Although confidence has been restored with respect to the world's economic recovery in 2011, several uncertainties remain such as the high unemployment rates in the U. S. and Europe, the U. S. budget and trade deficit, USA’s second quantitative easing (QE2), and the European debt crisis, etc will present the major obstacles to the world’s economic recovery. Overall speaking, foreign economic research institutions had forecasted the global economic growth in 2011 will be lower than 2010, around 3.7%∼4.4%. Forecasts from domestic economic research institutions had projected Taiwan’s economic growth at 4.24~5.71% in 2011, which is significantly lower than its record growth in 2010.

b. Projected business goals

c. Major operational policies

d The Company’s future development strategies

Since the establishment of ”The Financial Holding Company Act” in July 2001, the number of approved financial holding companies had grown into a total of 15. With the exception of Jih Sun, Yuanta, and Waterland, domestic financial holding companies tend to focus on banking or life insurance businesses. As of December 2010, there were a total of 37 local banks operating in 3,334 domestic branches, increasing by 25 in comparison with the end of 2009. It is evident that over-banking has become a growing problem in Taiwan. Because there are so many banks in Taiwan, most of them had yet to achieve economies of scale, and therefore posed many challenges to the industry's development. Several domestic banks did voluntarily try to size up and improve competitiveness through mergers in recent years; however, the results were insignificant.

The effecting of the "Cross-Strait Financial Supervisory Memorandum of Understanding (MOU) on 16 January 2010 opened up new opportunities for Taiwan's financial industry. In addition, the "Economic Cooperation Framework Agreement" was officially signed on 29 June 2010, which included banking and insurance industries as early beneficiaries, and gave Taiwanese banks the permission to set up branches in Mainland China one year after establishing representative offices. As ECFA became effective on 12 September 2010, it unleashed a massive wave of investments by Taiwanese banks into Mainland China. Currently, there are six local banks whose Chinese branches have commenced operation.

On the other hand, Chinese banks are also eying for the Taiwanese market. Bank of China, Bank of Communication, and China Merchants Bank had already set up offices in Taiwan, while China Construction Bank submitted its application to the Financial Supervisory Commission on 15 February 2011. In addition, Chinese banks had also shown great interests taking part in the ownership of Taiwanese banks, and the following two types of banks present the most attractive acquisition targets to Chinese banks: (1) those that can be controlled; and (2) those that can offer additional values from strategic alliance.

Jih Sun Securities Co., Ltd.

Based on the statistics provided by the Taiwan Stock Exchange Corporation and GreTai Securities Market, the Taiwan Stock Market Index closed at 8,972 at the end of 2010, which was a 9.6% gain compared with the end of 2009. The TSE trade volume in 2010 amounted to NT$28,218.7 billion, which was 4.93% lower than 2009; quarterly variations were +48.2%, -34.0%, -2.3%, and -2.8%. After taking into account the GTSM results, trade volume in 2010 totaled NT$33,852.3 billion, which was 3.1% lower than 2009. With respect to the world market, European and American countries gained between 1.0~16.9% in the previous year, while most Asian countries gained above 5.3% compared with the end of 2009. Shanghai and Tokyo indices were the only ones that fell compared to the 2009 year-end level; the Shanghai Composite Index even fell by as much as 14.3％. According to the year-on-year statistics composed by the Taiwan Stock Exchange Corporation, the market value of Taiwan’s stock market increased from NT$21.0 trillion in 2009 to NT$23.8 trillion in 2010, representing a 13.2% gain; the daily average trading volume decreased from NT$118.2 billion to NT$112.4 billion (4.93% increase); the number of TSE listed companies grew from 741 to 758 (a net increase of 17); the number of securities trading accounts increased from 8.525 million to 8.682 million (approximately 157 thousand new investors). At the end of 2010, there were a total of 152 securities Head Offices and 1,032 branch offices..

Jih Sun Securities Co., Ltd

Jih Sun International Commercial Bank Co., Ltd.

The latest business overview published by the Financial Supervisory Commission in November 2010 showed that pre-tax profit delivered across the entire banking sector from January to November 2010 amounted to NT$170.8 billion, exceeding the previous height of NT$155.3 billion set in 2004 with one more month before year-end. In addition to the record-breaking profitability, overdue loan ratios across the local banking industry had also dropped to 0.7% by the end of November, registering yet another new low. The coverage ratio, calculated as the percentage of loan loss provision to overdue loans, was 142%; this was also a historical high. Year 2010 marked the strongest time in Taiwan's banking history, in terms of risk tolerance; the main reasons behind banks' improved profitability included a reduction in loan loss provisions, widened interest spread, and increased commission revenues.

However, there are a number of uncertainties with regards to local banks' ability to continue delivering record-breaking performance in 2011, given the current circumstances. In 2011, we expect interest spread to widen slightly with further interest rate hike from the Central Bank, whereas commission revenues had begun to slowdown since the third quarter of 2010 mainly because of several uncertainties within the global financial market. Nevertheless, whether or not local banks are able to continue delivering record-breaking profitability still depends on their loan loss provisions, because higher provisions need to be made after implementing the Statement of Financial Accounting Standards No. 34. On the other hand, despite banks' proactive efforts venturing westward into the overseas market, their outcomes and contributions to profitability remained immaterial, and therefore are less exposed to international risks. Taking into consideration both favorable and unfavorable factors, we expect the banking industry will sustain its profitability over the coming year.

Jih Sun International Property Insurance Agency Co., Ltd.

Business perspective:
Business overview – premium structure :
Premiums from underwriting property insurance policies totaled NT$96.21 billion from January to November 2010. Vehicle insurance accounted for the largest portion of direct written premiums at 49.56% (among which, optional vehicle insurance accounted for 34.63% while mandatory vehicle insurance accounted for 14.93%), followed by fire insurance 16.44%, accident insurance 10.8%, marine insurance 8.13%, liabilities insurance 6.22%, engineering insurance 3.98%, other property insurance 1.79%, aviation insurance 1.19%, credit guarantee insurance 1.14%, and health insurance 0.74%.

Business overview - claims structure
Direct insurance claims totaled NT$57.69 billion from January to November 2010. The direct claim ratio amounted to 59.97%; a breakdown by products showed that fire insurance had the highest direct claim ratio at 91.16% , followed by other property insurance 69.08%, vehicle insurance 61.76%, engineering insurance 56.81%, liabilities insurance 45.51%, marine insurance 41.77%, accident insurance 41.17%, health insurance 27.29%, aviation insurance 9.46%, and credit guarantee insurance -9.74%. Note 1. Claim ratio = direct claim / direct premium income Note 2. Vehicle insurance includes optional vehicle insurance and mandatory liabilities insurance.