Sat, Jan 27, 2007 - Page 11 News List

TFMI rating unchanged on Asiaworld investment

CASH FLOW Through its investment in Asiaworld the company expects to collect rent of as much as NT$80 million a year, roughly a 5 percent return on investment

By Kevin Chen  /  STAFF REPORTER

Taiwan Ratings Corp (中華信評) said yesterday that its rating on Taiwan Fire & Marine Insurance Co (TFMI, 台灣產物保險) would not immediately be affected by the company's latest property investment.

Taiwan Ratings' remark came after TFMI announced on Thursday that it had decided to invest NT$2.01 billion (US$61.1 million) in Asiaworld Shopping Mall (環亞購物中心) through its asset management subsidiary, TFMI Asset Management Co (TFMI AMC, 台產資產管理).

Owned by the financially troubled Asiaworld Group (亞世集團), the shopping mall is situated at the intersection of Dunhua N Road and Nanjing E Road in Taipei City. The mall has been available in a public auction, initiated by the Taipei District Court, since last year.

The property insurer will spend NT$851 million on the 174.77 ping (577.74m2) piece of land on which the mall is situated -- which represents a record NT$4.87 million per ping for the popular business district -- and another NT$1.16 billion on the mall's first and second floor retail space, it said in a filing to the Taiwan Stock Exchange on Thursday night.

Through its investment in Asiaworld Shopping Mall, TFMI expects to collect a stable rental income of as high as NT$80 million a year, which would translate into about a 5 percent return on investment, or a NT$0.25 return on equity, according to the company.

"The transaction, which is expected to be completed by the end of January 2007, will have a limited impact on TFMI's investment profile and capitalization," Taiwan Ratings said in a statement yesterday.

On Dec. 11, Taiwan Ratings, a local arm of Standard & Poor's Ratings Services, gave its "twAA-" counterparty credit and insurer financial strength rating to TFMI, with a stable outlook.

The ratings agency said TFMI is unlikely to make additional significant capital investments in its asset management subsidiary over the short term.

To comply with local insurance regulations, TFMI and TFMI AMC have independent funding, it added.

With satisfactory underwriting performance, TFMI saw NT$4.42 billion in premium income last year despite fierce competition.

But the insurer is also known for its relatively aggressive investment strategy in both equity-related securities and real estate in order to generate above-average investment returns, Taiwan Ratings said.

Last year, TFMI saw NT$600 million profits generated from its equity-related securities and real estate investments. Overall, the company reported a record NT$2.34 earnings per share last year.

The share price rose 0.97 percent to close at NT$21 on the Taiwan Stock Exchange yesterday.

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