Shin Kong Life adheres to the business philosophy of "stability and prudent", and continues to strengthen corporate governance and safeguard the rights and interests of shareholders and stakeholders through such mechanisms as "strengthening the functions of the Board of Directors", "promoting ethical management", "strengthening the anti-money laundering mechanism", "improving the internal control system" and "implementing information disclosure". We have a Code of Corporate Governance signed by the Board of Directors and continue to use corporate governance as a basis for strengthening the foundation for sustainable business operation. 

SKL is a subsidiary of Shin Kong Financial Holdings Co., Ltd. (SKFH), who owns 100% of its shares, and has established the overall structure and authority of the Board of Directors in accordance with the Company Act, the Insurance Act, the Securities and Exchange Act, and other relevant laws and regulations. 

In 2022, there were 15 Directors (including 3 Independent Directors) who were responsible for the Company's operational policies and oversee and manage the results of ESG initiatives at all levels. As the insurance industry is an industry that is highly supervised by the competent authorities, we attach great importance to the regulation and governance mechanism of the members of the Board of Directors, establish the rules of procedure of the Board of Directors in accordance with the "Regulations Governing Procedure for Board of Directors Meetings of Public Companies", and actively invite credible and professional independent directors to participate in corporate governance and safeguard the rights and interests of all shareholders. 

In order to enhance the effectiveness of the operations of the Board of Directors, the Board of Directors' performance is evaluated annually in accordance with the "Corporate Governance Best Practice Principles for Insurance Companies". In 2022, the average score of directors' self-assessment was 97.7 (full score of 100) and the average score of peer evaluation (overall evaluation) was 94.8 (full score of 100). The performance of the Board of Directors was good. 

Note1: Since the Company is a subsidiary of the parent company, SKFH, which holds all of the issued shares, in accordance with the provisions of the Company Act, the Financial Holding Company Act, and the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, the members of the Board of Directors are all appointed by SKFH after qualification review and approval by the Chairman of SKFH, and the Chairman does not concurrently hold other duties in the management team. 

Note 2: The company voluntarily established an Audit Committee on June 30, 2017, to enhance corporate governance and audit supervision mechanisms.

Board Diversity Policy

In order to ensure the diversity of directors, as well as the ability to review and discuss ESG issues, the parent company, SKFH, follows all the regulations in appointing members of the Board of Directors of the Company, taking into account their professional background. At present, the members of the Board of Directors of SKL specialize in the fields of finance, risk management, insurance, and laws.

Strengthening the Competencies of the Board of Directors

In order to enhance the knowledge of the Board of Directors on responsible management, economic, environmental and social issues, in 2022, we conducted "Information security practices and sustainable operation CSR guidelines and case study," "Challenges and opportunities brought by the net zero era to the financial industry," "Latest development trends in AML/CFT, ethical corporate management, and treating customers fairly," and "Opportunities from the transition to IFRS17." and other courses for a total of 181 training hours, with an average of 12 hours of training per person. In addition, we regularly report to the Board of Directors in accordance with the Money Laundering Prevention Statement. The 15 members of the organization's governance unit have communicated100% of the organization's anti-corruption policies and procedures.

Remuneration Scheme for Directors and Executives

We have established the "Guidelines for the Remuneration of Directors and Supervisors", which are agreed upon with reference to the industry standard with respect to the extent of directors' participation and contribution to the Company's operations. In addition, the remuneration of independent directors is fixed by the Board of Directors' meeting and it is stipulated that they shall not participate in the distribution of SKL's earnings. 

To create long-term value for the Company, shareholders, and employees, senior managers established a bonus policy that is aligned with the Company's sustainable operation and development according to the "Regulations Governing the Distribution of Annual Performance Bonuses" and "Regulations Governing the Distribution of Long-term Incentives," encouraging and linking bonuses to the Company's long-term performance and value creation for shareholders. The Company established "Regulations Governing Senior Manager Performance Management" to effectively evaluate the performance of senior managers and improve business performance.

We established the "Ethical Corporate Management Policy and Best Practice Principles" and the "Ethical Corporate Management Operating Procedures and Code of Conduct" to implement ethical corporate management, and provide training to all employees each year to communicate the value of integrity to all employees. All employees completed ethical corporate management training in 2022. Furthermore, companywide risk of unethical conduct is assessed regularly each year, in order to effectively determine the distribution and control of risk of unethical conduct. We completed an assessment of the risk of unethical conduct at all company locations in 2022; a total of 11 risks were assessed, including bribes, inappropriate sponsorship, unfair competition, and accepting improper gains; overall risk of unethical conduct was assessed to be low.

Conflict of Interest Avoidance Mechanisms

The Company has specifically stipulated in the Rules of Procedure of the Board of Directors' Meeting that those who are stakeholders themselves or the legal entity they represent shall state the material content of their stake at the current Board of Directors' Meeting. In case of adverse effect on the Company's interests, they shall not participate in the discussion and voting, shall recuse themselves from the discussion and voting, and may not exercise their voting rights on behalf of other directors.

Ethics and Integrity Consultation and Reporting

Code of Ethical Conduct 

Directors and managers are required to exercise due diligence in the carrying out their duties, to treat all shareholders fairly, and not to compromise the interests of the Company for the benefit of individuals or particular groups.

Employee Code of Conduct 

We attach great importance to the ethical conduct of our insurance employees and have established the "Personnel Management Rules" and "Rules for Rewards and Punishment of Salespersons" to protect the rights and interests of our policyholders and the Company. There was no incident of acceptance of bribery in 2022.

Regulations for Handling Reported Cases 

The Company has established a reporting mechanism. Anyone who finds that if the Company's or its subsidiary's personnel are committing crimes, fraud, or violating laws and regulations can report to the Company in writing or by email ( whistleblower@skl.com.tw) , and if the case is determined, upon investigated to be true, the relevant personnel will be rewarded and punished in accordance with internal regulations. 

In 2022, we will continue to review the reasonableness and effectiveness of the "Regulations for Handling Reported Cases" in order to improve the reporting channels and strengthen the protection mechanism for whistleblowers. The confidentiality and protection system for whistleblowers includes:

Establish a dedicated unit 

In order to ensure the establishment and implementation of the anti-money laundering system, an independent and dedicated unit is set up, with the Board of Directors designating an executive as the dedicated director, who will report to the Board of Directors and the Audit Committee at least half-yearly, and to immediately report to the Board of Directors and the Audit Committee in accordance with the regulations in the event of a material breach of laws and regulations. In 2022, the Money Laundering and Terrorism Risk Assessment Report was completed for all departments (including those in the field) of the Company, and no significant risks occurred.

100% anti-money laundering education training 

In order to fully communicate the company's internal anti-money laundering policy and mechanism, and to establish a corporate culture that places emphasis on anti-money laundering and combating the financing of terrorism, various anti-money laundering training courses are held for the Board of Directors, general employees, and key departments handling anti-money laundering business. In 2022, the Board of Directors receiving anti-money laundering training was 100%, and specialized supervisors, specialized staff, and the supervisors of the domestic business units receiving the required training was also 100%. 

In addition, for external business partners, the rights and duties of both parties in the prevention of money laundering are regulated through formal contracts, supplementary contracts, etc., to reduce the impact of money laundering and financing of terrorism on the economy and society.

AML Risk Management Measures

The Company conducts an enterprise-wide risk assessment of money-laundering and terrorism financing risk each year. If control measures are assessed to be insufficient, a risk improvement plan must be formulated and submitted to the Board of Directors and Audit Committee, and a dedicated unit tracks the improvement plan until it is completed. 

SKL has established a comprehensive internal control system and an independent auditing unit to conduct audits. The main purpose is to identify and improve operational deficiencies at an early stage and prevent them in a timely manner. We have also strengthened our internal controls to prevent the occurrence of fraud, and have included the rights of policyholders and employees, as well as the prevention of money laundering in our audit plan. For the implementation results and the improvement plans of internal control.

SKL uphold the principle of fair and transparent information, disclosure accurately all financial and business information of the Company. We set up a Chinese and English shareholders' equity website to provide investors with information about the Company's financial and non-financial information, and designated a spokesperson who is responsible for maintaining good communication with the media, investors, and analysts.

Fines Imposed by the Competent Authority and Improvement Measures

A total of 7 fines amounting to NT$9.32 million was imposed in 2022. One of the fines was a major fine (NT$3 million and above) due to deficiencies in fund use and real estate investment management. Related expenses have been recovered for the case and a mechanism for inspecting the reasonableness of expenses reimbursement was established. For the real estate business, we have strengthened the management and inspection of contractors, and also established operating regulations regarding the completeness of data submitted to the Board of Directors. We revised the checklist for stakeholder transactions and strengthened inspection mechanisms for transaction terms and the basis for comparison.