For purposes of strengthening risk management of insurance enterprises when investing in structured products, and for regulatory consistency in terms of whether insurance enterprises shall submit internal audit reports to the Financial Supervisory Commission (FSC) when conducting financial derivatives transactions, the FSC amended Articles 13, 14 and 16 of the Regulations Governing Derivatives Transactions Conducted by Insurance Companies, per the letter Ref. No. Jin-Guan-Bao-Cai-Zi No. 10602503581 dated August 23, 2017. The main points are as follows:

1. Article 13 amended: Considering the derivatives transactions the insurance companies may conduct include investment in structured products, and such investment involves considerable risks, insurance companies shall have clear transaction strategies in place before engaging in such investment and Article 13 clearly stipulates that investment strategies for structured products shall be included in an insurance company's principles and policies for financial derivatives transactions.

2. Article 14 amended: Based on the necessity of insurance companies engaging in structured product transactions regularly assess whether the positions held in investment in structured products are in line with preset transaction strategy and risk bearing capacity, Article 14 clearly stipulates that an insurance company investing in structured products shall examine the positions held in investment in structured products, as well as assess whether the performance is in line with present transaction strategies and whether the risk exposure may undermine the financial soundness of the insurance company, on at least a monthly basis.

3. Article 16 amended: As insurance companies are already required under Paragraph 2 of Article 20 of the Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises to submit, or be exempt from submitting, internal audit reports to the FSC, the provision of Article 16 requiring insurance companies to submit audit reports on financial derivatives transactions to the FSC for reference is deleted to facilitate compliance by insurance companies.