79F9d933-1Baa-4D61-84Ce-683709D8ebac Worldreginfo - 79F9d933-1Baa-4D61-84Ce-683709D8ebac 04 Words from the Chairman

WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac 04 Words from the Chairman

08 SKFH Overview 18 2009 Operation Review 28 2010 Business Plan 38 Giving Back to Society 44 Financial Highlights

2 3 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac 04 Words from the Chairman

08 SKFH Overview 18 2009 Operation Review 28 2010 Business Plan 38 Giving Back to Society 44 Financial Highlights

2 3 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Words from the Chairman

Driven by loose monetary policies and economic by NT$1.1 billion or 7.5% compared to 2008 driven by various stimulation packages worldwide, 2009 saw the global economy cost reduction measures. The company returned to profitability gradually shaking off the shadows of the financial crisis. in 2009 with after-tax profit of NT$105.7 million. Emerging markets in particular have shown a strong recovery, Shin Kong Bank’s loan strategy balances both income and leading the global economy on its way to recuperation. Taiwan’s risk considerations. Outstanding loans in 2009 was $287.0 economy has benefited from China’s high economic growth, as billion, similar to the figure for 2008. NPL ratio decreased to business orders gradually stabilize and the domestic stock 1.42% while coverage ratio was high at 75.37%, indicating market rises by almost 80%. In 2010, international economy strong risk management. Bad debts expense for 2009 has fallen continues to recover, corporate profitability grows, and 11.9% in comparison to 2008, and quality of asset is sound. consumption power of the general public gradually revives. The Wealth management has also shown signs of recovery as the Directorate General of Budget, Accounting and Statistics securities market recovers; fee income reached NT$670.1 estimates an economic growth rate of 4.72%. Relaxation of million in 2009, a growth of 23.6% compared to 2008. In order to cross-strait financial policies has brought opportunities for the reduce funding cost, the company is actively developing cash banking industry. Every financial institution is searching for management business and increasing savings deposits for opportunities in China. Shin Kong Financial Holding Co., Ltd. securities settlements. As a result, the proportion of savings (SKFH) will also be proactively exploiting this trend. deposits was successfully increased from 31.6% to 42.3%. The bank is also continuing to adjust the number and locations of its Gradual Stabilization of Operations branches, so as to fully achieve the potential of each branch. SKFH has gotten back on track to achieve its budgetary The business model that Shin Kong Bank worked hard to targets after implementing a series of capital strengthening and establish bore fruit and produced after-tax profit of NT$560.3 risk management programs. Consolidated net profit after tax in million in 2009. We expect the bank to continue to generate 2009 was NT$1.13 billion, with profit per share of NT$0.17. steady profits in the future. Consolidated total assets reached NT$1.90 trillion, showing a Due to the dramatic rebound of the equity market during growth of 9.3%. the latter half of 2009, trading volume has also increased; Shin The sales strategy of Shin Kong Life no longer focuses Kong’s securities subsidiaries have shown excellent only on growth of premium income; in order to pursue performance in equity brokerage and proprietary trading. Shin profitability and sustainability, the company has put more Kong Securities and MasterLink Securities together contributed emphasis on value of new business. Despite a decline of 24.1% NT$538.0 million to profitability of SKFH. In order to accelerate in first year premium to NT$68.2 billion, sales of high value the integration of securities resources and enhance capital traditional products grew 121.7%, representing 37.9% of all first efficiency, SKFH implemented the merger of Shin Kong year premium income. New business value grew in comparison Securities and MasterLink Securities in 2009, under which to 2008. Net worth of the company also dramatically increased operations of Shin Kong Securities are transferred to by 130.2%, due to recovery of the stock market as well as MasterLink Securities. MasterLink Securities is one of Taiwan’s capital injection from SKFH. In addition, operating expense fell top 10 securities brokers, with 44 branches and a strong

4 5 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Words from the Chairman

4 5 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac customer base, while Shin Kong Securities has proven track markets, thereby building a stronger foundation for future warming through energy conservation and carbon emission Future Outlook records in e-trading and proprietary trading. The businesses of business development of Shin Kong Life. reduction measures. SKFH is actively engaged in this cause. In The global economy is expected to stabilize gradually the two companies are highly complementary. Synergies from support of the “Earth Hour” event organized by the World despite potential market volatility and challenges as various their integration will enhance the profitability of MasterLink Enforcing Risk Management Wildlife Fund, electricity was cut for an hour at 26 SKL buildings, countries exit their rescue efforts. In addition to closely Securities, which SKFH, as MasterLink’s largest shareholder, 107 SKB branches, outside walls, company occupied floors, Substantive programs are being carried out regarding the monitoring developments in the global economy, SKFH will will also benefit. Integration of the securities businesses has advertising signs and other facilities to encourage participation four pillars of risk management: “risk management culture, risk continue to: promoted a closer partnership and greater trust between in energy saving and carbon reduction efforts. management mechanisms, risk evaluation tools, and risk MasterLink Securities and SKFH, which is beneficial to further ■Pursue growth of core businesses and strengthen profitability management performance system”. For example, SKFH has Shin Kong Life Foundation (SKLF) has long been a collaboration and negotiations for potential merger in the future. heightened awareness towards risk management and revised supporter of indigenous education and elderly care. In ■Control costs various risk management guidelines, so that every subsidiary cooperation with the Rainbow Project, the foundation has ■Drive synergies among subsidiaries Excellent Results from Integrated Marketing will take relevant risks into account when making decisions. established daycare and supplementary classes for students in ■Enhance risk management SKFH continued to see excellent results from integrated Further, the FHC-wide market risk management system went the indigenous villages of Xinguang and Zhenxibao, Hsinchu ■Strengthen customer service marketing. Shin Kong Bank has fully demonstrated its value as on-line in April 2009, and will be fully operational in June 2010. County and in Zhudong Township. These programs have helped a marketing channel in selling Shin Kong Life’s insurance Once the system is completed, financial positions of SKFH and to reduce problems faced at home by children and adolescents ■Collaborate with our partner to successfully operate the products in 2009, producing first year premium of NT$17.1 its subsidiaries will be integrated, and the system will be able to in these communities and also improved the ability of these insurance joint venture in China billion, representing 40.4% of the sales from bancassurance perform value-at-risk calculations, sensitivity analyses and young people to compete. In the area of elderly care, SKLF SKFH will faithfully implement its operating plans and fully channels. It has also assisted with the placing of Shin Kong stress testing via historical scenarios, so as to effectively control teamed up with New York-based Elders Share the Arts (ESTA) utilize its existing advantages to capture future opportunities Investment Trust (SKIT) funds, accounting for 27.2% of the total overall market risk exposure. in 2004 to plan service programs for seniors in Taiwan. The and create value for its shareholders. funds raised. In addition to increasing sales, Shin Kong Bank foundation introduced ESTA's "History Alive" and "Legacy Arts" has introduced high margin traditional policies to increase Cultivating the Chinese Life Insurance Market programs to encourage seniors to share their life stories and hand down traditional arts to the next generation. These profitability and enhance fee income of the bank. Likewise, Shin Shin Kong-HNA Life, a joint venture by Shin Kong Life and programs have fostered intergenerational exchange, gave Kong Life has utilized its rich resources to enhance the business the HNA Group in China, began operations in 2009. Shin seniors emotional and psychological support, while also developments of Shin Kong Bank and Shin Kong Investment Kong-HNA Life immediately took advantage of market promoted cultural preservation. Trust, such as assisting the bank in opening 22,928 premium opportunities to enter into collaboration agreements with a payment accounts, successfully promoting Shin Kong Bank number of large enterprises including SPD Bank, ICBC and In order to promote animal conservation concepts, SKL credit cards to 32,884 customers, and linking investment-linked Hainan Airlines, embarking on a path of rapid development. It donated funds in 2009 for the construction of the Shin Kong policies to SKIT funds. Resources from different subsidiaries has also adopted a stable and sound operating strategy that Special Exhibit House, home to the Taipei Zoo's pandas. The are being used to serve our customers and enhance profitability, emphasizes sales quality and innovative services, for example, company also held the Shin Kong Tower Run-up in collaboration thereby successfully achieving a win-win situation. launching the first “policy number selection” service in China. with the Taipei Zoo and Endemic Species Research Institute, Currently the company is increasing its branches in Beijing and Council of Agriculture, under the theme of "Running for Wildlife Strengthening Capital Structure applying to set up other provincial branches in China, so as to Conservation: Cherish Pandas, Care for the Formosan Black further develop the vast Chinese market. Bear." This activity called public attention to the plight of the The financial crisis has proven that a strong capital base is indigenous Formosan black bear to expand the room for the an important foundation to long-term business viability. SKFH Corporate Good Citizenship survival of this endangered species and encouraged has therefore continued to strengthen its capital. In 2009, it participation in wildlife conservation work. successfully issued GDRs and undertook a rights issue to In the spirit of giving back to society, SKFH is actively enhance its capital structure, raising a total of NT$18.4 billion involved in public welfare activities, especially in the areas of SKFH's long-term dedication and contribution to public Chairman, which dramatically enhanced the financial strength of SKFH. global warming, care for the disadvantaged and animal welfare has been widely recognized by society. In 2009, SKL Shin Kong Financial Holding Co., Ltd The GDR was awarded Taiwan Capital Markets Deal of the Year conservation. The company also takes concrete actions in line won the "Public Welfare Excellence Award" and "Public Welfare by IFR Asia, indicating widespread acclaim to SKFH’s capital with its commitment to corporate social responsibility. Special Award" in the Third Taiwan Insurance Excellence planning efforts. NT$18 billion of the capital raised was injected Global warming has resulted in abnormal climate change Award. It also won for the 11th consecutive time in the "Best into Shin Kong Life to improve its financial structure and and a higher frequency of natural disasters. Countries around Social Responsibility" category of the Insurance Faith, Hope, strengthen its ability to withstand fluctuations of the capital the world are united in their efforts to reduce the impact of global and Love Award.

6 7 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac customer base, while Shin Kong Securities has proven track markets, thereby building a stronger foundation for future warming through energy conservation and carbon emission Future Outlook records in e-trading and proprietary trading. The businesses of business development of Shin Kong Life. reduction measures. SKFH is actively engaged in this cause. In The global economy is expected to stabilize gradually the two companies are highly complementary. Synergies from support of the “Earth Hour” event organized by the World despite potential market volatility and challenges as various their integration will enhance the profitability of MasterLink Enforcing Risk Management Wildlife Fund, electricity was cut for an hour at 26 SKL buildings, countries exit their rescue efforts. In addition to closely Securities, which SKFH, as MasterLink’s largest shareholder, 107 SKB branches, outside walls, company occupied floors, Substantive programs are being carried out regarding the monitoring developments in the global economy, SKFH will will also benefit. Integration of the securities businesses has advertising signs and other facilities to encourage participation four pillars of risk management: “risk management culture, risk continue to: promoted a closer partnership and greater trust between in energy saving and carbon reduction efforts. management mechanisms, risk evaluation tools, and risk MasterLink Securities and SKFH, which is beneficial to further ■Pursue growth of core businesses and strengthen profitability management performance system”. For example, SKFH has Shin Kong Life Foundation (SKLF) has long been a collaboration and negotiations for potential merger in the future. heightened awareness towards risk management and revised supporter of indigenous education and elderly care. In ■Control costs various risk management guidelines, so that every subsidiary cooperation with the Rainbow Project, the foundation has ■Drive synergies among subsidiaries Excellent Results from Integrated Marketing will take relevant risks into account when making decisions. established daycare and supplementary classes for students in ■Enhance risk management SKFH continued to see excellent results from integrated Further, the FHC-wide market risk management system went the indigenous villages of Xinguang and Zhenxibao, Hsinchu ■Strengthen customer service marketing. Shin Kong Bank has fully demonstrated its value as on-line in April 2009, and will be fully operational in June 2010. County and in Zhudong Township. These programs have helped a marketing channel in selling Shin Kong Life’s insurance Once the system is completed, financial positions of SKFH and to reduce problems faced at home by children and adolescents ■Collaborate with our partner to successfully operate the products in 2009, producing first year premium of NT$17.1 its subsidiaries will be integrated, and the system will be able to in these communities and also improved the ability of these insurance joint venture in China billion, representing 40.4% of the sales from bancassurance perform value-at-risk calculations, sensitivity analyses and young people to compete. In the area of elderly care, SKLF SKFH will faithfully implement its operating plans and fully channels. It has also assisted with the placing of Shin Kong stress testing via historical scenarios, so as to effectively control teamed up with New York-based Elders Share the Arts (ESTA) utilize its existing advantages to capture future opportunities Investment Trust (SKIT) funds, accounting for 27.2% of the total overall market risk exposure. in 2004 to plan service programs for seniors in Taiwan. The and create value for its shareholders. funds raised. In addition to increasing sales, Shin Kong Bank foundation introduced ESTA's "History Alive" and "Legacy Arts" has introduced high margin traditional policies to increase Cultivating the Chinese Life Insurance Market programs to encourage seniors to share their life stories and hand down traditional arts to the next generation. These profitability and enhance fee income of the bank. Likewise, Shin Shin Kong-HNA Life, a joint venture by Shin Kong Life and programs have fostered intergenerational exchange, gave Kong Life has utilized its rich resources to enhance the business the HNA Group in China, began operations in 2009. Shin seniors emotional and psychological support, while also developments of Shin Kong Bank and Shin Kong Investment Kong-HNA Life immediately took advantage of market promoted cultural preservation. Trust, such as assisting the bank in opening 22,928 premium opportunities to enter into collaboration agreements with a payment accounts, successfully promoting Shin Kong Bank number of large enterprises including SPD Bank, ICBC and In order to promote animal conservation concepts, SKL credit cards to 32,884 customers, and linking investment-linked Hainan Airlines, embarking on a path of rapid development. It donated funds in 2009 for the construction of the Shin Kong policies to SKIT funds. Resources from different subsidiaries has also adopted a stable and sound operating strategy that Special Exhibit House, home to the Taipei Zoo's pandas. The are being used to serve our customers and enhance profitability, emphasizes sales quality and innovative services, for example, company also held the Shin Kong Tower Run-up in collaboration thereby successfully achieving a win-win situation. launching the first “policy number selection” service in China. with the Taipei Zoo and Endemic Species Research Institute, Currently the company is increasing its branches in Beijing and Council of Agriculture, under the theme of "Running for Wildlife Strengthening Capital Structure applying to set up other provincial branches in China, so as to Conservation: Cherish Pandas, Care for the Formosan Black further develop the vast Chinese market. Bear." This activity called public attention to the plight of the The financial crisis has proven that a strong capital base is indigenous Formosan black bear to expand the room for the an important foundation to long-term business viability. SKFH Corporate Good Citizenship survival of this endangered species and encouraged has therefore continued to strengthen its capital. In 2009, it participation in wildlife conservation work. successfully issued GDRs and undertook a rights issue to In the spirit of giving back to society, SKFH is actively enhance its capital structure, raising a total of NT$18.4 billion involved in public welfare activities, especially in the areas of SKFH's long-term dedication and contribution to public Chairman, which dramatically enhanced the financial strength of SKFH. global warming, care for the disadvantaged and animal welfare has been widely recognized by society. In 2009, SKL Shin Kong Financial Holding Co., Ltd The GDR was awarded Taiwan Capital Markets Deal of the Year conservation. The company also takes concrete actions in line won the "Public Welfare Excellence Award" and "Public Welfare by IFR Asia, indicating widespread acclaim to SKFH’s capital with its commitment to corporate social responsibility. Special Award" in the Third Taiwan Insurance Excellence planning efforts. NT$18 billion of the capital raised was injected Global warming has resulted in abnormal climate change Award. It also won for the 11th consecutive time in the "Best into Shin Kong Life to improve its financial structure and and a higher frequency of natural disasters. Countries around Social Responsibility" category of the Insurance Faith, Hope, strengthen its ability to withstand fluctuations of the capital the world are united in their efforts to reduce the impact of global and Love Award.

6 7 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Revitalizing Shin Kong,Pioneering New Ground

In 2009, the world gradually emerged from the shadow of the financial tsunami and set a new course. Shin Kong Financial addition, Shin Kong Bank obtained ISO9001:2000 QMS standard certification and was honored as the top issuer of Visa Holding (SKFH) also set out in a new direction after the severe test of 2008, earning positive reviews along the way. Infinite Cards in the Asia-Pacific region. Among its well-deserved recognitions in 2009, the company earned its fourth consecutive A+ ranking in the Corporate Facing the challenges ahead, SKFH will implement solid business strategies in keeping with Shin Kong founder Wu Information Disclosure and Transparency Survey by the Securities & Futures Institute. Vice Chairman Chia-Lu Wu was Ho-Su's dictum that "keeping the status quo means falling behind". The company will remain dedicated to developing new presented with the "Lifetime Achievement Award" at the Asia Insurance Industry Awards. Shin Kong Life won in several fields, new thinking, new products and innovative services that redefine the status quo, pioneer new ground, rebuild categories of the "Third Taiwan Insurance Excellence Award" and "11th Insurance Faith, Hope, and Love Award." In corporate profitability, and continue to create value for shareholders.

8 9 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Revitalizing Shin Kong,Pioneering New Ground

8 9 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac SKFH Overview

SKFH Highlights Unit: NT$ Thousands 2009 Asset Mix by Subsidiary (Subsidiary's Share in Percentage) Shin Kong Life Insurance Year 2009 2008 Shin Kong Investment Trust 0.04% 74.92% Subsidiary Share of Total Capital 78,677,876 62,541,866 Shin Kong Insurance Brokers 0.01% Shin Kong Life Insurance 74.92% Shin Kong Securities 0.28% Consolidated assets 1,902,090,155 1,741,052,083 Shin Kong Bank 21.92% MasterLink Securities 2.83% Consolidated shareholders' equity 92,678,238 56,194,437 Shin Kong Securities 0.28% Consolidated net income 2,212,696 ( 22,228,222 ) Shin Kong Investment Trust 0.04% EPS (NT$) 0.17 ( 3.80 ) Shin Kong Insurance Brokers 0.01% Return on equity 2.97% ( 28.44% ) MasterLink Securities 2.83% Shin Kong Bank 21.92% Return on assets 0.12% ( 1.30% ) Total Assets 100.00% SKFH Total Consolidated Assets: NT$ 1,902,090 million

Unit: NT$ Thousands Shin Kong Life InsuranceShin Kong Bank Shin Kong Securities Shin Kong Investment Trust Shin Kong Insurance BrokersMasterLink Securities

2009 2009 2009 2009 2009 2009 Year 2008 2008 2008 2008 2008 2008

1,445,264,001 422,859,688 5,363,584 707,313 110,364 54,676,704 Total assets 1,301,251,423 404,028,058 14,046,226 651,769 133,126 46,821,113

57,044,966 22,262,956 5,205,903 655,096 68,218 17,829,864 Shareholders’ equity 24,779,225 20,604,889 4,625,716 591,088 78,481 15,634,161

396,205,501 7,331,231（1） 1,163,531 248,141 320,667 12,554,922 Operating income 439,182,729 7,479,513（1） 1,068,008 355,202 331,469 11,857,023 105,729 560,325 490,301 22,487 40,136 1,426,573 Net Income（Loss） ( 19,737,526 ) 226,604 ( 380,120 ) ( 2,243 ) 50,780 ( 1,728,240 )

（1）Since there is no operating income item for the banking industry under the Regulations Governing the Preparation of FinancialR eports by Public Banks, these figures are net revenues.

10 11 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac SKFH Overview

Unit: NT$ Thousands Shin Kong Life InsuranceShin Kong Bank Shin Kong Securities Shin Kong Investment Trust Shin Kong Insurance BrokersMasterLink Securities

2009 2009 2009 2009 2009 2009 Year 2008 2008 2008 2008 2008 2008

1,445,264,001 422,859,688 5,363,584 707,313 110,364 54,676,704 Total assets 1,301,251,423 404,028,058 14,046,226 651,769 133,126 46,821,113

57,044,966 22,262,956 5,205,903 655,096 68,218 17,829,864 Shareholders’ equity 24,779,225 20,604,889 4,625,716 591,088 78,481 15,634,161

（1）Since there is no operating income item for the banking industry under the Regulations Governing the Preparation of FinancialR eports by Public Banks, these figures are net revenues.

10 11 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Management Team

Chia-Lu Wu Victor Hsu Po-Tseng Pan Tseng-Chang Lee Chin-Yuan Lai Joel Lin Ding-Yi Lee Richard Huang Jung-Yi Chen Jeng-Lun Chen Vice Chairman President President Chairman President Chairman Vice Chairman President Chairman President

Vice Chairman, Shin President, Shin Kong President, Shin Kong Chairman, Taiwan Shin President, Taiwan Shin Chairman, Shin Kong Vice Chairman, Shin President, Shin Kong Chairman, Shin Kong President, Shin Kong Kong Financial Holding Financial Holding Life Kong Commercial Bank Kong Commercial Bank Investment Trust Kong Investment Trust Investment Trust Insurance Brokers Insurance Brokers Vice Chairman, Shin Spokesperson, Shin Executive Director, Life Chairman, Shin Kong Director, Shin Kong Director, Shin Kong Director, Shin Kong Director, Shin Kong Director, Life Insurance Kong Life Kong Financial Holding Insurance Association Property Insurance Property Insurance Investment Trust Investment Trust Investment Trust Association of the Chairman, Wu Chia-Lu Supervisor, Commerce of the Republic of Agency Agency Republic of China Life Insurance Culture Development Research China Chairman, Shin Kong Director, Shin Kong & Education Institute Executive Director, Insurance Agency Insurance Agency Foundation Chinese Insurance Service Association

12 13 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Management Team

12 13 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Shin Kong Financial Holding Credit Ratings ： Information as of Dec. 31, 2009 The list below shows credit ratings of SKFH and its major subsidiaries in year 2010

90.01% Shin Kong Life Real Estate Agency 100% Shin Kong Service Company Life Insurance 30% Co., Ltd. 31% New Light International Taiwan Ratings Co., Ltd. Standard & Poor's

100% Shin Kong 50% Shin Kong-HNA Life Securities Insurance Co., Ltd.（3） Co., Ltd.（1） Shin Kong Life

Agency

100% Taiwan Shin Kong Taiwan Ratings Insurance Brokers Co., Ltd. Standard & Poor's Shin Kong Financial Holding Co., Ltd Shin Kong 100% 100% Shin Kong Property Investment Trust Shin Kong Bank Insurance Agency Co., Ltd. Co., Ltd. Agency

100% Shin Kong Insurance Taiwan Ratings 100% Taiwan Shin Kong Agency Co., Ltd. Commercial Bank 50.3% Standard & Poor's Co., Ltd. 49.7% Shin Kong Marketing Consultant Co., Ltd.

100% Shin Kong Finance (HK) Limited

25.2% MasterLink Subsidiaries and Affiliated Companies of Securities MasterLink Securities Corporation（4） Corporation（2）

Organiza�on Chart Notes: (1) The Board of Directors assumed the authority of the shareholders' mee�ng to dissolve SKSC on January 5, 2010. (2) ''Subsidiary'' is deﬁned according to Ar�cle 4 of the Financial Holding Company Act, not according to the deﬁni�on of the Company Act. (3) Shin Kong & HNA Life Insurance Co., Ltd. is a life insurance company established as a joint venture between Shin Kong Life Insurance Co., Ltd. and HNA Group Co., Ltd. (4) Included companies and holding ra�os: MasterLink Futures Co., Ltd. (100%), MasterLink Securi�es Investment Advisory Corpora�on (100%), MasterLink Bri�sh Virgin Islands Corpora�on (100%), MasterLink Insurance Agency Co., Ltd. (100%), MasterLink Securi�es (HK) Co., Ltd. (100%), Shanghai MasterLink Investment Advisory Corpora�on (100%), MasterLink Nominees (HK) Ltd. (99.99%).

14 15 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Shin Kong Financial Holding Credit Ratings ： Information as of Dec. 31, 2009 The list below shows credit ratings of SKFH and its major subsidiaries in year 2010

90.01% Shin Kong Life Real Estate Agency 100% Shin Kong Service Company Life Insurance 30% Co., Ltd. 31% New Light International Taiwan Ratings Co., Ltd. Standard & Poor's

100% Shin Kong 50% Shin Kong-HNA Life Securities Insurance Co., Ltd.（3） Co., Ltd.（1） Shin Kong Life

Agency

100% Shin Kong Insurance Taiwan Ratings 100% Taiwan Shin Kong Agency Co., Ltd. Commercial Bank 50.3% Standard & Poor's Co., Ltd. 49.7% Shin Kong Marketing Consultant Co., Ltd.

100% Shin Kong Finance (HK) Limited

25.2% MasterLink Subsidiaries and Affiliated Companies of Securities MasterLink Securities Corporation（4） Corporation（2）

14 15 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Milestones

■ SKL awarded "Institutional Investor of the Year" by the Asian Investor Magazine ■ The Securities & Futures Institute rated SKFH A+, the highest ranking in the Corporate Information Disclosure and Transparency Survey ■ SKFH signed cooperation agreement with Dai-ichi ■ United-Credit CoCommercialmm Bank merged under Mutual Life Insurance Company of Japan; Dai-ichi SKFH and renamed Taiwan Shin Kong Commercial ■ The Securitiesities & Futures Institute rated SKFH A+, the paid NT$7 billion in subscription for SKFH Bank Co., Ltd. highest ranking in the Corporate Information Disclosure common shares through private placement ■ New Light Asset Management Company and Transparency Survey ■ Shin Kong Investment Trust incorporated into established as a subsidiary of SKFH ■ SKB received the Outstanding Service Award from SKFH and merged with New Light Asset Management ■ SKFH issued US$260 million zero coupon Global Views Magazine to form Shin Kong Investment Trust Co., Ltd. Euro Convertible Bond ■ Dai-ichi Mutual Life Insurance Company of Japan ■ Shin Kong Insurance Brokerage Co., Ltd. and Taiwan ■ SKL won the 15th National Quality Award acquired private placement common shares of SKFH Shin Kong Insurance Brokers Co., Ltd. merged to form ■ Shin Kong Investment Trust won the “Most in the amount of NT$6.3 billion and acquired preferred Taiwan Shin Kong Insurance Brokers Co., Ltd. Improved Fund Company Award” sponsored ■ SKFH was established and went public shares in SKL in the amount of NT$1.7 billion ■ SKL named a "2006 Taiwan Superbrand" by Asia Asset Management 2008 2006 2004 2002 2009 2007 2005 2003 2001 ■ Shin Kong & HNA Life Insurance officially established, ■ The Securities & Futures Institute rated SKFH A+, the ■■Macoto Bank incorporated into SKFH and merged Shin Kong Insurance Brokerage ■ SKL and Powerworld marking Shin Kong's entry to the mainland Chinese highest ranking in the Corporate Information Disclosure with Shin Kong Bank to become Taiwan Shin Kong established as a subsidiary of Securities（renamed market and Transparency Survey Commercial Bank Co., Ltd. (Shin Kong Bank) SKFH Shin Kong Securities ■ NT$13.1 billion raised in a successful GDR issue ■ Shin Kong Investment Trust (SKIT) won the Ninth ROC ■ SKFH issued US$250 million zero coupon Euro and mergedwith ■ GDR awarded Taiwan Capital Markets Deal of the "Outstanding Financial Innovation Award" under the Convertible Bond MasterLink Securities Year by International Financing Review Asia magazine "Republic of China Securities and Futures Golden ■ SKL won the First Taiwan Insurance Excellence in 2009）merged to ■ The Securities & Futures Institute rated SKFH A+, the Goblet Award" Award in the categories of "Employee Training" and form Shin Kong highest ranking in the Corporate Information Disclosure ■ SKL won the Seventh National Public Service Award "Public Service Image" Financial Holding Co., and Transparency Survey ■ “Shin Kong OTC Market Fund” of Shin Kong Ltd.（SKFH） ■ Shin Kong Securities merged with MasterLink Securitieses Investment Trust won the Eighth Best Fund Award ■ Shin Kong Life (SKL) won the "Public Welfare Excellencence (5-Year OTC category) Award" and "Public Welfare Special Award" in thethe Third Taiwan Insurance Excellence Award ■ Shin Kong Bank (SKB) won top award for “Most Visaisa Unlimited Cards Issued in the Asia-Pacific Region”

16 17 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Milestones

16 17 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Working Together in Face of Adversity

The 2008 financial tsunami washed over the global economy and shrouded the world in fear. Capital markets plunged, and strengthen operations to seize the competitive opportunities the post-crisis era presents. destroying vast asset value as the economy retreated into one of its coldest winters. Fortunately, the storm has receded After the two-year fallout, SKFH is still standing firm. Thanks to well-conceived strategic adjustments, the company with monetary easing and market rescue measures by governments across the globe, enabling the markets to steadily improved performance in 2009, with profits trending higher. Going forward, the company will focus on strengthening its recover. Notably, the crisis has also pruned away the weaker players in the financial industry and produced a round of core competencies, developing competitive advantages, strictly controlling costs, and continuing to steadily grow its mergers that will change the competitive landscape of the market ahead. Moreover, the recovery means that central business. bank rate hikes will not be far behind. As the economy enters a new cycle, corporations need to rethink their strategies

18 19 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Working Together in Face of Adversity

18 19 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac 2009 Operation Review

Shin Kong Life Insurance In 2009, Shin Kong Life Insurance (SKL) responded to the Insurance’), health insurance policies (e.g., ‘An-Xin 99 Surgical Last 5 Years – Total Assets Unit: NT$ Millions Last 5 Years – First-year Premium Unit: NT$ Millions subsiding financial crisis and gradual economic recovery with Whole Life Health Insurance’), group insurance policies (e.g., measures to effectively control costs, adjust asset allocation, ‘An-Xin One-year Term Group Health Insurance’), and variable 1,445,264 annuity policies (e.g., ‘Sheng-Li Nian-Nian Variable Annuity 1,301,251 and strengthen investment risk management. These measures 1,229,174 98,764 Policy I’ and ‘An-Li Nian-Nian Variable Annuity Policy I’). New 1,117,368 65,871 89,794 helped SKL return to profitability and record an after-tax profit 967,629 51,792 68,191 of NT$105.7 million for the year. Moreover, capital injections investment-linked products included the ‘Feng-Li Nian-Nian and rising valuation of financial assets enhanced shareholders’ Variable Universal Life Insurance’. Through its commitment to equity by 130.2% from NT$24.78 billion in 2008 to NT$57.04 new product development, SKL has extended the range of billion in 2009, improving capital adequacy. choices for its customers, earning broad public approval.

SKL achieved steady growth in its insurance business in Developing Multiple Distribution Channels 2009. First year premium (FYP) was NT$68.19 billion (representing a 7.4% share of Taiwan's life insurance market). As part of SKL's business strategy, it has been developing Though FYP was lower than the previous year, the company multiple distribution channels to provide customers with greater improved its product mix through a 121.7% increase in convenience. Current sales channels include internal channels traditional policies and high-margin health policies, helped by (agents and direct marketing) and third-party channels 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 strong demand for its ‘Health 99’ product. This pushed health (bancassurance, traditional brokers and cross-industry premium up sharply by 56.4%. In addition, the company strategic alliances). continued to adjust its sales strategy to focus more on Internal channels: Tied agents are SKL's main sales high-margin traditional products in order to reduce funding channel. In 2009, the company continued to introduce incentive costs and increase loading gains. programs and hold conferences to commend outstanding Individual life insurance agents. In addition to planning incentive programs for 66.49% SKL also improved policy persistency through raising Group insurance 0.60% persistency standards in various incentive programs. Through recruitment, the company's incubation centers fostered new life Business Mix Unit: NT$ Millions these efforts, 13-month and 25-month persistency ratios insurance talent and provided support to agents in acquiring （％） Annuity insurance 17.39% increased to 83.9% and 80.9%, respectively, in 2009. licenses. In the area of operational support, SKL intensified CategoryS2009 Premium Income hare of Total promotion of its PDA Mobile Financial Consultant System and Individual life insurance 117,633 66.49% Product Diversification implemented an e-Mobile Office system, providing high-tech tools to improve sales performance in changing times. The Individual health insurance 19,866 11.23% SKL continued to promote a diversified product strategy in Individual accident company also established a Business Lead Management Individual accident insurance 7,591 4.29% insurance 4.29% response to changes in channel and product characteristics. System that integrates activity management by the company Annuity insurance 30,776 17.39% New products developed in 2009 included traditional life and customer management by the agents. The system is linked policies (e.g., ‘Wei-Li-Duo-Fu Policy’ and ‘Quan-Xin Quan-Yi to SKL's customer relationship management (CRM) platform, Group insuranc e 1,060 0.60% Whole Life with Survival Benefit Policy’), traditional foreign including the company's platform for reinvestment of Individual health insurance Total Premiu m 176,926100.00% currency policies (e.g., ‘Wei-Li Mei-Yuan Foreign Currency maturity/annuity payments and a platform to target VIP 11.23% Policy’), preferred risk policies (e.g., ‘Ping-An-Bao Term Life customers and insured persons over 14 years of age. These Note: Due to rounding, premium figures may not add up to the total

20 21 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac 2009 Operation Review

20 21 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac systems provide agents with information needed to proactively Regarding operational risk management, SKL has assist policyholders with insurance planning and foster close established clear roles and responsibilities, as well as internal long-term relations with customers. In addition, SKL continued control systems. In addition, each department conducts its own to promote various direct channels, including direct mailing, internal operational and compliance audit and engages internet, and telemarketing. It also promoted travel insurance auditors to conduct annual inspections of internal controls. through fax-on-demand policy applications and airport Other operational risk management mechanisms include counters. monitoring and control by risk management units and Sales force training: SKL introduced the industry-leading promotion of governing laws and regulations by legal affairs a+LMS (Learning Management System), providing agents with personnel. SKL is also planning the phased implementation of a high-quality, unified online learning platform. This platform risk and control self-assessment (RCSA) and key risk gives every SKL employee simultaneous access to the most indicators (KRI) to effectively identify, assess, monitor and accurate, complete and up-to-date training content, enabling control potential operational risk. Moreover, the company has new personnel to achieve superior training results and improve established emergency reporting measures and business crisis professional knowledge on company products. Classroom response measures. These measures aim to realize the courses in the fields of marketing, business, wealth benefits of early warning and enable timely and effective to help victims rebuild after the disaster. In addition, SKL and foreign equities, government bonds, corporate bonds, management and information were also provided for personnel handling of potential business crises to reduce company continued to promote policy loan ATM cards and interest- financial bonds, futures, options and other financial products. to further advance their professional abilities. losses, ensure policyholder rights and interests, and maintain The company also improved limit controls, absolute risk, stress free plans to help policyholders more conveniently utilize the normal operation of the company. Third-party channels: Bancassurance has become the funds. testing, back testing, and other risk controls to effectively manage investment risk and optimize investment processes most important sales channel after agents in today's insurance 2. A telephone assistance service was established to ensure Impact of the New Core System and market. In 2009, SKL further developed cooperative and returns. customers fully understand the investment-linked products Implementation of the Agent Activity Management relationships with banks and securities companies. It also they have purchased to safeguard customer rights and In market risk management, SKL revised risk management System continued to cross-sell products externally and internally interests. guidelines for various asset classes in addition to building the

through other SKFH subsidiaries, including Shin Kong Bank, ALGO system. The company also applied value at risk (VaR) limits Since coming online in February 2009, the New Core IT 3. A global toll-free Skypephone service for policyholders was Shin Kong Investment Trust and Shin Kong Securities, to and stress testing based on 13 historical scenarios and major System has been steadily showing results in improving launched, marking a first in the life insurance industry. As of provide customers with the convenience of one-stop shopping changes in risk variables to evaluate potential portfolio losses in administrative efficiency and customer service quality. The December 11, 2009, a total of 253 SKL policyholders for financial products and services. With steady business extreme situations and provide a reference for decision-making in main advantages of the New Core IT System are listed below: worldwide have benefited from this service. growth, SKFH subsidiaries have rapidly upgraded their mutual managing major risk events. 1.The system provides a unified environment to handle cooperative relations and business support. This was reflected 4. A survey of customer satisfaction with the new toll-free SKL implements credit risk controls at the portfolio and administrative operations for four major types of insurance - in the strong performance of cross-selling in 2009, with telephone service center was conducted, with 98% of the individual asset levels as detailed below: individual life, investment-linked, group term (including group premium revenue from internal bancassurance channels customers expressing satisfaction with the service they whole life) and accident insurance, enabling greater flexibility exceeding NT$17 billion. received from the center personnel. 1.Overall Portfolio Credit Risk Control: in personnel and resource allocation. 5. A survey was conducted to assess customer satisfaction In order to strengthen quantitative control for overall 2.The system has an accounting-based design and integrates Enhancing Customer Service with SKL's roadside rescue services and emergency portfolio risk, SKL has adopted ‘adjusted expected credit loss’ information with the accounting system to assist cross- SKL has always been committed to putting customers first assistance services for overseas travelers to ensure service to improve the accuracy of overall credit risk assessment and checking between accounting and business departments and and providing sincere services to enhance customer quality. Moreover, policyholders needing roadside rescue enable close tracking of the credit risk faced by the company. further automate internal controls and management. satisfaction. In addition to its toll-free customer hotline, can send text messages from their handsets to contact SKL also conducts stress testing to assess potential credit 3.The system uses parameter settings to integrate database roadside rescue service, and emergency assistance service for service personnel and promptly receive assistance. losses under extreme credit event scenarios. management of life insurance regulations and information, overseas travelers, SKL implemented the following customer 2.Individual Asset Credit Risk Control: such as policy attributes, standard articles, underwriting and service measures in 2009: Establishing Sound Risk Management acceptance rules, maintenance rules, and business SKL adopts three levels of qualitative and quantitative 1. SKL launched the "Golden Bull Interest-free Policy Loan" Mechanisms guidelines. The system also links these functions to allow fast measurements and analyses for individual assets, including at and " Year-end Policy Loan Gift Drawing" activities to thank SKL continued in 2009 to improve risk management and easy updating and maintenance, enhancing the the country, industry and enterprise levels, to ensure that credit policy loan customers and encourage use of policy loan mechanisms. In April, the company completed the first-phase company's ability to introduce new products and shortens risk for each asset is kept within controllable limits. The services. The company also offered a 90-day interest-free installation of the ALGO market risk management system to time to market. company also decomposes and dissects related risks of credit loan period for policyholders affected by the August 8 flood enhance the precision of risk measurement for listed domestic derivative products and maintains a database of its findings. 4.The system has a customer-oriented database design to

22 23 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac systems provide agents with information needed to proactively Regarding operational risk management, SKL has assist policyholders with insurance planning and foster close established clear roles and responsibilities, as well as internal long-term relations with customers. In addition, SKL continued control systems. In addition, each department conducts its own to promote various direct channels, including direct mailing, internal operational and compliance audit and engages internet, and telemarketing. It also promoted travel insurance auditors to conduct annual inspections of internal controls. through fax-on-demand policy applications and airport Other operational risk management mechanisms include counters. monitoring and control by risk management units and Sales force training: SKL introduced the industry-leading promotion of governing laws and regulations by legal affairs a+LMS (Learning Management System), providing agents with personnel. SKL is also planning the phased implementation of a high-quality, unified online learning platform. This platform risk and control self-assessment (RCSA) and key risk gives every SKL employee simultaneous access to the most indicators (KRI) to effectively identify, assess, monitor and accurate, complete and up-to-date training content, enabling control potential operational risk. Moreover, the company has new personnel to achieve superior training results and improve established emergency reporting measures and business crisis professional knowledge on company products. Classroom response measures. These measures aim to realize the courses in the fields of marketing, business, wealth benefits of early warning and enable timely and effective to help victims rebuild after the disaster. In addition, SKL and foreign equities, government bonds, corporate bonds, management and information were also provided for personnel handling of potential business crises to reduce company continued to promote policy loan ATM cards and interest- financial bonds, futures, options and other financial products. to further advance their professional abilities. losses, ensure policyholder rights and interests, and maintain The company also improved limit controls, absolute risk, stress free plans to help policyholders more conveniently utilize the normal operation of the company. Third-party channels: Bancassurance has become the funds. testing, back testing, and other risk controls to effectively manage investment risk and optimize investment processes most important sales channel after agents in today's insurance 2. A telephone assistance service was established to ensure Impact of the New Core System and market. In 2009, SKL further developed cooperative and returns. customers fully understand the investment-linked products Implementation of the Agent Activity Management relationships with banks and securities companies. It also they have purchased to safeguard customer rights and In market risk management, SKL revised risk management System continued to cross-sell products externally and internally interests. guidelines for various asset classes in addition to building the through other SKFH subsidiaries, including Shin Kong Bank, ALGO system. The company also applied value at risk (VaR) limits Since coming online in February 2009, the New Core IT 3. A global toll-free Skypephone service for policyholders was Shin Kong Investment Trust and Shin Kong Securities, to and stress testing based on 13 historical scenarios and major System has been steadily showing results in improving launched, marking a first in the life insurance industry. As of provide customers with the convenience of one-stop shopping changes in risk variables to evaluate potential portfolio losses in administrative efficiency and customer service quality. The December 11, 2009, a total of 253 SKL policyholders for financial products and services. With steady business extreme situations and provide a reference for decision-making in main advantages of the New Core IT System are listed below: worldwide have benefited from this service. growth, SKFH subsidiaries have rapidly upgraded their mutual managing major risk events. 1.The system provides a unified environment to handle cooperative relations and business support. This was reflected 4. A survey of customer satisfaction with the new toll-free SKL implements credit risk controls at the portfolio and administrative operations for four major types of insurance - in the strong performance of cross-selling in 2009, with telephone service center was conducted, with 98% of the individual asset levels as detailed below: individual life, investment-linked, group term (including group premium revenue from internal bancassurance channels customers expressing satisfaction with the service they whole life) and accident insurance, enabling greater flexibility exceeding NT$17 billion. received from the center personnel. 1.Overall Portfolio Credit Risk Control: in personnel and resource allocation. 5. A survey was conducted to assess customer satisfaction In order to strengthen quantitative control for overall 2.The system has an accounting-based design and integrates Enhancing Customer Service with SKL's roadside rescue services and emergency portfolio risk, SKL has adopted ‘adjusted expected credit loss’ information with the accounting system to assist cross- SKL has always been committed to putting customers first assistance services for overseas travelers to ensure service to improve the accuracy of overall credit risk assessment and checking between accounting and business departments and and providing sincere services to enhance customer quality. Moreover, policyholders needing roadside rescue enable close tracking of the credit risk faced by the company. further automate internal controls and management. satisfaction. In addition to its toll-free customer hotline, can send text messages from their handsets to contact SKL also conducts stress testing to assess potential credit 3.The system uses parameter settings to integrate database roadside rescue service, and emergency assistance service for service personnel and promptly receive assistance. losses under extreme credit event scenarios. management of life insurance regulations and information, overseas travelers, SKL implemented the following customer 2.Individual Asset Credit Risk Control: such as policy attributes, standard articles, underwriting and service measures in 2009: Establishing Sound Risk Management acceptance rules, maintenance rules, and business SKL adopts three levels of qualitative and quantitative 1. SKL launched the "Golden Bull Interest-free Policy Loan" Mechanisms guidelines. The system also links these functions to allow fast measurements and analyses for individual assets, including at and " Year-end Policy Loan Gift Drawing" activities to thank SKL continued in 2009 to improve risk management and easy updating and maintenance, enhancing the the country, industry and enterprise levels, to ensure that credit policy loan customers and encourage use of policy loan mechanisms. In April, the company completed the first-phase company's ability to introduce new products and shortens risk for each asset is kept within controllable limits. The services. The company also offered a 90-day interest-free installation of the ALGO market risk management system to time to market. company also decomposes and dissects related risks of credit loan period for policyholders affected by the August 8 flood enhance the precision of risk measurement for listed domestic derivative products and maintains a database of its findings. 4.The system has a customer-oriented database design to

22 23 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac facilitate the collection and analysis of customer information, 5.3% from NT$356.19 billion in 2008, supporting growth and coverage ratio was 75.37%, indicating good asset quality. In the area of small and medium enterprise (SME) finance, establishment of CRM information systems, and provision of development in the bank's lending and wealth management SKB emphasized self-liquidating loans and capital expenditure more comprehensive customer service functions. services. Loan balances (including revolving balance on credit Corporate Banking financing. Credit quality was also improved through cash flow cards and excluding overdue receivables) increased 1.1% from Furthermore, in order to help agents achieve twice the SKB's corporate banking strategy in 2009 focused on analysis and strict collateral inspection. In May 2009, SKB NT$283.99 billion in 2008 to NT$287.03 billion. Growth in marketing effects with half the effort, SKL launched its online developing enterprise customers with high credit quality and became a member of the Small and Medium Enterprise Credit lending came mainly from comparatively low-risk mortgages, "Business Lead Management System" in 2009, following a year reasonable profits. The bank leveraged its service efficiency to Guarantee Fund of Taiwan. Through this credit guarantee reducing overall lending risk. In addition, SKB placed strategic of planning and development. This system enables agents to strengthen pricing power, as well as increased various fees and mechanism, and in conjunction with a regional division system, focus in 2009 on wealth management services. As the easily track target customers and arrange marketing activities. non-interest income in conjunction with trust, foreign exchange SKB bolstered local management to deeply cultivate its economy turned around and investor confidence recovered, In today's customer-driven market, the system helps agents and cash management products. In addition, SKB utilized the customer base and comprehensively upgrade SME loan wealth management fee income for the year reached NT$670 better understand client needs, improve customer service marketing resources of SKFH and its affiliates to strengthen quality. million, up 23.6% from 2008. Furthermore, through various quality and, more importantly, further automate agent sales and cross-selling, thereby expanding service scope and tapping To satisfy the diverse needs of its corporate customers, expenditure controls, operating expenses fell 6.8% enhance the company's market competitiveness. new service niches. SKB established an integrated marketing committee with SKFH year-on-year. Overall non-performing loan ratio was 1.42% and subsidiaries and affiliates, bringing together group insurance, Developing the Mainland Insurance Market travel insurance, securities, property and casualty insurance, SKL and China's HNA Group formed a joint venture security and health examination services. Last 5 Years – Deposit Balance Unit: NT$ Millions insurance company named "Shin Kong & HNA Life Insurance". Headquartered in Beijing, the venture has been initially 375,074 Business Mix Unit: NT$ Millions Consumer Banking capitalized at RMB500 million (about NT$2.25 billion). SKL has 356,193 326,012 The global economy regained its footing in the second half seconded a senior vice president and about 40 employees 286,934 CategoryS2009 Premium Income hare of Total（％） 284,425 of 2009, helping house prices in Taiwan continue to rise. based in the mainland to carry out preparatory work and assist Interest Income 8,226 71.99% Nevertheless, the overall level of real estate transactions failed with post-launch business development. Drawing on SKL's to fully recover to previous levels. SKB's mortgage business Fee Income 2,143 18.76% more than 40 years of successful experience in Taiwan, the continued to grow steadily in 2009, with new lending increasing team was in charge of establishing IT systems, obtaining Gains from Securities Investment 861 7.53% to NT$31.02 billion and performing loan amount rising 4.0% to product approvals, setting up policy administration processes, Other Income 197 1.72% NT$118.29 billion. Mortgage lending was concentrated in and recruitment and training of new agents. It also assisted Taipei County and Taipei City, accounting for 43.1% of the Total 11,427 100.00% with the development of channels for individual insurance, total, while lending in the three major metropolitan areas of group insurance, bancassurance, and telemarketing operations. Taiwan (Taipei county and city, Taichung City, and Kaohsiung All of these tasks were smoothly completed, paving the way for 2005 2006 2007 2008 2009 City) accounted for 69.3% of the national total. Asset quality in Shin Kong & HNA Life Insurance to officially launch operations Note: Numbers exclude interbank deposits these areas is more stable than that in other parts of Taiwan. In in April 2009. Looking ahead, the company will follow a stable order to maintain good asset quality and steadily grow its business strategy in the fast-growing mainland insurance Interest Income mortgage business, SKB focused on owner-occupied real market, first establishing a solid foundation and then actively Last 5 Years – Loan Balance Unit: NT$ Millions 71.99% estate as collateral and adopted a strategy involving strict innovating, fostering talent, and cultivating a deep presence in Other Income 1.72% controls for speculative borrowers and lower loan-to-value the mainland insurance market. 287,025 283,990 (LTV) ratios. These measures helped reduce the 280,339 Gains from Securities 241,758 Investment 7.53% non-performing loan (NPL) ratio of SKB's overall mortgage 216,862 Shin Kong Bank business to 0.65% in 2009, down from 0.90% at the start of the With the gradual recovery of Taiwan's economy since the year, underscoring the strength of the bank's credit controls in second half of 2009, Shin Kong Bank (SKB) managed to this business. Fee Income steadily grow and develop its business in a fast-changing 18.76% In unsecured consumer lending, SKB maintained a financial environment. Net interest income fell, but fee income conservative strategy to ensure profitability through emphasis increased from NT$1.88 billion to NT$2.14 billion. Provisions on good credit quality. In 2009, the bank made new loans for 2009 fell to NT$1.76 billion from NT$2.00 billion in 2008, totaling NT$13.93 billion, up 21.8% from the year before. New netting the bank an after-tax profit of NT$560 million. NPL fell by 48.9% from 2008 demonstrating success in growing As for overall operations, SKB increased deposit balance 2005 2006 2007 2008 2009 lending while maintaining asset quality. (excluding interbank deposits) to NT$375.07 billion in 2009, up Note: Numbers include credit card revolving balance but exclude overdue receivables SKB's car loan business benefited from a combination of

24 25 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac facilitate the collection and analysis of customer information, 5.3% from NT$356.19 billion in 2008, supporting growth and coverage ratio was 75.37%, indicating good asset quality. In the area of small and medium enterprise (SME) finance, establishment of CRM information systems, and provision of development in the bank's lending and wealth management SKB emphasized self-liquidating loans and capital expenditure more comprehensive customer service functions. services. Loan balances (including revolving balance on credit Corporate Banking financing. Credit quality was also improved through cash flow cards and excluding overdue receivables) increased 1.1% from Furthermore, in order to help agents achieve twice the SKB's corporate banking strategy in 2009 focused on analysis and strict collateral inspection. In May 2009, SKB NT$283.99 billion in 2008 to NT$287.03 billion. Growth in marketing effects with half the effort, SKL launched its online developing enterprise customers with high credit quality and became a member of the Small and Medium Enterprise Credit lending came mainly from comparatively low-risk mortgages, "Business Lead Management System" in 2009, following a year reasonable profits. The bank leveraged its service efficiency to Guarantee Fund of Taiwan. Through this credit guarantee reducing overall lending risk. In addition, SKB placed strategic of planning and development. This system enables agents to strengthen pricing power, as well as increased various fees and mechanism, and in conjunction with a regional division system, focus in 2009 on wealth management services. As the easily track target customers and arrange marketing activities. non-interest income in conjunction with trust, foreign exchange SKB bolstered local management to deeply cultivate its economy turned around and investor confidence recovered, In today's customer-driven market, the system helps agents and cash management products. In addition, SKB utilized the customer base and comprehensively upgrade SME loan wealth management fee income for the year reached NT$670 better understand client needs, improve customer service marketing resources of SKFH and its affiliates to strengthen quality. million, up 23.6% from 2008. Furthermore, through various quality and, more importantly, further automate agent sales and cross-selling, thereby expanding service scope and tapping To satisfy the diverse needs of its corporate customers, expenditure controls, operating expenses fell 6.8% enhance the company's market competitiveness. new service niches. SKB established an integrated marketing committee with SKFH year-on-year. Overall non-performing loan ratio was 1.42% and subsidiaries and affiliates, bringing together group insurance, Developing the Mainland Insurance Market travel insurance, securities, property and casualty insurance, SKL and China's HNA Group formed a joint venture security and health examination services. Last 5 Years – Deposit Balance Unit: NT$ Millions insurance company named "Shin Kong & HNA Life Insurance". Headquartered in Beijing, the venture has been initially 375,074 Business Mix Unit: NT$ Millions Consumer Banking capitalized at RMB500 million (about NT$2.25 billion). SKL has 356,193 326,012 The global economy regained its footing in the second half seconded a senior vice president and about 40 employees 286,934 CategoryS2009 Premium Income hare of Total（％） 284,425 of 2009, helping house prices in Taiwan continue to rise. based in the mainland to carry out preparatory work and assist Interest Income 8,226 71.99% Nevertheless, the overall level of real estate transactions failed with post-launch business development. Drawing on SKL's to fully recover to previous levels. SKB's mortgage business Fee Income 2,143 18.76% more than 40 years of successful experience in Taiwan, the continued to grow steadily in 2009, with new lending increasing team was in charge of establishing IT systems, obtaining Gains from Securities Investment 861 7.53% to NT$31.02 billion and performing loan amount rising 4.0% to product approvals, setting up policy administration processes, Other Income 197 1.72% NT$118.29 billion. Mortgage lending was concentrated in and recruitment and training of new agents. It also assisted Taipei County and Taipei City, accounting for 43.1% of the Total 11,427 100.00% with the development of channels for individual insurance, total, while lending in the three major metropolitan areas of group insurance, bancassurance, and telemarketing operations. Taiwan (Taipei county and city, Taichung City, and Kaohsiung All of these tasks were smoothly completed, paving the way for 2005 2006 2007 2008 2009 City) accounted for 69.3% of the national total. Asset quality in Shin Kong & HNA Life Insurance to officially launch operations Note: Numbers exclude interbank deposits these areas is more stable than that in other parts of Taiwan. In in April 2009. Looking ahead, the company will follow a stable order to maintain good asset quality and steadily grow its business strategy in the fast-growing mainland insurance Interest Income mortgage business, SKB focused on owner-occupied real market, first establishing a solid foundation and then actively Last 5 Years – Loan Balance Unit: NT$ Millions 71.99% estate as collateral and adopted a strategy involving strict innovating, fostering talent, and cultivating a deep presence in Other Income 1.72% controls for speculative borrowers and lower loan-to-value the mainland insurance market. 287,025 283,990 (LTV) ratios. These measures helped reduce the 280,339 Gains from Securities 241,758 Investment 7.53% non-performing loan (NPL) ratio of SKB's overall mortgage 216,862 Shin Kong Bank business to 0.65% in 2009, down from 0.90% at the start of the With the gradual recovery of Taiwan's economy since the year, underscoring the strength of the bank's credit controls in second half of 2009, Shin Kong Bank (SKB) managed to this business. Fee Income steadily grow and develop its business in a fast-changing 18.76% In unsecured consumer lending, SKB maintained a financial environment. Net interest income fell, but fee income conservative strategy to ensure profitability through emphasis increased from NT$1.88 billion to NT$2.14 billion. Provisions on good credit quality. In 2009, the bank made new loans for 2009 fell to NT$1.76 billion from NT$2.00 billion in 2008, totaling NT$13.93 billion, up 21.8% from the year before. New netting the bank an after-tax profit of NT$560 million. NPL fell by 48.9% from 2008 demonstrating success in growing As for overall operations, SKB increased deposit balance 2005 2006 2007 2008 2009 lending while maintaining asset quality. (excluding interbank deposits) to NT$375.07 billion in 2009, up Note: Numbers include credit card revolving balance but exclude overdue receivables SKB's car loan business benefited from a combination of

24 25 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac economic recovery and preferential tax policy in 2009. The public fund—the "Shin Kong China Growth Fund". Capitalized insurance premiums in 2009, resulting in a 6.2% contraction in amount of new car loans increased 22.5% over the previous at NT$1.33 billion, this fund has outperformed all peers in the total premium income. Taiwan Shin Kong Insurance Brokers year, fee income rose 6.0%, and loan balance continued a same category. Another public fund—the "Shin Kong Emerging (SKIB) also felt the impact of these developments on its steady upward trend. New NPL fell by 65.4% from the same Market New Stars Fund"—was introduced in the fourth quarter. business, with operating income falling by 3% in 2009. period last year. Through the dual strategic goals of growing This fund aims to help investors capitalize on strong growth Nevertheless, the company posted an after-tax profit of loan balance and lowering NPL, SKB's car-loan business trends in emerging markets. NT$40.14 million, or NT$66.9 per share, representing a 54.7% continued to steadily develop. return on shareholder equity. The scale of SKIT funds linked to investment-linked In the credit card business, SKB had about 900,000 credit policies from Shin Kong Life (SKL) achieved stable growth in SKIB increased total premium revenue sixfold from cards in circulation in 2009. Consumption expenditures for the 2009. In future, the company will continue to maintain and mid-March of 2003 to NT$1.37 billion in 2009. Auto insurance year totaled NT$34.41 billion, with 3.53% bad debt write-off, improve fund performance and increase sales by integrating (including compulsory) policies contributed the highest share indicating a sharp improvement in asset quality over 2008. In channel resources. (61.3%) of total premium income, followed by accident order to enhance the profitability of its credit card business, the insurance (31.2%) and fire insurance (7.5%). The number of In the offshore fund category, SKIT followed up its 2008 bank continued to plan various activities to promote card usage total policies also continued an upward trend, increasing from offering of seven funds from DWS Investments with new and consumption. The bank also adopted strict standards for 558,000 in 2008 to 662,000 in 2009, an 18.6% gain. offshore fund offerings in 2009. The company applied to the new cardholder approval to reduce the risk of losses. In potential investment needs of overseas corporate customers, competent authority to serve as the master agent for funds In 2010, SKIB will continue to sell high-quality non-life addition, SKB continued to expand its credit card merchant SKB established an OBU platform in 2009 to actively develop managed by Robeco Investment Management Group and products in close cooperation with Shinkong Insurance to meet business to increase fee income. As of 2009, the bank’s corporate money management services, and build the bank's received formal approval on February 6, 2010. Established in customer demand. In the area of back office support, the merchant business has 2,423 customers and annual client base in this area. Rotterdam in 1929, Robeco has 80 years of investment company will steadily expand its computer system so agents at consumption of NT$6.64 billion. management experience and is today one of Europe's largest SKL branches can better manage customer data and improve

In August 2009, SKB was honored as the top issuer of Commitment to Service Excellence investment management groups. As of December 31, 2009, service quality. In addition, classes on non-life insurance will be Visa Infinite Cards in the Asia-Pacific region, demonstrating the Robeco had about US$192.9 billion in assets under organized at SKL's Educational Training Center and trainers In order to build on its excellent services, SKB formed a success of the bank's effort in winning over top-tier customers. management. Robeco is a fully owned subsidiary of Rabobank, will be dispatched to various SKL units to provide training Total Customer Satisfaction (TCS) Committee in 2008 to SKB also expanded services to business consumers by which is one of only a few non-government related commercial aimed at enhancing non-life insurance knowledge and skills of promote a TCS program at the bank. In 2009, the TCS team teaming up with MasterCard International to issue Asia's first banks in the world to receive the highest credit ratings from SKL agents. partnered with the Landis Institute to continue promotion of the Titanium Commercial Travelers Card in September 2009. With Standard & Poor's and Moody's. In 2008, Robeco was honored "Delight Your Customer" program in pursuit of excellent a combination of the Titanium Card and Commercial Card, SKB as "The Best Dutch Asset Management Group" by the Financial service. SKB also established benchmark branches in various is able to offer unique high-quality benefits for cardholders. In Times. December 2009, SKB's Titanium Cards had an average areas and dispatched TSC project members with advisors to Robeco offers an extensive product line that includes per-card consumption of NT$15,033, second only to Infinite help these branches diagnose their current situation, set goals equity and fixed-income investments, money market funds, Cards and New Diamond Cards. and attainment methods, carry out action plans, and resolve trust management and alternative investment products, such difficulties. Other branches were invited to observe, learn and Last 5 Years – Premium Income Unit: NT$ Millions Wealth Management copy the successful examples in their own operations. Through as hedge funds, funds of hedge funds, private equity products, the hard work of the entire bank staff, clear progress was commodity, and structured products. The company's strategic

Aided by recovery in the financial markets, fee income 1,393 achieved in telephone courtesy, branch improvement, and investment group has offices in Rotterdam, Paris, Zurich, 1,369 from SKB's wealth management services grew by 23.6% in standardized outward presentation, while also setting a solid Boston, New York and Hong Kong. 1,316 2009 to reach NT$670 million for the year. Overall scale of foundation for ongoing improvements. 1,132 assets under management mirrored this upward trend. SKIT will initially offer five Robeco funds, including Robeco Emerging Markets Equities, Robeco Asia Pacific Non-discretionary trust assets grew 16.7%, ranking SKB 11th 891 in the domestic market. Shin Kong Investment Trust Equities, Robeco Chinese Equities, Robeco US Premium At the end of 2009, Shin Kong Investment Trust (SKIT) Equities, and Robeco Health & Wellness Equities. These funds In terms of product mix, SKB added new select/non-select had NT$33.37 billion in public funds under management, are expected to become available through SKIT in the second funds each quarter, as well as rolled out sales promotions representing a 1.7% market share. This figure covers equity quarter of 2010. aimed at various customer groups (corporate banking, wealth funds (incl. fund of funds), balanced funds, and quasi money management, and internet banking customers). The bank also market funds. Equity funds under management increased by Taiwan Shin Kong Insurance Brokers planned offshore securities products (preferred shares, NT$6.16 billion, or 83.0%, over 2008. perpetual debts, equity-linked notes, and structured notes), The non-life insurance market in Taiwan was affected by along with competitive insurance products. In order to meet the In the second quarter of 2009, SKIT introduced one new deregulation of insurance premiums and lower compulsory 2005 2006 2007 2008 2009

26 27 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac economic recovery and preferential tax policy in 2009. The public fund—the "Shin Kong China Growth Fund". Capitalized insurance premiums in 2009, resulting in a 6.2% contraction in amount of new car loans increased 22.5% over the previous at NT$1.33 billion, this fund has outperformed all peers in the total premium income. Taiwan Shin Kong Insurance Brokers year, fee income rose 6.0%, and loan balance continued a same category. Another public fund—the "Shin Kong Emerging (SKIB) also felt the impact of these developments on its steady upward trend. New NPL fell by 65.4% from the same Market New Stars Fund"—was introduced in the fourth quarter. business, with operating income falling by 3% in 2009. period last year. Through the dual strategic goals of growing This fund aims to help investors capitalize on strong growth Nevertheless, the company posted an after-tax profit of loan balance and lowering NPL, SKB's car-loan business trends in emerging markets. NT$40.14 million, or NT$66.9 per share, representing a 54.7% continued to steadily develop. return on shareholder equity. The scale of SKIT funds linked to investment-linked In the credit card business, SKB had about 900,000 credit policies from Shin Kong Life (SKL) achieved stable growth in SKIB increased total premium revenue sixfold from cards in circulation in 2009. Consumption expenditures for the 2009. In future, the company will continue to maintain and mid-March of 2003 to NT$1.37 billion in 2009. Auto insurance year totaled NT$34.41 billion, with 3.53% bad debt write-off, improve fund performance and increase sales by integrating (including compulsory) policies contributed the highest share indicating a sharp improvement in asset quality over 2008. In channel resources. (61.3%) of total premium income, followed by accident order to enhance the profitability of its credit card business, the insurance (31.2%) and fire insurance (7.5%). The number of In the offshore fund category, SKIT followed up its 2008 bank continued to plan various activities to promote card usage total policies also continued an upward trend, increasing from offering of seven funds from DWS Investments with new and consumption. The bank also adopted strict standards for 558,000 in 2008 to 662,000 in 2009, an 18.6% gain. offshore fund offerings in 2009. The company applied to the new cardholder approval to reduce the risk of losses. In potential investment needs of overseas corporate customers, competent authority to serve as the master agent for funds In 2010, SKIB will continue to sell high-quality non-life addition, SKB continued to expand its credit card merchant SKB established an OBU platform in 2009 to actively develop managed by Robeco Investment Management Group and products in close cooperation with Shinkong Insurance to meet business to increase fee income. As of 2009, the bank’s corporate money management services, and build the bank's received formal approval on February 6, 2010. Established in customer demand. In the area of back office support, the merchant business has 2,423 customers and annual client base in this area. Rotterdam in 1929, Robeco has 80 years of investment company will steadily expand its computer system so agents at consumption of NT$6.64 billion. management experience and is today one of Europe's largest SKL branches can better manage customer data and improve

26 27 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac New Thinking,Stronger Performance

2010 will be a crucial year for the financial industry. Apart from the economic turnaround and recovery of corporate through its mainland joint venture. In banking, the company will strengthen corporate banking, establish a Hong Kong profitability, the signing of the cross-strait Economic Cooperation Framework Agreement (ECFA) between Taiwan and branch, and actively develop cross-strait operations. Shin Kong Investment Trust will build a competitive foundation on mainland China will open the gates to China's financial market. This is a brand new year, and SKFH will embrace it with outstanding performance, issue futures trust funds and introduce offshore funds to meet customers' wealth a business strategy rooted in new thinking. In the life insurance sector, the company will emphasize protection products management needs. In addition, SKFH will continue to increase overall cross-selling activities among subsidiaries, and and re-introduce investment-linked products based on market demand. The company is also expanding market reach thereby fully tap synergies within the group.

28 29 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac New Thinking,Stronger Performance

28 29 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac 2010 Business Plan

Shin Kong Life Insurance

Shin Kong Life Insurance (SKL) will continue to develop Developing New Products Channel Mix Unit: NT$ Millions Bancassurance 61.92% sales channels and new products, invest funds efficiently, enhance SKL's future product strategy is to re-focus on core （％） synergies through integrated marketing, strengthen risk CategoryS2009 First-year Premium hare of Total protection policies to meet the basic protection and retirement Agents 35.38% management, deepen operations in mainland China and expand in needs of its customers. To meet the rising demand for higher Agents 24,128 35.38% other overseas markets to achieve operation targets for the year. quality medical treatment in Taiwan, the company will introduce Bancassurance 42,222 61.92% an industry-first critical illness insurance allowing up to three Developing Sales Channels DM, Brokers and Others 1,841 2.70% claim settlements. Furthermore, in view of declining birthrates

Diversified sales channels enable insurers to further and the graying of society in Taiwan, SKL will continue to Total 68,191 100.00% segment markets, expand customer reach, and enhance develop new long-term care insurance. The company also corporate image. They also give customers access to the introduced the industry's first Australian-dollar-denominated currency hedging, so long as hedging costs are within limits, fastest and most convenient services, building client satisfaction traditional policy to meet both the protection and savings needs SKL will continue to move towards a high ratio of hedging. and raising the company's competitive position in the market. of customers. Another area of future development is Otherwise proxy hedging will be used. SKL will also adopt a DM, Brokers and microinsurance, which will help make insurance available to Others 2.70% To develop internal channels, SKL continues to fine-tune flexible strategy in increasing returns from real estate everyone. its agent incentives and benefits systems. The company is also investment. widely recruiting high-caliber candidates and will integrate Investing Funds More Efficiently e-training and e-learning resources to further enhance the skills Last 5 Years – In-force Policies Unit: Policies After a year and a half, the global financial crisis receded of current agents. SKL will also introduce eHRD modules,continue Enhancing Integrated Marketing to develop specialized courses, and build on various learning in the second half of last year and the world economy began to 7,238,959 show signs of recovery. Nevertheless, persistently high In conjunction with SKFH, SKL is able to offer financial 7,064,859 tools (such as personal development plans and learning 6,852,098 unemployment in major countries is expected to moderate products beyond its current insurance services, as well as 6,665,050 blueprints). These initiatives aim to upgrade the professional 6,483,343 ability of agents, provide compliance training, and improve staff economic growth in 2010. Quantitative easing by central banks expand sales channels to further enhance the company's retention. Furthermore, through integrated sales processes in advanced countries has led to bubble symptoms in certain competitive strength. In addition to selling existing insurance under the "Business Lead Management System", SKL is asset classes, forcing the exit of stimulus packages and raising products, such as annuities, through Shin Kong Bank (SKB), strengthening customer relationship management (CRM), market uncertainties. Therefore, relatively high volatility is the company will redouble its efforts to market high-value departmental activity management, and agent customer anticipated in financial markets this year as turning points are traditional and protection products to increases profits and management to achieve new business targets. reached in the fiscal and monetary policies of various fees. Through Taiwan Shin Kong Insurance Brokers (SKIB), countries. SKL will thus follow conservative and forward-looking SKL agents also sell various non-life insurance products from In the area of bancassurance, SKL will continue to pursue a investment principles. These principles will be rooted in a Shinkong Insurance. This strategy aims to provide balanced strategy between SKFH and third-party channels. To strategic asset allocation (SAA) that considers the company’s policyholders with a broad range of services beyond life increase sales of high value products, the company will provide liability structure as well as risk tolerance. It will also be insurance, while also supporting the development of SKIB's training to Shin Kong Bank (SKB) staff on traditional insurance supported by a dynamically adjusted tactical asset allocation non-life insurance business. SKL also assists SKB in 2005 2006 2007 2008 2009 and health insurance. SKL will also actively develop new (TAA). This strategy strives to generate stable recurring income, as distributing credit cards, as well as encourages policyholders to cooperative channels to increase market share. well as capital gains from short-term market movements. As to pay premiums with SKB cards and fund transfers. At the same Note: Numbers include individual life and health policies

30 31 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac 2010 Business Plan

Shin Kong Life Insurance

30 31 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac time, SKL will further strengthen linkages between its corporate banking business. with operations in mainland China, as well as provide financing investment-linked policies and Shin Kong Investment Trust （2）Strengthen branch functions and establish a comprehensive to overseas Chinese. In view of the limited growth potential for funds. By fully utilizing the resources of SKFH, SKL aims to platform for foreign exchange operations, as well as traditional services in Taiwan's increasingly saturated banking provide customers with a comprehensive range of financial expand the scope and depth of such services. market, SKB’s strategy is to actively explore new market niches services and realize synergies from integrated marketing. and develop a foundation for business expansion consistent （3）Recruit high-caliber talent（including talent with OBU, with the overseas investment trends of Taiwanese enterprises. foreign exchange, and mainland business experience） Strengthening Risk Control Mechanisms This will allow SKB to upgrade its international position and and provide training to upgrade staff’s expertise in transform as an international bank, participate in international In 2010, SKL will continue to refine and promote risk corporate finance. financial organizations, and raise its global profile. This management based on the following four-pillar framework: （4）Form a task force to promote corporate banking and strategy will also better position SKB to underwrite and Promote a risk management culture : Raising risk management strengthen solicitation and negotiation ability in this participate in international syndicated loans, provide more awareness is an ongoing process. Risk management is not just the sector. comprehensive services, and improve its competitive position. duty of the risk management department. Rather, the establishment （5）Enhance global e-banking（GEB）functions. of a comprehensive risk management culture involves participation Leveraging Consumer Banking Strengths to Boost （6）Establish a platform for foreign exchange systems and of the entire company, from upper management to the operation Developing the Mainland and Other Overseas Performance operations, acquire related IT systems, and provide level. Therefore, SKL will actively promote a risk management Insurance Markets SKB will continue to steadily expand its consumer banking customers with faster and more convenient services. culture and strengthen awareness of and support for risk Shin Kong & HNA Life Insurance, a joint venture between services to deliver higher profits and performance than 2009. management at all levels. （7）Join Factors Chain International（FCI）to strengthen SKL and China's HNA Group, obtained its business license in The bank will further broaden customer sources, expand Two-Factor services for international accounts market share, raise interest spreads and, at the same time, Establish comprehensive risk management mechanisms: In March 2009 and officially launched operations in Beijing in receivable. maintain high asset quality to enhance competitive advantages addition to conducting regular reviews and updating risk April. The company is establishing other branches in the （） in consumer banking. management guidelines, SKL developed new guidelines to Beijing area to actively expand share in the local insurance 8 In conjunction with the future establishment of SKB's strengthen risk management for loans and real estate assets market. It also plans to open branch companies in other Hong Kong branch, extend operations in the Asia-Pacific Strictly Controlling Asset Quality and last year. The company also revised measures on single mainland provinces to progressively and steadily grow and region, plan financing channels for mainland-based Strengthening Overdue Loan Recovery counterparty risk limits to more tightly control such risk. This deepen operations. In addition, SKL received approval from Taiwanese enterprises, and seize new opportunities to year, SKL will continue to refine overall credit risk evaluation the Investment Commission of the Ministry of Economic Affairs serve such businesses. SKB will closely follow changes in the overall economic models, establish new credit risk models, and enhance loan in May 2008 to establish a subsidiary in Vietnam. In future, the （9）Implement a profit sharing mechanism for referral of environment to control credit risk. Lending to high-quality risk monitoring mechanisms. company will progressively develop in the insurance market syndicated loans and a system for regional division of enterprises will be encouraged; credit check, inspection, and there. Drawing on more than 40 years of successful experience loan operations; fully leverage channels to market post-loan management will be strengthened. The bank will also Establish risk assessment tools: SKL will continue to in Taiwan, SKL will grow overseas subsidiaries with an aim to corporate banking services; strengthen local management; enhance assessment of non-performing loans, and expedite implement phase 2 of the Algo market risk management system making them the best insurance providers in their local and further cultivate customer bases. collection procedures on loans where the possibility of which covers various types of complex financial products and markets, while also moving SKL towards the goal of developing returning to normal payment is nonexistent. Through these products lacking open market pricing, such as structured notes, as a comprehensive and international company. Expanding Asian Operations initiatives, SKB aims to raise recovery rates, write off bad interest rate-linked products, CDOs and CMOs. The new loans, and improve overall asset quality. system is scheduled to officially come online in June this year, Shin Kong Bank Taiwanese enterprises widely use Hong Kong-based providing SKL with more comprehensive risk assessment tools. Taiwanese banks to finance their operations in mainland Training Specialist Talent and Providing Shin Kong Bank (SKB) will carry out the following SKL will also adopt the R++ market risk assessment system to China. SKB’s Hong Kong branch, when opened, will focus on Comprehensive Services improve its ability to value structured products and assess risk, business plan in 2010 to respond to the changing financial developing deposit and loan services, international People are SKB's biggest asset. The bank will therefore and enhance risk management for customized structured environment and maintain stable profits. trade-related transaction and remittance services, and continue to cultivate key organizational strengths to ensure the products. In the area of asset and liability management (ALM), international finance services for Taiwanese businesses in the bank's competitive advantages. SKB's "Employee Learning, the company has introduced stochastic ALM models for future Balancing Corporate and Consumer Banking mainland area. SKB will also expand into derivatives and Development and Career Planning" system divides all job analysis of asset and liability optimization. SKB is a relatively small bank in the market. In order to wealth management services. functions into 10 categories to find the best position for each expand scale and market share, SKB will continue a strategy of Establishing risk performance systems: As SKL's risk SKB selected Hong Kong for branch establishment mainly employee based on their aspirations and experience. For each client segmentation and integrated marketing. The bank will management culture and risk assessment ability develop, the to build specialist talent in international finance, expand job category, SKB provides professional and core competency also upgrade branch service quality and actively grow company will gradually implement a risk-adjusted bonus system that overseas operations, and forge closer international linkages. training to guide development of specialized skills. SKB also corporate banking business. Major initiatives include: considers an employee’s long-term performance and reduces The Hong Kong branch will also provide a base for expansion uses job rotation, promotion, evaluation and other HR short-term incentive bonus payments to better balance risk and return. （1）Continue to add full-service branches for promoting in the Asia-Pacific region, serve Taiwanese corporate clients management measures to develop a diverse talent pool to help

32 33 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac time, SKL will further strengthen linkages between its corporate banking business. with operations in mainland China, as well as provide financing investment-linked policies and Shin Kong Investment Trust （2）Strengthen branch functions and establish a comprehensive to overseas Chinese. In view of the limited growth potential for funds. By fully utilizing the resources of SKFH, SKL aims to platform for foreign exchange operations, as well as traditional services in Taiwan's increasingly saturated banking provide customers with a comprehensive range of financial expand the scope and depth of such services. market, SKB’s strategy is to actively explore new market niches services and realize synergies from integrated marketing. and develop a foundation for business expansion consistent （3）Recruit high-caliber talent（including talent with OBU, with the overseas investment trends of Taiwanese enterprises. foreign exchange, and mainland business experience） Strengthening Risk Control Mechanisms This will allow SKB to upgrade its international position and and provide training to upgrade staff’s expertise in transform as an international bank, participate in international In 2010, SKL will continue to refine and promote risk corporate finance. financial organizations, and raise its global profile. This management based on the following four-pillar framework: （4）Form a task force to promote corporate banking and strategy will also better position SKB to underwrite and Promote a risk management culture : Raising risk management strengthen solicitation and negotiation ability in this participate in international syndicated loans, provide more awareness is an ongoing process. Risk management is not just the sector. comprehensive services, and improve its competitive position. duty of the risk management department. Rather, the establishment （5）Enhance global e-banking（GEB）functions. of a comprehensive risk management culture involves participation Leveraging Consumer Banking Strengths to Boost （6）Establish a platform for foreign exchange systems and of the entire company, from upper management to the operation Developing the Mainland and Other Overseas Performance operations, acquire related IT systems, and provide level. Therefore, SKL will actively promote a risk management Insurance Markets SKB will continue to steadily expand its consumer banking customers with faster and more convenient services. culture and strengthen awareness of and support for risk Shin Kong & HNA Life Insurance, a joint venture between services to deliver higher profits and performance than 2009. management at all levels. （7）Join Factors Chain International（FCI）to strengthen SKL and China's HNA Group, obtained its business license in The bank will further broaden customer sources, expand Two-Factor services for international accounts market share, raise interest spreads and, at the same time, Establish comprehensive risk management mechanisms: In March 2009 and officially launched operations in Beijing in receivable. maintain high asset quality to enhance competitive advantages addition to conducting regular reviews and updating risk April. The company is establishing other branches in the （） in consumer banking. management guidelines, SKL developed new guidelines to Beijing area to actively expand share in the local insurance 8 In conjunction with the future establishment of SKB's strengthen risk management for loans and real estate assets market. It also plans to open branch companies in other Hong Kong branch, extend operations in the Asia-Pacific Strictly Controlling Asset Quality and last year. The company also revised measures on single mainland provinces to progressively and steadily grow and region, plan financing channels for mainland-based Strengthening Overdue Loan Recovery counterparty risk limits to more tightly control such risk. This deepen operations. In addition, SKL received approval from Taiwanese enterprises, and seize new opportunities to year, SKL will continue to refine overall credit risk evaluation the Investment Commission of the Ministry of Economic Affairs serve such businesses. SKB will closely follow changes in the overall economic models, establish new credit risk models, and enhance loan in May 2008 to establish a subsidiary in Vietnam. In future, the （9）Implement a profit sharing mechanism for referral of environment to control credit risk. Lending to high-quality risk monitoring mechanisms. company will progressively develop in the insurance market syndicated loans and a system for regional division of enterprises will be encouraged; credit check, inspection, and there. Drawing on more than 40 years of successful experience loan operations; fully leverage channels to market post-loan management will be strengthened. The bank will also Establish risk assessment tools: SKL will continue to in Taiwan, SKL will grow overseas subsidiaries with an aim to corporate banking services; strengthen local management; enhance assessment of non-performing loans, and expedite implement phase 2 of the Algo market risk management system making them the best insurance providers in their local and further cultivate customer bases. collection procedures on loans where the possibility of which covers various types of complex financial products and markets, while also moving SKL towards the goal of developing returning to normal payment is nonexistent. Through these products lacking open market pricing, such as structured notes, as a comprehensive and international company. Expanding Asian Operations initiatives, SKB aims to raise recovery rates, write off bad interest rate-linked products, CDOs and CMOs. The new loans, and improve overall asset quality. system is scheduled to officially come online in June this year, Shin Kong Bank Taiwanese enterprises widely use Hong Kong-based providing SKL with more comprehensive risk assessment tools. Taiwanese banks to finance their operations in mainland Training Specialist Talent and Providing Shin Kong Bank (SKB) will carry out the following SKL will also adopt the R++ market risk assessment system to China. SKB’s Hong Kong branch, when opened, will focus on Comprehensive Services improve its ability to value structured products and assess risk, business plan in 2010 to respond to the changing financial developing deposit and loan services, international People are SKB's biggest asset. The bank will therefore and enhance risk management for customized structured environment and maintain stable profits. trade-related transaction and remittance services, and continue to cultivate key organizational strengths to ensure the products. In the area of asset and liability management (ALM), international finance services for Taiwanese businesses in the bank's competitive advantages. SKB's "Employee Learning, the company has introduced stochastic ALM models for future Balancing Corporate and Consumer Banking mainland area. SKB will also expand into derivatives and Development and Career Planning" system divides all job analysis of asset and liability optimization. SKB is a relatively small bank in the market. In order to wealth management services. functions into 10 categories to find the best position for each expand scale and market share, SKB will continue a strategy of Establishing risk performance systems: As SKL's risk SKB selected Hong Kong for branch establishment mainly employee based on their aspirations and experience. For each client segmentation and integrated marketing. The bank will management culture and risk assessment ability develop, the to build specialist talent in international finance, expand job category, SKB provides professional and core competency also upgrade branch service quality and actively grow company will gradually implement a risk-adjusted bonus system that overseas operations, and forge closer international linkages. training to guide development of specialized skills. SKB also corporate banking business. Major initiatives include: considers an employee’s long-term performance and reduces The Hong Kong branch will also provide a base for expansion uses job rotation, promotion, evaluation and other HR short-term incentive bonus payments to better balance risk and return. （1）Continue to add full-service branches for promoting in the Asia-Pacific region, serve Taiwanese corporate clients management measures to develop a diverse talent pool to help

32 33 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac achieve the bank's strategic objectives. service skills and professional know-how. SKB also hopes to Last 5 Years – Total Assets Under management group channels. establish mechanisms for customer feedback in order to better In order to enhance the professional ability of bank staff in （Public Funds） Unit: NT$ Millions The promotion of funds under investment-linked policies will understand the banking experience and expectation of foreign exchange and lending, and thereby accelerate help SKIT expand the scale of its funds under management. The customers. In addition, SKB will continue to carry out mystery establishment of a foreign exchange platform, SKB will provide 54,378 company will also regularly analyze and closely track overseas customer service inspections to ensure consistently high 47,618 entry level and advanced training on corporate banking and 46,892 markets to provide guidance to life insurance agents. service quality. foreign exchange operations from the end of 2009 to the third 33,311 33,370 Furthermore, the company will develop an integrated information quarter of 2010. Such training will be provided to all employees at platform for online delivery of real-time global data and operational units and related departments throughout the bank. Shin Kong Investment Trust information.

Business focus of Shin Kong Investment Trust (SKIT) in In 2010, SKIT also will continue to develop cross-selling Leveraging SKFH Resources to Fully Realize 2010 will be on adding overseas products and raising new channels with other SKFH subsidiaries. The company will jointly Benefits from Integrated Marketing offshore funds, including funds offered by Robeco Investment formulate short-term, medium-term and long-term objectives with Management Group. Resources of Shin Kong Bank (SKB) and SKFH brings together subsidiaries in four distinct other group subsidiaries, as well as carry out a series of win-win Shin Kong Life (SKL) will be utilized to provide customers with industries. SKB will utilize group resources across these cooperation projects to develop business. greater choices for asset allocation. Specific business plans sectors to provide customers with a broad spectrum of services are as follows: and the convenience of one-stop shopping. Through Business Development Plans integration of different products and cross-selling, the bank will 2005 2006 2007 2008 2009 1. Expansion of Direct Sales Team provide customer-tailored solutions to increase revenue Issuing Public and Private Placement Funds In addition to launching new domestic products, SKIT contributions from the bank's wealth management, mortgage, In the second quarter of 2010, SKIT's public fund emphasis personal loan, and credit card customers. SKB will also work will be on cross-strait advantages, with products aimed at the with Shin Kong affiliates to create opportunities to serve business opportunities in China. The company will introduce the Revenue Mix Unit: NT$ Thousands Management fee income 90.68% publicly listed companies and small and medium enterprise offshore "Shin Kong Cross Strait Selective Fund", and it plans to clients, tapping SKFH's integrated marketing resources to launch other offshore products to further round out the Consulting fee income CategoryS2009 Amount hare of Total（％） increase profitability. company's fund family and provide customers with more options. 5.48% Furthermore, in the fourth quarter of 2009, SKIT was licensed to Management fee income 225,015 90.68 engage in futures trust fund operations. The company has Sales fee income 9,521 3.84 Sales fee income designated a specialized unit to develop such funds and expects 3.84% Consulting fee income 13,604 5.48 preparations to be completed at the end of 2010. Total 248,140100.00 Introducing and Developing Offshore Funds In February 2010, SKIT received approval from the competent authority to serve as master agent for five Robeco funds, including the Robeco Emerging Markets Equities Fund, Robeco Asia Pacific Equities Fund, Robeco US Premium Equities Fund, Robeco Chinese Equities Fund, and Robeco Assets Managed Unit: NT$ Millions Equity funds Health & Wellness Equities Fund. SKIT will successively （incl. portfolio funds）40.44% Upgrading Service Quality and Raising Efficiency introduce these funds in Taiwan, further expanding the scope CategoryS2009 Amount hare of Total（％） of the company's offshore fund business. In the area of To continue implementation of the "Total Customer Discretionary funds Equity funds (incl. portfolio funds) 13,575 40.44% Satisfaction (TCS) Plan", the TCS task force will transfer its discretionary trusts, SKIT will continue to seek outsourced fund 0.59% management opportunities to maintain and expand its scale responsibilities to the human resources department in 2010. Quasi money market fund 17,535 52.24% Balanced funds "Excellent Service" will be embedded into the bank’s normal and level of discretionary trust management. 6.73% Balanced funds 2,260 6.73% operating procedures and integrated with its overall effort to raise HR quality. These developments show that SKB has Integrating Group Resources Discretionary funds 199 0.59% passed a new milestone in customer satisfaction and achieved SKITwillcontinue to promote funds under investment-linked Total 33,569 100.00% tangible results in building a bank-wide culture of service policies with SKL. Future products will be developed based on Quasi money market fund quality. Related work in 2010 will include the continued close analysis of changes in the economic environment as well 52.24% promotion and establishment of training courses to build as customer demand and will be marketed through integrated

34 35 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac achieve the bank's strategic objectives. service skills and professional know-how. SKB also hopes to Last 5 Years – Total Assets Under management group channels. establish mechanisms for customer feedback in order to better In order to enhance the professional ability of bank staff in （Public Funds） Unit: NT$ Millions The promotion of funds under investment-linked policies will understand the banking experience and expectation of foreign exchange and lending, and thereby accelerate help SKIT expand the scale of its funds under management. The customers. In addition, SKB will continue to carry out mystery establishment of a foreign exchange platform, SKB will provide 54,378 company will also regularly analyze and closely track overseas customer service inspections to ensure consistently high 47,618 entry level and advanced training on corporate banking and 46,892 markets to provide guidance to life insurance agents. service quality. foreign exchange operations from the end of 2009 to the third 33,311 33,370 Furthermore, the company will develop an integrated information quarter of 2010. Such training will be provided to all employees at platform for online delivery of real-time global data and operational units and related departments throughout the bank. Shin Kong Investment Trust information.

34 35 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Voluntary automobile plans to introduce several different types of offshore funds to colleagues through customer cultivation, new market Revenue Mix Unit: NT$ Millions Marine and other insurance 0.2% insurance 31.2% expand investment options in 2010. The company's direct sales development, agent training, creation of monthly revenue and 2009 Premium Fire insurance 7.5% team will continue to undergo training to build specialized increasing agent retention. All these aim to achieve a win-win CategoryShare of Total（％） Revenue product knowledge, improve business development ability, and situation for Shin Kong's life and non-life insurance businesses. Voluntary automobile insurance 427 31.2% thereby achieve this year's growth targets. SKIB will continue to leverage the extensive agent resources, Compulsory comprehensive product range, and outstanding services of motorcycle Moreover, in order to enhance customer relations and Personal accident insurance 427 31.2% SKFH to further improve performance. insurance 14.8% provide an even higher quality of service, SKIT will strengthen Compulsory automobile insurance 206 15.1% regular reviews of customer profit-loss status, track customer's Developing Innovative Non-life Products overall investment picture, and provide the best possible Compulsory motorcycle insurance 203 14.8%

wealth management advice. New products are constantly introduced in Taiwan's Fire insurance 103 7.5% insurance market. In this highly competitive environment, SKIB 2. Channel Development Strategies and Objectives will continue to work with Shinkong Insurance to develop new Marine and other insurance 3 0.2% Apart from its direct sales team, SKIT also markets products that satisfy customer needs and are suitable for sale Total Premium Income 1,369 100.0% Compulsory automobile through Shin Kong Life Insurance (SKL) channels. Such insurance 15.1% through bank and life insurance channels. In addition to its Personal accident long-term partners, the company has shifted its channel focus products include third party motorcycle liability insurance, insurance 31.2% in recent years to SKL, SKB and other SKFH subsidiaries. SKIT traffic accident insurance with injury rider, the “An-Shin-Da-Li” awards for customer acquisition and special project awards. SKIB will provide a series of training programs such as BTS also divided its service team into northern, central, and policy which combines commercial fire insurance with public Such incentives will increase agent income as well as training for new non-life agents, qualification exam courses for southern regions to improve interaction with clients and service liability insurance, motorcycle theft insurance, and package strengthen the company's competitive position in the market. non-life agents, AS3 classes, and non-life instructor training quality. policies such as the "Yi Lu Shun Feng" and "Jhu Bi An" policies. These products will position SKIB to tap new markets, expand classes. The company also will visit operation units, formulate In 2010, SKIB aims to increase the number of automobile In 2010, SKIT will strengthen channel training, including incentive measures, assist life insurance agents to obtain customer base, and create new business opportunities. insurance policies (including compulsory insurance and voluntary training and consulting services at regional SKL offices, to professional licenses, improve their professional knowledge, insurance) by 15%. Since the number of policies is a barometer of enhance fund promotion. In addition, the company will continue and increase agent registration rates. Upgrading Non-life Professional Ability business activity, SKIB’s performance metrics will shift to emphasize to dispatch personnel to SKB branches across Taiwan and policy number first and premium amount second. This will hopefully arrange training courses, fund seminars, and other activities for SKIB attaches high importance to employee education 4.Developing new non-life packages: SKIB is introducing the encourage agents to become more active in cultivating customers SKB's wealth management officers to deepen understanding of and training. In cooperation with SKL's Training and Education "New Yi Lu Shun Feng" automobile insurance package and and help SKL sustain high life insurance sales. SKIT’s products and promote new funds. Department, the company arranges weekly 90-minute basic "New Travel Safety" policy to provide customers with even courses on non-life insurance (BTS) and advanced monthly greater protection and choice. 3. Customized Service courses (AS3) at SKL's Educational Training Center. It also Establishing a "Research, Training, Planning and 5.Emphasizing claims services: When policyholders experience arranges licensing courses for personnel hired within the Information Service Team" to Provide attentive In 2010, SKIT will introduce new online services for the losses, SKIB will seek benefit payments from the non-life insurer previous two months (PIS) and produces sales manuals on Service company's wealth management customers. Such services will as soon as liability is determined to protect the rights and non-life insurance to support SKL agents in the sales process. include a new home page, updated e-newsletter content, as In order to provide even better service, SKIB will establish a interests of its customers. The company will also provide updated Furthermore, SKIB continues to promote various specialized well as more frequent and broader access to e-newsletter "Research, Training, Planning and Information Service Team" to reports during the claims handling process so customers can non-life insurance courses taught by outstanding lecturers from reports, to help investors save time and effort in tracking pay attention to the professional ability and enthusiasm of track progress of their claims. investment performance. Furthermore, the website will offer a Shinkong Insurance and the Training and Education company service personnel, as well as provide customers with the wide selection of financial spreadsheets so investors can Department at SKL, as well as arrange seminars on non-life best insurance services possible. Specific measures include the 6.Strengthening appeal channels: Customers who experience compare rates of return under one-time payment, regular insurance at SKL offices. It also encourages SKL employees to following: improper marketing practices or have claims disputes can take non-life licensing exams and register with the Non-life call SKIB's toll-free support line for assistance. This service payment, and total payment scenarios. Other functions include 1.Expanding service network: SKIB will cooperate with SKL's Insurance Association. aims to protect customer rights and interests and enhance automated stop-loss/profit notification and automatic repurchase. nationwide service centers and call center to provide high-quality Investors can also receive email notifications from SKIT when customer satisfaction. Increasing Agent Income non-life insurance services to walk-in and call-in customers. rates of return reach certain preset levels. Overall, SKIT hopes The "Research, Training, Planning and Information 2.Upgrading administrative efficiency: In addition to upgrading to provide customers with the most cost-effective and Through selling non-life policies, SKL agents not only can Service Team" will be responsible for research, training, its computer system and making its website more convenient online service to help them invest with greater earn commissions but also provide a more complete range of planning, information and customer service affairs, including user-friendly, SKIB will further coordinate with non-life peace of mind. services to customers and increase opportunities to interact with the deep cultivation of service concepts throughout SKIB. The insurers to expedite policy underwriting, ensure 100% clients, enhancing their life insurance business. SKIB will team will also review and improve administrative procedures, accuracy of policy content, and provide customers with Taiwan Shin Kong Insurance Brokers continue to negotiate with non-life insurers to increase develop new policy packages, reduce claims time, streamline high-quality administrative services. The core value of Taiwan Shin Kong Insurance Brokers commission rates and secure additional funds for sales operations, raise overall service efficiency to achieve full (SKIB) is in creating business opportunities for life insurance incentives, including monthly manager bonuses, competitive 3.Establishing systematic non-life licensing courses and training: customer satisfaction.

36 37 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Voluntary automobile plans to introduce several different types of offshore funds to colleagues through customer cultivation, new market Revenue Mix Unit: NT$ Millions Marine and other insurance 0.2% insurance 31.2% expand investment options in 2010. The company's direct sales development, agent training, creation of monthly revenue and 2009 Premium Fire insurance 7.5% team will continue to undergo training to build specialized increasing agent retention. All these aim to achieve a win-win CategoryShare of Total（％） Revenue product knowledge, improve business development ability, and situation for Shin Kong's life and non-life insurance businesses. Voluntary automobile insurance 427 31.2% thereby achieve this year's growth targets. SKIB will continue to leverage the extensive agent resources, Compulsory comprehensive product range, and outstanding services of motorcycle Moreover, in order to enhance customer relations and Personal accident insurance 427 31.2% SKFH to further improve performance. insurance 14.8% provide an even higher quality of service, SKIT will strengthen Compulsory automobile insurance 206 15.1% regular reviews of customer profit-loss status, track customer's Developing Innovative Non-life Products overall investment picture, and provide the best possible Compulsory motorcycle insurance 203 14.8% wealth management advice. New products are constantly introduced in Taiwan's Fire insurance 103 7.5% insurance market. In this highly competitive environment, SKIB 2. Channel Development Strategies and Objectives will continue to work with Shinkong Insurance to develop new Marine and other insurance 3 0.2% Apart from its direct sales team, SKIT also markets products that satisfy customer needs and are suitable for sale Total Premium Income 1,369 100.0% Compulsory automobile through Shin Kong Life Insurance (SKL) channels. Such insurance 15.1% through bank and life insurance channels. In addition to its Personal accident long-term partners, the company has shifted its channel focus products include third party motorcycle liability insurance, insurance 31.2% in recent years to SKL, SKB and other SKFH subsidiaries. SKIT traffic accident insurance with injury rider, the “An-Shin-Da-Li” awards for customer acquisition and special project awards. SKIB will provide a series of training programs such as BTS also divided its service team into northern, central, and policy which combines commercial fire insurance with public Such incentives will increase agent income as well as training for new non-life agents, qualification exam courses for southern regions to improve interaction with clients and service liability insurance, motorcycle theft insurance, and package strengthen the company's competitive position in the market. non-life agents, AS3 classes, and non-life instructor training quality. policies such as the "Yi Lu Shun Feng" and "Jhu Bi An" policies. These products will position SKIB to tap new markets, expand classes. The company also will visit operation units, formulate In 2010, SKIB aims to increase the number of automobile In 2010, SKIT will strengthen channel training, including incentive measures, assist life insurance agents to obtain customer base, and create new business opportunities. insurance policies (including compulsory insurance and voluntary training and consulting services at regional SKL offices, to professional licenses, improve their professional knowledge, insurance) by 15%. Since the number of policies is a barometer of enhance fund promotion. In addition, the company will continue and increase agent registration rates. Upgrading Non-life Professional Ability business activity, SKIB’s performance metrics will shift to emphasize to dispatch personnel to SKB branches across Taiwan and policy number first and premium amount second. This will hopefully arrange training courses, fund seminars, and other activities for SKIB attaches high importance to employee education 4.Developing new non-life packages: SKIB is introducing the encourage agents to become more active in cultivating customers SKB's wealth management officers to deepen understanding of and training. In cooperation with SKL's Training and Education "New Yi Lu Shun Feng" automobile insurance package and and help SKL sustain high life insurance sales. SKIT’s products and promote new funds. Department, the company arranges weekly 90-minute basic "New Travel Safety" policy to provide customers with even courses on non-life insurance (BTS) and advanced monthly greater protection and choice. 3. Customized Service courses (AS3) at SKL's Educational Training Center. It also Establishing a "Research, Training, Planning and 5.Emphasizing claims services: When policyholders experience arranges licensing courses for personnel hired within the Information Service Team" to Provide attentive In 2010, SKIT will introduce new online services for the losses, SKIB will seek benefit payments from the non-life insurer previous two months (PIS) and produces sales manuals on Service company's wealth management customers. Such services will as soon as liability is determined to protect the rights and non-life insurance to support SKL agents in the sales process. include a new home page, updated e-newsletter content, as In order to provide even better service, SKIB will establish a interests of its customers. The company will also provide updated Furthermore, SKIB continues to promote various specialized well as more frequent and broader access to e-newsletter "Research, Training, Planning and Information Service Team" to reports during the claims handling process so customers can non-life insurance courses taught by outstanding lecturers from reports, to help investors save time and effort in tracking pay attention to the professional ability and enthusiasm of track progress of their claims. investment performance. Furthermore, the website will offer a Shinkong Insurance and the Training and Education company service personnel, as well as provide customers with the wide selection of financial spreadsheets so investors can Department at SKL, as well as arrange seminars on non-life best insurance services possible. Specific measures include the 6.Strengthening appeal channels: Customers who experience compare rates of return under one-time payment, regular insurance at SKL offices. It also encourages SKL employees to following: improper marketing practices or have claims disputes can take non-life licensing exams and register with the Non-life call SKIB's toll-free support line for assistance. This service payment, and total payment scenarios. Other functions include 1.Expanding service network: SKIB will cooperate with SKL's Insurance Association. aims to protect customer rights and interests and enhance automated stop-loss/profit notification and automatic repurchase. nationwide service centers and call center to provide high-quality Investors can also receive email notifications from SKIT when customer satisfaction. Increasing Agent Income non-life insurance services to walk-in and call-in customers. rates of return reach certain preset levels. Overall, SKIT hopes The "Research, Training, Planning and Information 2.Upgrading administrative efficiency: In addition to upgrading to provide customers with the most cost-effective and Through selling non-life policies, SKL agents not only can Service Team" will be responsible for research, training, its computer system and making its website more convenient online service to help them invest with greater earn commissions but also provide a more complete range of planning, information and customer service affairs, including user-friendly, SKIB will further coordinate with non-life peace of mind. services to customers and increase opportunities to interact with the deep cultivation of service concepts throughout SKIB. The insurers to expedite policy underwriting, ensure 100% clients, enhancing their life insurance business. SKIB will team will also review and improve administrative procedures, accuracy of policy content, and provide customers with Taiwan Shin Kong Insurance Brokers continue to negotiate with non-life insurers to increase develop new policy packages, reduce claims time, streamline high-quality administrative services. The core value of Taiwan Shin Kong Insurance Brokers commission rates and secure additional funds for sales operations, raise overall service efficiency to achieve full (SKIB) is in creating business opportunities for life insurance incentives, including monthly manager bonuses, competitive 3.Establishing systematic non-life licensing courses and training: customer satisfaction.

36 37 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Giving Back to Society

SKFH has long been dedicated to the principles of corporate social responsibility and working for a better society and deep-rooted solutions to the social challenges of our day: supporting indigenous education, caring for women's health, the wider world. Through Shin Kong Life Scholarship Foundation, Shin Kong Life Foundation and Shin Kong Bank passing down the wisdom of our elders, and encouraging corporate volunteerism. In these and other public service Education Foundation, SKFH and its subsidiaries are deeply involved in public service in Taiwan and beyond, from areas, Shin Kong has been an industry pacesetter. The group also holds the annual Shin Kong Tower Run-up under campaigns to heighten awareness of energy conservation to the introduction of strategic partnerships in philanthropy health and safety related themes, earning broad support from young people, groups and the general public. work. In partnership with social welfare groups, Shin Kong is promoting a number of service projects seeking

38 39 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Giving Back to Society

Shin Kong Financial Holding (SKFH) has long been This activity is the largest global activity in support of energy Philanthropy and Public Welfare rate of over 90%. Moreover, in 2009, the foundation and SKB dedicated to serving society, true to the principles of corporate conservation and carbon reduction. Developing Strategic Philanthropy held a money management seminar in Puli Township to teach social responsibility. The Shin Kong Life Scholarship SKFH has also been promoting energy conservation parents in indigenous communities how to avoid becoming Foundation, Shin Kong Life Foundation (SKLF), and Shin Kong Shin Kong Life Foundation (SKLF) approaches its mission internally through initiatives like turning up air conditioner victims of fraud or bankruptcy, with an aim to minimize Bank Education Foundation were all founded to carry out this of social service based on the concept of "strategic temperatures and asking employees to dress lightly in summer. financially related social problems. Over 90% of the mission in both Taiwan and the wider world. The reach of philanthropy". In partnership with other philanthropic groups, Compared with 2006 when the program was initiated, energy participating parents said that the seminar was highly SKFH's philanthropic work is broad-based, extending from the the foundation has launched and supported numerous saving measures introduced at the Shin Kong Life Tower beneficial. promotion of energy conservation and educational support for programs that seek to address the root causes of issues facing reduced electricity usage by 13.15 kilowatts per square meter, indigenous youth to heightening society's contact with the society today. SKLF Executive Director Cynthia Wu emphasizes that in eliminating nearly 240 metric tons of carbon emissions. In physically and mentally handicapped and caring for the elderly future, the foundation will focus on raising the quality of classes future, SKFH will gradually install energy-saving lights, adjust and women's health. Shin Kong is also actively involved in 1. Educational Support for Indigenous Youth for indigenous children to improve their chances of academic illumination of advertising signs depending on seasonal promoting traditional culture, basic insurance education, and a advancement as well as stimulate and motivate kids to learn. changes, and insulate buildings to retain cooled air. The Smangus and Cinsbu tribes in Jianshi Township, range of other public service activities. Hsinchu County are located in remote areas, forcing most tribe The foundation also hopes that these students will fully develop In order to combat global warming, SKL, SKB and the parents to look for work outside the community. This has their potential, and ultimately contribute their abilities in their Taiwan Institute for Sustainable Energy teamed up to hold the created a situation in which the children are often reared by hometowns. 2009 "Shin Kong National Children's Drawing Contest" under their grandparents. Moreover, due to frequent natural disasters the theme "Loving the World Together for a Brighter Future". and the difficulty earning a livelihood, many families leave the 2. Women's Health This activity promoted the concepts of energy conservation and tribes for Chutung Township. The newly relocated parents are According to statistics compiled by the Department of carbon reduction to foster green habits early in life. often too busy to fully care for their children or help with Health (DOH), breast cancer has surpassed cervical cancer as SKL has also been working tirelessly in the area of wildlife homework, resulting in a high dropout rate. the biggest killer of women in Taiwan. Since 2007, SKLF and conservation. In 1988, the company celebrated its 25th SKLF and the Rainbow Project have therefore been Shin Kong Wu Ho-Su Memorial Hospital have been working anniversary by donating over NT$300 million to the Zoological collaborating to offer supplementary classes for young people together to issue coupons for ultrasound breast checkups. This Society of Taipei to build the "Shin Kong Special Exhibit House" in Smangus, Cinsbu and Chutung. The classes provide has substantially increased the cancer-screening rate and at the Taipei Zoo. This multifunctional facility is dedicated to after-school care to help minimize family problems faced by helped women to discover and treat breast cancer in its early exhibitions of endangered animals and has been used as the indigenous children and help aboriginal youth to compete in the stages. To date, 10,183 women have undergone examinations “Panda House” since 2009. workplace. Since its launch in 2004, the program has improved with support from this program. Environmental Protection and Conservation homework completion rate from 40% originally to 90% at In 2009, SKLF and the Taiwan Breast Cancer Alliance Cherishing the Earth, Caring for the Environment present. Over the past five years, the program has served over trained a total of 78 volunteer breast cancer survivors to staff 45,000 school children, helping them improve their academic In the area of environmental protection, SKFH has long the "Love Breast Hotline", providing support and information on performance. been a pacesetter within Taiwan's financial industry. At 8:30 medical care for the general public. The hotline served an p.m., March 28, 2009, Shin Kong turned electricity off for an Aboriginal youth living in remote rural areas often face average of 310 people per month, or about 4,000 in total, hour at 26 Shin Kong Life (SKL) buildings, 107 Shin Kong Bank environmental limitations, resulting in a lopsided view of urban during 2009. The foundation and SKL also jointly arranged (SKB) branches, outside walls, company occupied floors, life. SKLF therefore has arranged Aboriginal Youth City community courses in Taipei, Taichung and Kaohsiung to advertising signs and other facilities to encourage participation Experience Camps that give young people new practical promote self-examination for breast cancer. In addition, SKLF in conjunction with the "Earth Hour" event organized by the experience and correct concepts of city life. Since 2004, 294 has been promoting breast cancer prevention awareness Sydney-based World Wildlife Fund to combat global warming. students have participated in this activity, with a satisfaction through ATMs at 107 SKB branches nationwide. 40 41 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac Giving Back to Society

The needs of the elderly in Taiwan are becoming 4. Corporate Volunteering increasingly apparent with the aging of society, changing family In August 2009, SKLF formed the "Shin Kong LOHAS structures, and a weakening of traditional concepts of caring for Volunteer Club" to foster a spirit of volunteer service at Shin Kong. one's parents. After assessing the service needs of the elderly The foundation arranged volunteer training courses, including in Taiwan, SKLF and New York-based Elders Share the Arts classes on "Children's Safety Education", "Experiencing Aging (ESTA) introduced the "History Alive" and "Legacy Art Works" Activities", as well as volunteer service activities. Since the club's programs to serve seniors in Taiwan. creation, 144 people have taken classes on volunteering and 63 people have provided a total of 511 hours of volunteer services. In partnership with the Hondao Welfare Foundation, SKLF also arranged "Experiencing Aging Volunteer Day" activities for young SKL employees in northern, central and southern Taiwan. Participants donned patented 'aging' equipment in order to experience first-hand the many difficulties that older The camp is based on the four "WISE" themes of: "Wealth", Registration proceeds plus an additional NT$3 million from SKL people face in their daily life. The activity aimed to build "Improving Health", "Security" and "Earth Care". SKFH were donated to the Taiwan Institute for Sustainable Energy to empathy for the elderly and help people foster healthy ideas affiliates also contribute their expertise and resources to give fund environmental protection research and to Lifeline Express and attitudes towards volunteer services for the elderly. After the kids a fun and educational experience. China to rebuild schools destroyed in the Sichuan earthquake. completing the aging experience course, participating In order to promote art and art education among young The 28th Shin Kong Life Tower Run-up was held in 2009 employees provided volunteer services for elders in their people in Taiwan, SKB has been holding the "Children's Color under the theme of "Running for Wildlife Conservation: community. A total of 130 people took part in the activity, with a Contest" annually during the Lantern Festival since 2006. The Cherishing Pandas, Caring for Black Bears". Supported by the satisfaction rate of over 90%. contest encourages children to develop their creativity and Taipei Zoo and Endemic Species Research Institute under the "History Alive" encourages seniors to share their life stories present the colorful stories of their imagination based on Council of Agriculture, the activity aimed to heighten public with children through interactive classes at elementary schools. In Education and Culture different color schemes. awareness of the plight of the giant pandas and indigenous 2009, "History Alive" was joined by about 360 seniors and 220 Working for a Better Society For the past three years, SKB has also partnered with the Formosan black bear, carry out ecological conservation work, students at Mingde, Shijian and Jian'an elementary schools in Born into poverty, Shin Kong founder Mr. Ho-Su Wu had Kaohsiung City Social Affairs Bureau, Kiss Radio and SKL to and thereby give endangered species more room for survival. Taipei. New training courses were also arranged for program limited educational opportunities growing up. In 1973, he hold the annual "Christmas Dreams Come True" series of leaders, and training was provided to seed instructors at 15 SKFH will continue to act on its commitment to corporate established the Shin Kong Life Scholarship Foundation with an activities, including the "National Gift of Love Donation Drive", Senior Active Learning and Resource Centers, extending the social responsibility by giving back to society and caring for the initial endowment of NT$2 million to help gifted children pursue "Love Fair", and "Christmas Concert". These events have program to 30 areas. The program also incorporated, for the disadvantaged. The company will also continue to promote and a full education. Over the years, the foundation has awarded called on the public to show their heart and warmth to orphans first time, the methods of experimental theater to enhance steadily cultivate public welfare programs to widely spread the NT$209.40 million in scholarships to 95,864 students. and disadvantaged children in the Kaohsiung area. cross-generation interaction. SKLF also launched a "History spirit of love and care and make life better for all. Alive" website (http://www.sklf.org.tw/historyalive/) and produced SKFH also places high importance on basic education in Other Activities a short documentary to promote public understanding of the spirit the insurance field. Through partnerships between the and mission of this program. business and academic sectors, the company has held the Shin Kong Tower Run-up Insurance Star Career Planning and Development Camp, The Shin Kong Life Tower Run-up has been held for 16 "Legacy Art Works" gives seniors with disabilities a Beautiful Life Insurance Discovery Camp, Young Money years since 1994. This activity encourages young people, chance to recount their life stories and memories through the Manager Contest, Shin Kong Children's Treasure Camp, and groups and social figures to support various causes, including creative medium of visual art, with theme-based and other activities to foster healthy concepts about insurance and health, public safety and public service issues. Since its purpose-based guidance from group leaders. Through this money management among young people. inception, the run-up has attracted 152,206 registrants and platform, seniors can pass on their experience to the next 61,157 participants, making it one of the biggest and best-loved generation, like heirlooms passed down to family and friends. Arranged by SKB, the month-long Shin Kong Children's events in Taipei City. The program also helps seniors enjoy a higher quality of life Treasure Camp seeks to improve basic financial knowledge through increased social interaction, rekindling the spark of life and foster good investment and money management concepts The 26th and 27th Shin Kong Life Tower Run-ups were for long-term residents of senior homes. In 2009, SKLF held the and skills among students in the fourth to sixth grades. Over held in 2008 under the respective themes of "Love the World: first international certification ceremony for "Legacy Art Works" 1,600 children have participated in the camp, which has been Running for Energy Conservation and Carbon Reduction" and group leaders, during which 15 people became Taiwan's first held four times during summer vacations from 2006 to 2009. "Remembering 921: Running for Sichuan Earthquake Relief".

42 43 WorldReginfo - 79f9d933-1baa-4d61-84ce-683709d8ebac 3. Handing Down Wisdom internationally certified program leaders.

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