Regulations Governing Financial and Business Operations of Professional Reinsurance Enterprises Article 6

Professional reinsurance enterprises shall, by each line of reinsurance, reserve or dispose special reserves for fluctuation of risks for their retained businesses according to the following provisions:1.If the incurred loss ratio calculated based on the amount of retained reinsurance claim minus the offset by special reserves for extraordinary business losses for the line of reinsurance is lower than the average incurred loss ratio in the past fifteen (15) fiscal years, the professional reinsurance enterprises shall reserve special reserves for fluctuation of risks in an amount at no less than thirty (30) percent of the difference.2.If the incurred loss ratio calculated based on the amount of retained reinsurance claim minus the offset by special reserves for extraordinary business losses for the line of reinsurance exceeds the average incurred loss ratio in the past fifteen (15) fiscal years, the professional reinsurance enterprises shall release special reserves for fluctuation of risks in an amount equal to the excess portion.3.In the event that the accumulated amount of special reserves for fluctuation of risks exceeds 60% of the retained amount, the amount in excess shall be subject to recovery under the applicable rules.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 fluctuation of risks recorded in the account of “Special Reserve” under “Equity.”