Regulations Governing Financial and Business Operations of Professional Reinsurance Enterprises Article 5

Professional reinsurance enterprises shall reserve or dispose special reserves for extraordinary business losses for retained business according to the following provisions:1.The provision for special reserves for extraordinary business losses shall be one (1) percent of the retained reinsurance premium. The provision ratio shall be increased to three (3) percent for extraordinary business losses involving earthquake, war or terrorist attack.2.In case of an extraordinary business losses, the portion of retained reinsurance claim that exceeds NT$100 million may be offset by special reserves for extraordinary business losses.3.Where the special reserves for extraordinary business losses has been reserved for more than fifteen (15) years, the appointed actuary may evaluate and draft a releasing reserves mechanism and report such mechanism and any subsequent changes thereto to the competent authority for recordation.The amount that can be offset or released as provided in subparagraph 2 or 3 of the preceding paragraph less income tax pursuant to Statement of IAS No. 12 may be offset or released by or from special reserves for extraordinary business losses recorded in the account of “Special Reserve” under “Equity.”