1. ART 1 Appendix Presentation to Taiwanese Delegation

2. ART 2 Questionnaire The differences between Finite Risk and Financial Reinsurance ? Originally, these have been used as synonyms for structures with limited risk transfer and usually multi-year characteristics. “Financial Re” is now an outdated expression The reasons of developing Finite Risk and Financial Reinsurance in USA, European and Japanese market during past decades and their Business Volumes? Reasons: See presentation; volumes: No good statistics available; volumes might also be misleading because premium volume is not a meaningful quantity. There’re various types of Finite Reinsurance or Financial Reinsurance in current market, which types are most popular and what are the purposes of using them? See presentation. How to distinguish Finite/Financial Reinsurance from Traditional Reinsurance? Should we review their contents or just look at its form ? There is a fine line between traditional and finite reinsurance; traditional contracts can also have loss sensitive elements, and they can be implicitly multi-year due to long term client relationships. The distinction between “sufficient risk transfer for (Re)insurance booking” (according to the FAS 113 risk transfer test) or “deposit booking” is more relevant.

3. ART 3 Questionnaire Would Finite/Financial Reinsurance manipulate the company’s financial report and hence mislead the public understanding of the company’s real financial situation? Not generally. If properly structured and booked (risk transfer test!), this should not be the case. Could Finite/Financial Reinsurance be applied to manage catastrophe risks? Are there any cases or experiences of using Finite/Financial Reinsurance in catastrophe risk management before ? Yes, it can; if properly structured, this can help the company to use its own diversification potential to the maximum extent and not “over-buy on reinsurance protection. The possibility of using Finite/Financial Reinsurance in the risk bearing mechanism of TREIP. Which layer could Finite/Financial Reinsurance be applied ? Generally, this could be a valid option; 3rd tier might be the best place (but not exclusively) The attitudes of global regulators toward Finite/Financial Reinsurance after AIG suit. What is the latest outlook of the Finite/Financial Reinsurance market? Regulators are generally alerted and feel they need to do their own analysis. Some regulators (e.g. Germany) have started developing their own questionnaires. Currently, potential clients may be concerned to undergo Finite arrangements at all. On the mid term, we expect properly structured Finite Reinsurance to remain an important instrument in a “purged” market.

4. ART 4 Questionnaire Is ten/ten rule still the common standard in global market to examine the existence of significant risk transfer in Finite/Financial Reinsurance? Are there other ways of proving the existence of significant risk transfer when ten/ten rule couldn’t be applied? The 10/10 rule is still applied although it’s only a rule of thumb, and general practice is moving towards more individual risk testing. In contracts with cat characteristics, the probability can be lower – however, mostly at the price of higher loss severity. Many life insurance companies in Taiwan are now required to increase their capital under RBC regulation. Could Finite/Financial Reinsurance be properly used to replace capital increase for life insurance companies without violating solvency regulation? In the Life reinsurance market, surplus relief transactions are pretty much standard. It depends on local regulation to what extent these structures become truly effective. Where is the most developed and mature market among USA, London, Europe and Japan in terms of Finite Risk/Financial Reinsurance ? US and Europe are probably in front; Japan is still in its beginnings.

5. ART 5 Questionnaire Are there any statistics of finite risk available in the market that we can find? To our knowledge, no conclusive specific statistics exist. Please comment on the development of finite markets in US, London, Europe, and Japan and what are their differences? See above; the US market was the first one where the continuing development of (US GAAP) accounting standards, along with an increasingly stringent application rule, triggered the necessity of extremely diligent examination of accounting related questions. In Europe, rules used to be less strict – however, with a clear convergence towards US practice. London has some similarities with Continental Europe – although there is a somewhat more stringent treatment through the FSA, and Finite structures are less present in the market. Japan is about to start.