The Ministry of Finance may punish a financial holding company whose capital adequacy ratio (CAR) fell below the government's minimum requirement last year, a local Chinese-language economic daily reported yesterday without naming the financial institution.
William Fong (
The government requires that financial holding companies maintain a capital adequacy ratio of 100 percent.
Shin Kong shares fell NT$0.1, or 1.1 percent, to close at NT$9.1 on the TAIEX. It was the only insurance-holding company stock that fell yesterday.
But Fong said the under-capitalization incident only posed a "short-term shock" to its performance.
But Shin Kong Financial still faces an uphill battle this year despite government plans to raise the cap on domestic insurers' overseas investments in an effort to boost investment returns, Fong said.
Wang Chang-hwa (
Wang said that Shin Kong Life Insurance put aside an additional NT$19.6 billion in reserves last June to cover potential losses stemming from higher policy claims. this may have contributed to parent company Shin Kong Financial's slumping capital adequacy ratio, which fell below 100 percent. Last year, Shin Kong Financial posted a net loss of NT$20.9 billion in the first half, or a loss of NT$8.8 per share.
* Shin Kong Financial posted a net loss of NT$20.9 billion in the first half of last year.
* Its shares fell NT$0.1, or 1.1 percent, to close at NT$9.1.
But by the end of last December, Shin Kong Financial's capital-adequacy ratio returned to normal and met the minimum requirement after the insurance arm reduced its reserves, Wang said.
"Shin Kong Financial's CAR exceeds 130 percent," Wang said, adding that the subsidiary insurer may also turn a profit this year.
Now that Shin Kong has met the minimum requirement, the government is undecided whether any penalties should be dealt out to the company according to the Chinese-language media reports.
Gary Tseng (曾國烈), director general of the finance ministry's Bureau of Monetary Affairs, was unavailable for comment yesterday.
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