Shinkong Life Insurance Co (新光人壽), the nation's third-largest life insurer, plans to raise its overseas investment to the regulatory ceiling of 35 percent of its working capital in the next two months, in pursuit of better investment returns, the insurer's executives said yesterday.
"The net return ratio of our overseas investments is around 4 percent, which is higher than that of domestic investments of 2.5 percent to 3 percent," Victor Hsu (
In light of the less than ideal performance of the TAIEX, the insurer plans to pour more than NT$30 billion (US$958.8 million) into its overseas portfolio in the next two months, taking its overseas investment ratio to the regulatory limit of 35 percent of available funds, from the current 30.6 percent, after the authorities gave the green light about two weeks ago, Hsu said.
Under the Insurance Law (
The funds will mainly be invested in the financial products of stable investments like exchange-traded funds, said Hsu Shun-yun (徐順鋆), manager of Shinkong Financial's accounting department.
Shinkong's overseas investments would amount to some NT$300 billion after reaching the ceiling, according to the company. On Thursday, the insurer said it would increase its investments in Taiwan's property market by as much as NT$20 billion this year.
Shinkong Financial, the nation's seventh-biggest financial service provider, posted January-to-April earnings of NT$3.5 billion, up from around NT$3.2 billion a year ago, on consolidated revenue of about NT$78 billion, up from NT$71.2 billion a year ago.
The financial holding firm said yesterday that it will halt the issuance of European Convertible Bonds (ECBs) worth US$250 million, after it decided last month to acquire Macoto Bank (誠泰銀行).
Shinkong Financial lodged the application to financial authorities for the ECB issuance early last month in the hope of expanding its banking unit. However, the two parties agreed in late April to conduct the acquisition exclusively through a share-swap, in a ratio of one share of Shinkong Financial for 1.1408 shares of Macoto Bank.
Accordingly, the company and the ECB underwriter Morgan Stanley decided to suspend the issuance process, Hsu said.
However, since the application to the financial authorities cannot be withdrawn, they still expect to get the approval in June, he added.
As the approval would be valid for six months, the company can revive the issuance process if it needs to raise funds before the approval expires by the year's end, Hsu said.
Hsu remained tight-lipped about whether the fund-raising plan would be revived for future acquisition activities, saying only that the financial holding company's top priority is to seek smooth integration with Macoto after the share conversion slated to take place on Oct. 3.
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