Regulations Governing the Taiwan Residential Earth
Adopted per 30 November 2001 Letter No. Taiwan-Finance-Insurance- 0900751337
Amended per 1 December 2005 Letter No. Financial-Supervisory-Insurance- 09402564041
Amended per 29 December 2006 Letter No. Financial-Supervisory-Insurance- 09502565332
Amended per 26 November 2007 Letter No.Financial-Supervisory-Insurance- 09602564102
 Article 1 | These regulations are adopted pursuant to Article 138-1, paragraph 4 of the Insurance Act. |
| Article 2 | Management of the Taiwan Residential Earthquake Insurance Fund (TREIF) shall be conducted in accordance with these Regulations unless otherwise provided by statute. |
| Article 3 | When the TREIF assumes and spreads residential earthquake risks and handles other related business under the “Enforcement Rules for the Risk Spreading Mechanism of Residential Earthquake Insurance” adopted by the competent authority over its line of business, it shall do so in accordance with the provisions of Article 138-1 of the Insurance Act and other applicable acts and regulations. |
| Article 4 | The TREIF may not engage in operations outside the scope authorized by the Insurance Act and its Articles of Incorporation. |
| Article 5 | The balance of the total pure premium received by the TREIF in accordance with the provisions of Article 6, subparagraph 1 of its Articles of Incorporation after deduction of premium allocated to the Pool and premiums ceded in connection with spreading of risk on domestic and overseas reinsurance and capital markets shall be accumulated in their entirety, and may not be drawn upon except when settlement payments need to be made in connection with an earthquake event.
When the occurrence of a major earthquake disaster results in claim payments that exceed the amount of funds accumulated in the TREIF, the TREIF shall lay down a financing plan to raise capital with domestic or foreign loans or other financing patterns, and in order to safeguard the interest of insured parties the TREIF may as necessary ask the competent authority and the Ministry of Finance to jointly request Executive Yuan’s approval for the national treasury to provide collateral to obtain the necessary source of funding.
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| Article 6 | Apart from the support of operational needs, the funds from the TREIF shall only be utilized for the following purposes:
1 To make NT$ or foreign currency deposits in domestic banks.
2. To purchase government bonds, treasury bills, financial bonds, negotiable certificates of deposits, banker’s acceptances, and commercial promissory notes guaranteed by a financial institution.
3. To purchase publicly issued guaranteed corporate bonds, or corporate bonds issued by a company which has been rated above certain level by a credit rating agency.
4. Other funds allocations as approved by the competent authority.
The investment limits and terms as referred to in subparagraph 3 of the preceding paragraph shall be reported to the competent authority for approval.
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| Article 7 | The entire balance of the total amount of pure premium received by the TREIF shall be set aside as a special reserve at the end of each year after deduction of premium allocated to the Pool, premiums ceded in connection with spreading of risk on domestic and overseas reinsurance and capital markets, and net retained indemnities.
The balance of the yearly financial income after deduction of financial costs, expenses, and losses shall be carried over as accumulated surplus/deficit and listed under net assets.
At the end of each year, the TREIF shall set aside the entire balance of the management fee income after deduction of costs and expenses as a special reserve. The costs, expenses, indemnities, and losses which have been deducted as per the provisions of paragraph 1 and paragraph 2 shall not be included herein. In the event of the balance of this item is negative, it shall be carried over into accumulated surplus/deficit.
The special reserve referred to in the preceding paragraph may not be recalled unless the balance as specified in paragraph 1 for the year is negative, in which case it may be recalled to the amount of the deficit.
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| Article 8 | The competent authority over the line of business in question may from time to time dispatch personnel to examine the TREIF’s operational and financial status.
The TREIF shall regularly report, in accordance with the regulations of the competent authority over its line of business, its operational and financial status to that authority or to an organization designated thereby.
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| Article 9 | These regulations shall be enforced from January 1, 2008. |
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