Insurers post huge gains

Total assets of Taiwan's life insurance industry reached NT$2.3 trillion at the end of last year, according to the Life Insurance Association (壽險公會).

That makes Taiwan Asia's second largest life insurance market following Japan. It also makes Taiwan the 11th-largest market for life insurance products worldwide.

According to the association, total revenue from life insurance premiums last year was NT$558.09 billion, up 14 percent over the NT$489.21 billion earned the previous year.

It was also the first time the figure topped NT$500 billion.

Cathay Life Insurance (國泰人壽), the nation's largest life insurer, raked in NT$183.54 billion in premium revenue last year, grabbing a 32.9 percent market share.

Nan Shan Life Insurance (南山人壽) became the the second-largest life insurer, earning NT$99.31 billion for a 17.8 percent market share.

Shin Kong Life Insurance (新光人壽), which for a long time had held the No 2 spot, dropped to the third place position. Shin Kong earned NT$90.6 billion last year for a 16.2 percent market share.

Total premium revenue for domestic life insurers companies came in at NT$500.17 billion last year, an increase of 11.8 percent over the previous year. Total revenue earned by foreign life insurers with Taiwanese operations came to NT$57.92 billion, an increase of 37.6 percent.

Meanwhile, foreign life insurers grabbed a 10.37 percent slice of the market last year, the first time that the figure has ever exceeded 10 percent.

Analysts said that the strong showing by foreign firms indicates that domestic insurers can no longer expect to dominate the market as they have during the previous five decades.

In addition, analysts noted that if life insurance premiums grow 14 percent this year, the industry's total assets industry could top NT$3 trillion (US$100 billion).

However, Taiwan's life insurance market may be entering a "plateau period" in which it would be difficult to maintain high rates of growth as during previous years, according to one analyst.

A number of factors have contributed to the plateau-effect. For example, the insurance penetration rate in Taiwan has reached 107 percent, meaning everyone has at least one policy and some have more than one.

Another cause of slower growth has been the lack of an investment function, which has been banned for years. As a result, the growth rate of first year premiums (FYP) have been unable to maintain 10-plus percent increases as in previous years; in addition, growth rates for total premium revenue have slowed below the 15 percent level.

In addition to Nan Shan Life ascending to the No 2 spot, there have been other major movers.

The US' Aetna Life Insurance (安泰人壽) company, the No 4 player, has been growing fast. Its FYP and total premium revenue grew 47.2 percent and 37.6 percent last year, respectively. Aetna's executive forecasts that it will eventually become the No 3 player in three years.

Another development in the life insurance sector has been competition for the China market.

A number of domestic life insurers -- including Cathay, Shin Kong and Taiwan Life Insurance (台灣人壽) -- have been planning to step across the Taiwan Strait after the government recently gave the go-ahead.

However, a number of foreign players -- such as AIG, the parent company of Nan Shan, Aetna, Allianz, AXA and Manulife -- have already set up branches in cities such as Shanghai (上海) and Canton (廣州).