or express opinions to the competent authority. In such event, the custodian institution entrusted by the insurer shall not refuse the related examination;2. The overseas custodial account of the insurer may not be used to provide any form of guarantee for the debt of others;3. Unless with the consent of the insurer, the custodian institution shall not transfer the assets in the insurer's custodial account to any third parties;4. For matters relating to insurer's custodial account as inquired by the certifying accountant of the insurer for confirmation (including whether the account balance matches, whether any asset in the account is used to provide guarantee, etc.), the custodian shall directly reply by letter to the accounting firm after verifying each inquiry item;5. The custodian agreement shall specify that the ultimate beneficiary of the agreement, the owners of assets, and the beneficiary of master and sub accounts shall be the insurer only; and6. Other matters designated by the competent authority.