Taiwan Ratings Corp (中華信評) yesterday affirmed a stable outlook for Fubon Financial Holding Co (富邦金控), but maintained a negative outlook on its non-life insurance arm, Fubon Insurance Co (富邦產險).
The negative outlook on Fubon Insurance had more to do with the parent group’s “resource fungibility,” or transfer of capital from the strongest non-life insurance arm indirectly to other group members, than its acquisition of ING Life Taiwan (安泰人壽), Taiwan Ratings said in a statement.
“If the parent group refuses to issue new shares or debts to fund its banking and life insurance arms — both of which have had strong growth momentum this year — the negative outlook on Fubon Insurance could linger on once it keeps transferring residual capital upstream,” Andy Chang (張書評), a financial analyst at Taiwan Ratings, said by telephone.
Fubon Insurance transferred residual capital of NT$10 billion (US$303.4 million) upstream to the parent group in 2002 and 2006, Chang said.
The outlook could be revised to “stable” if Fubon Insurance manages to sustain its currently strong market position, satisfactory operating performance and strong capitalization over the next three to five years, it said.
In related news, Fubon Insurance yesterday set up a wholly owned subsidiary in Vietnam after opening a branch in Ho Chi Minh City in June.
With US$19.5 billion in investment in Vietnam, Taiwan is the top foreign investor in Vietnam. Fubon Insurance hopes to extend its financial network there to better serve Vietnam-based Taiwanese businesses, it said.