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Amendment to Point 2 of Matters to be Noted in the Announcement of Issuance of Bonds with Capital Characteristics by Insurance Companies

Trisha Chang/Wei-Shun Hsu


The Financial Supervisory Commission (FSC) amended point 2 of Matters to be Noted in the Announcement of Issuance of Bonds with Capital Characteristics by Insurance Companies(the "Announcement") as per the letter Ref. No. Jin-Guan-Bao-Cai-Zi No. 10804500531 dated May 3, 2019. The main points are as follows:
 
1.    The bonds with capital characteristics stated in the Announcement refer to convertible corporate bonds, non-cumulative corporate bonds with no maturity date and cumulative corporate bonds with no maturity date with maturities of not less than five years and a lower priority for repayment than other debt obligations of the issuer, or for which the insurance company or its affiliate does not provide any guarantee or security.
 
2.    Convertible corporate bonds refer to subordinated bonds that meet the following conditions:
 
(1) Maturity below ten years;
 
(2) Such subordinated bonds shall be converted into ordinary shares or perpetual preferred shares at the maturity date, and may only be converted into ordinary shares or perpetual preferred shares before the maturity date. Other conversion methods shall be approved by the competent authority.
 
3.    Non-cumulative corporate bonds with no maturity date and cumulative corporate bonds with no maturity date shall be subject to no interest rate markup conditions or other early redemption incentives. However, after ten years of issuance, when calculating the capital adequacy ratio, if the capital adequacy ratio of the insurance industry after the redemption is more than twice the legal minimum capital adequacy ratio at the time of calculation, after obtaining the approval of the competent authority, such bonds may be redeemed in advance.


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