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China Life faces probe for possible insider trading

The Taiwan Stock Exchange Corp said it will probe China Life Insurance Co (中國人壽) for suspected insider trading after trading volume surged ahead of the insurer's disclosure about its first loss in four years. The stock fell.

China Life executive vice president Tony Hsu (許東敏) denied the allegation.

"We followed the rules in disclosing the information," he said in a telephone interview yesterday.

Shares of China Life, controlled by the nation's fourth-richest family, fell 4.52 percent to close at NT$15.85 after sliding by the 7 percent daily limit on Tuesday after the life insurer decided to comply with stricter accounting rules and reported a loss for last year due to write-offs on depreciated asset values.

"It's a surprise China Life suddenly reported a big loss, and now comes the insider trading report," said Michael On, who manages the equivalent of US$30 million as managing director at Beyond Asset Management Co in Taipei.

"Investors may be dumping the shares because the price likely will fall further," he said.

On Monday, China Life reported an unaudited net loss of NT$3.27 billion (US$104 million), or NT$4.12 a share, for last year on the value of depreciating assets.

China Life had a profit of NT$315 million in 2003.

"We'll look into China Life because some unusual trading happened beforehand," Leon Ku (古台昭), senior executive vice president of the exchange, said in a telephone interview.

He declined to elaborate.

The government adopted accounting rules this year that require companies to count assets at their fair value and to write off idle assets. Companies are required to implement the new rules when they report their earnings for this year. They can apply the changes earlier.

China Life is owned by the family of Jeffrey Koo Sr. (辜濂松), whose net worth has been estimated by Forbes magazine at US$2.5 billion.
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