To strengthen risk management and management of matching fund of insurance companies' investments in foreign financial bonds, international bonds, overseas and Mainland China area real property and overseas insurance-related enterprises and enhance efficiency and flexibility for investing in foreign corporate bonds and foreign private equity funds, the Financial Supervisory Commission (the "FSC") amended the Regulations Governing Foreign Investments by Insurance Enterprises, per the letter Ref. No. Jin-Guan-Bao-Cai-Zi No. 10602502521 dated June 14, 2017. The main points are as follows:

1.Article 6 amended:

(1)In order to strengthen risk management of insurance companies' investment in instruments issued by foreign banks, insurance companies shall adhere to the investment criteria prescribed by the regulator when investing in the financial bonds issued or guaranteed by foreign banks with credit ratings of BBB to BB+.

(2)When investing in instruments such as bonds and stocks issued or guaranteed by the same bank, insurance companies shall comply with certain provisions of the concentration limits. In addition, the investment limits on foreign subordinated debts with BBB+ to BB+ credit rating are amended in accordance with Article 7 below.

2.Article 7 amended:

(1)In order to enhance efficiency and flexibility for insurance companies to deploy funds, the investment in foreign corporate bonds rated BBB+ is exempted frominvestment limits on foreign corporate bondsratedBBB+ to BB+.

(2)The total amount of investment in foreign bonds rated BBB to BB+ shall be limited to 6% of the insurer's approved foreign investment limit or 30% of its shareholders' equity, whichever is higher. If the amount of foreign securities under the custody of a domestic custodian institution exceeds 30% of total investment in foreign securities, the investment limit above may be raised to 7% of the insurer’s approved foreign investment limit or 30% of its shareholders’ equity, whichever is higher. If the amount of foreign securities under the custody of a domestic custodian institution exceeds 50%, the investment limit above may be raised to 7.5% of the insurer’s approved foreign investment limit or 30% of its shareholders’ equity, whichever is higher.

3.Article 8 amended:It is newly stipulated that insurance companies may invest in overseas private debt funds and private real estate funds. As to the qualification of fund management institutions, the insurance company shall implement the qualification standards for fund management institutions approved by the board of directors.

4.Article 10 amended:

(1)Even if an insurance company does not have any of the relevant negative conditions, it may still bear too much investment risk which may have adverse impacton its solvency ratio when investing in international bonds. Therefore, insurance companies which do not have relevant negative conditions shall still adhere to relevant investment criteria.

(2)The international bonds issued with call provisions that can be redeemed by issuers prior to the maturity date account for a large proportion of international bonds in Taiwan. For better matching fund management of insurance companies, it is newly stipulated that for investment in callable international bonds, the call protection period shall not be less than five years from issuance date to the date when the call protection period is over; for such bonds acquired in the secondary market, such period shall not be less than three years from settlement date to the date when the call protection period is over.

5.Article 11-1 amended:

Insurance companies shall disclose in the notes to annual financial report any restrictions on ownership of real estate overseas and in the Mainland China area they invest.

6.Article 11-2 and 11-3 amended:

When an insurance company acquires real estate overseas or in the Mainland China area through a real estate investment business for the specific purposes of investment or by means of a trust, it shall report the matters that affect interests of the insurance company to the competent authority within seven days after the occurrence of such event.

7.Article 13-3 amended:

Insurance company which invests in overseas insurance-related businesses shall also report to the competent authority within seven days after the occurrence of material event.