These Regulations are enacted pursuant to Article 147 of the Insurance Act (referred to as “the Act” hereunder).

An insurance enterprise shall establish risk management mechanism for its retained, ceded reinsurance and assumed reinsurance business in consideration of its risk bearing capacity, and draft a reinsurance risk management plan including but not limited to the following particulars, implement the plan accordingly, and review and revise it in a timely manner:
1.Retained risk management: Management guidelines for estimation of maximum reasonable loss according to risk characteristics per risk unit, risk bearing capacity, and maximum accumulated limit per risk unit.
2.Ceded reinsurance risk management: Management guidelines for the method of cession, arranging cession to reinsurer after the original insurance policy in force, selection of reinsurer, reinsurance broker and operational process for cession to reinsurer.
3.Assumed reinsurance risk management: Management guidelines for thelines of insurance, geographic regions, risk unit and accumulated limit of assumed reinsurance.
4.Intra-group reinsurance risk management: Risk management process and transaction procedures for ceding or assuming reinsurance within the group.
The term “ceding reinsurance within the group” in subparagraph 4 of the preceding paragraph means an insurance enterprise ceding reinsurance to an affiliated enterprise or another subsidiary of the parent company.
A foreign insurance enterprise engaging in exclusively reinsurance business may follow the laws and regulations of its home country or the systems of its head office by furnishing information on the laws and regulations of its home country or the systems of its head office, a statement of compliance with the laws and regulations of its home country or the systems of its head office, which are signed by the person-in-charge of its branch office in The Republic of China and reported to the competent authority for recordation, provided the laws and regulations of its home country or the systems of its head office are not laxer than the laws and regulations of the Republic of China.

An insurance enterprise engaging in reinsurance shall comply with the following operational provisions:
1. Arranging cession to reinsurers in conjunction with the established reinsurance risk management plan, and acquiring a written confirmation of acceptance from reinsurer with regard to share of participation, reinsurance premium rate, reinsurance commissions and other terms and conditions before the original insurance policy is in force or before the date the insurance liability for ceded portion starts. The preceding provision does not apply if the insurance enterprise complies with the management guidelines for ceded reinsurance risk management plan provided in subparagraph 2, paragraph 1 of the foregoing article.
2. If the reinsurance in the preceding subparagraph is arranged through an insurance broker, the insurance enterprise shall ensure that the broker has acquired a written confirmation of acceptance from the reinsurer with regard to share of participation, reinsurance premium rates, reinsurance commission, and other terms and conditions before the original insurance contract takes effect or before the date the insurance liability for ceded portion starts, and examine whether the reinsurer and the terms and conditions of reinsurance provided in the confirmation of acceptance fit the instructions given to the broker. If the insurance enterprise has question with regard to the aforementioned matters, it shall confirm directly with the reinsurer.
3. For reinsurance arranged through an insurance broker, if the broker intends to commission a foreign insurance broker to arrange reinsurance, the insurance enterprise shall check in advance whether the foreign insurance broker meets the following conditions:
(1) Having been approved by the competent authority of home country to register incorporation and operate reinsurance business.
(2) Having acquired valid professional liability insurance with sum insured of not less than an equivalent of US$5 million per occurrence and aggregate sum insured of not less than an equivalent of US$10 million during the policy period, the deductible not exceeding 5% of sum insured, and uninterrupted policy period.
4. Obtaining contract documents signed by the reinsurer within sixty (60) days after the reinsurance contract has taken effect. However for treaty reinsurance, the insurance enterprise should obtain the complete reinsurance contract that contains reinsurance terms and conditions, reinsurance clauses and contents, and all relevant ancillary contracts, and has been signed by all reinsurers within six (6) months after the reinsurance contract has taken effect.
An insurance enterprise shall safely file the aforementioned documents, for at least five (5) years after the expiry of insurance liability.

The reinsurance contract document mentioned in subparagraph 4, paragraph 1of the foregoing article shall meet the following criteria:
1. The contract wording and contexts are consistent throughout and the terminologies used are defined.
2. The contract specifies applicable law and court of jurisdiction.
3. The contract specifies rights and obligations of the parties concerned.
4. The contract specifies the scope of coverage, including the types of risks covered, types of reinsurance and limits of liability.

An insurance enterprise engaging in operating reinsurance can include accounts as reinsurance transactions in its financial reports prepared in accordance with IFRS 17 only if the reinsurance contract it issues and holds exhibit significant insurance risk.
The significant Insurance risk specified in the preceding paragraph refers to the significance of insurance risk in individual reinsurance contracts evaluated by the insurance enterprise that meets one of the following criteria:
1. The reinsurer has in substance assumed all insurance risks associated with the ceded portion of the original insurance policy; or
2. The portion of original policy ceded to the reinsurer under the reinsurance contract carries significant insurance risk and it is reasonably likely that the reinsurer will assume significant loss under the original reinsurance contract.
If the reinsurance contract serves the purpose of financing or might not meet the criteria specified in the preceding paragraph, the insurance enterprise may act in accordance with the provisions in Paragraph 1 only if an appointed actuary has conducted reasonable testing of significant insurance risk in accordance with the practice standards drawn up by The Actuarial Institute of the Republic of China and deemed that it has significant insurance risk.

A non-life insurance enterprise shall not assume reinsurance ceded by a life insurance enterprise. A life insurance enterprise shall not assume reinsurance ceded by a non-life insurance enterprise. The preceding provisions do not apply to insurance enterprises with approval from the competent authority in accordance with paragraph 1, Article 138 of the Act.

Entities meeting any of the conditions below are eligible reinsurer to whom an insurance enterprise may cede its business to:
1.An insurance enterprise approved by the competent authority to engage in concurrently or exclusively reinsurance business in the Republic of China.
2. A foreign insurance enterprise approved by the competent authority to engage in concurrently or exclusively reinsurance business in the Republic of China.
3. A foreign reinsurance or insurance organization with a credit rating above a certain level from an international credit rating agency.
4. A reinsurance organization, insurance organization or risk spreading mechanism allowed operating reinsurance business according to the laws of the Republic of China.
5. Other reinsurance organizations, insurance organizations or risk spreading mechanisms approved by the competent authority.
If the reinsurer to whom the insurance enterprise cedes its business to does not meet the criteria in the preceding paragraph, the ceded reinsurance is deemed unqualified.

Credit rating above certain level from an international credit rating agency referred to in subparagraph 3, paragraph 1 of the foregoing article shall mean ratings from any of the following credit rating agencies:
1.BBB or higher from Standard & Poor's Corporation;
2.B++ or higher from A.M. Best Company;
3.Baa2 or higher from Moody’s Investors Service;
4.BBB or higher from Fitch Group;
5.twA+ or higher from Taiwan Ratings Corporation; or
6.An equivalent rating from any other rating agency recognized by the competent authority.

An insurance enterprise shall comply with the provisions in Article 7 herein when ceding reinsurance through an insurance broker.
If the insurance broker in the preceding paragraph is a foreign insurance broker but not licensed by the competent authority, the ceded reinsurance is deemed unqualified. The preceding provision does not apply where the ceded business is a line of insurance that has been approved by the competent authority to be insured by an offshore insurer.

In the case a non-life insurance enterprise undertakes assumed reinsurance business, its reinsurance premium rates shall be adequate and reasonable, and reflect costs.
In the case that a Non-Life insurance enterprise arranges proportional reinsurance, the retention premium rate shall not be lower than the reinsurance premium rate and original premium rate.
In the case that a Non-Life insurance enterprise arranges non-proportional reinsurance, each of retention-layers premium rate shall not be lower than the higher-layer premium rate or the weighted average reinsurance premium rate of the same layer, and the premium level for each layer should conform to a reasonable premium allocation proportions.
The Non-Life insurance enterprise should not underwrite the risk of written line by way of facultative reinsurance after the risk ceded. However, aviation insurance, nuclear insurance and captive reinsurance are not included.
Where a Non-Life insurance enterprise violates preceding three paragraphs, in addition to being imposed disciplinary actions according to the Article 170-1 of the Insurance Act, and an Appointed Actuary should provide explanations in its annual certified actuarial report.

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.

Credit rating above certain level from an international credit rating agency referred to in paragraph 1 of the foregoing article shall mean ratings from the following credit rating agencies:
1.A or higher from Standard & Poor’s Corporation;
2.A or higher from A.M. Best Company;
3.A2 or higher from Moody’s Investors Service;
4.A or higher from Fitch Group;
5.twAA+ or higher from Taiwan Ratings Corporation; or
6.An equivalent rating from any other rating agency recognized by the competent authority.

Where an insurance enterprise has unqualified ceded reinsurance under the Regulations herein, the insurance enterprise shall, in accordance with the requirements set forth by the competent authority, evaluate the effect of unqualified reinsurance contracts, and disclose the evaluation results in its financial statements or notes to financial statements:
1. The summary of the reinsurance contract and the recipients of the cession of reinsurance.
2. Reconciliation of assets and liabilities of the reinsurance contract for reinsurance contracts held.
3. Estimates of future cash flows evaluated for the group of reinsurance contracts held and the assumption reflected by the estimates for the risk of non-performance by the issuer of the reinsurance contract.
4.The sensitivity analysis of the changes in the non-performance risk assumption (except where the premium allocation approach is adopted) includes the impact of changes in assumptions on the assets of reinsurance contracts, the methods and assumptions used in preparing the sensitivity analysis, changes from the previous period in the methods and assumptions used in preparing the sensitivity analysis, and the reasons for such changes.

The risk spreading mechanism referred to in Article 147 of the Act means finite reinsurance or other unconventional reinsurance to spread insurance risk by means of transfer, swap or securitization.
The term “finite reinsurance” referred to in the preceding paragraph means a reinsurance contract under which the insurance risk transferred is limited to a certain range and the contract also serves the purpose of financing.
Where an insurance enterprise does not comply with the Regulations herein in the conduct of business in the preceding two paragraphs, the competent authority may restrict or suspend such business undertaken by the insurance enterprise.

An insurance enterprise that intends to engage in the business mentioned in the foregoing article shall draft a management procedure and report to the competent authority for recordation after being approved by its board of directors; the preceding provision applies to any subsequent amendment thereto. In the case of a foreign insurance enterprise, the management procedure shall be reported to the Supervisory Authority for recordation after being signed by person-in-charge of its branch office in The Republic of China.
The management procedure in the preceding paragraph shall include the following:
1. Purpose of transaction, motives of transaction, basis for determination, delineation of responsibility, and evaluation of benefits;
2. Operating procedure;
3. Accounting treatment;
4. Internal control and audit system; and
5. Other matters designated by the competent authority.

When an insurance enterprise engages in or terminates the business provided in Article 14 herein, the insurance enterprise shall obtain the acceptance or approval of its board of directors or a function (personnel) authorized by the board of directors, and the approval of the competent authority beforehand.

An insurance enterprise that engages in the unconventional reinsurance business provided in Article 14 herein shall disclose the following particulars in its financial statements or notes to financial statements:
1. Purpose, reasons and expected benefits of engaging in such business.
2. The following matters regarding the business:
(1) Statement of reconciliation for assets and liabilities of reinsurance contract held.
(2) Statement of reconciliation for assets and liabilities of insurance contract issued.
3. The impact of the business on the statement of comprehensive income is categorized below based on the reinsurance contract categories:
(1) The reinsurance assets of reinsurance contracts held or the insurance contract liabilities for reinsurance contracts issued must include the insurance service results, financial outcome, the composition of other comprehensive income, and total comprehensive income.
(2) The financial assets of reinsurance contracts held or the financial liabilities of reinsurance contracts issues must include the net investment income, finance costs, and total comprehensive income recognized in profit or loss.
4. In case of change to the business or contract, reasons for such change and effects on assets or financial assets of reinsurance contracts and total comprehensive income.
5. Method of accounting treatment.
6. Other matters designated by the competent authority.

Entities to whom an insurance enterprise cedes its business provided in Article14 herein shall meet one of the following criteria:
1. A professional reinsurance enterprise registered in the Republic of China.
2. A foreign professional reinsurance enterprise or organization with credit rating specified in Article 12 herein.
3. Other institutions or organizations approved by the competent authority.

An insurance enterprise that engages in the business provided in Article 14 herein shall include at least the following particulars in the contract:
1. Scope of risk assumed, contents and limits of payment.
2. Conditions for termination of the contract.
3. Arrangement in case a party to the contract becomes insolvent.
4. Account handling between parties to the contract.
5. Other matters designated by the competent authority.

Article 6 and Article 11 herein do not apply to an insurance enterprise engaging in exclusively reinsurance business.

These Regulations shall enter into force from April 1, 2008.
The amendment to these Regulations comes into enforcement upon the date of promulgation, except for the amendment promulgated on December 28th, 2011, which shall come into force on January 1st, 2013, and the amendment promulgated on December 26th, 2023, which shall come into force on January 1st, 2026