Allianz Taiwan Life Insurance Co (安聯人壽) posted a NT$5.06 billion (US$157 million) first year premium (FYP) last month and expected the figure to climb for the rest of the year as an improving economy softens risk aversion, company officials said yesterday.
President and chief executive Chris James told reporters that the company, which devotes itself almost entirely to unit-linked insurance policies, posted modest growth of 2.2 percent in FYP in the first eight months from the same period last year.
“That is quite a remarkable achievement in light of the global financial crisis that plunged the unit-linked insurance market by 63 percent,” James said.
FYP amounted to NT$29.4 billion for the first eight months, trailing Taipei-based China Life Insurance Co (中國人壽) by NT$1.4 billion, James said.
Allianz Taiwan senior vice president Tom Yang (楊承清) said the insurer is the fifth-largest player in the domestic life insurance industry and could improve its ranking in the near future.
“The [goal] is not a long-shot effort given the small gap between our showings,” Yang said, adding that domestic rivals had virtually pulled out of the investment-linked insurance market following the financial crisis.
Yang said the government’s decision to tax overseas income would have little impact on company sales as only 5 percent of its clients meet the taxable threshold.
He said sales of a unit-linked product with principal protection guarantee had exceeded NT$1.5 billion since its launch in June this year, representing almost 30 percent of the market share.
However, the company restated its objections to the government’s proposal to tax investment-linked insurance polices, saying the reform would discourage long-term investment while a significant portion of the population is aging.
Meanwhile, Standard & Poor’s Ratings Services said yesterday that the operating environment for life insurers in Taiwan would “remain difficult over the next few quarters” as market conditions remain challenging amid a slow economy.
“Life insurers reported better bottom lines and capitalization in the first half of 2009, up from a very low base at the end of 2008,” Patty Wang (王珮齡), an analyst at Taiwan Ratings Corp (中華信評), which is the local partner of Standard & Poor’s, said in a statement. “Nonetheless, insurers continue to face the central bank’s low interest rate policy and a volatile domestic capital market.”
The central bank on Sept. 24 left its rediscount rate unchanged at a record low of 1.25 percent for the third straight quarter since February after it cut the rate by 237.5 basis points from last month. Central bank governor Perng Fai-nan (彭淮南) told lawmakers on Sept. 30 that the bank would keep its key rates “at a low level” to help boost the economy.
The domestic capital market, meanwhile, showed volatility in recent months thanks to increasingly favorable equity market, statistics compiled by the Financial Supervisory Commission (FSC) showed.
Net inflow of foreign portfolio capital rose to US$7.06 billion last month, following a net outflow of US$302 million in August and a net inflow of US$2.39 billion in July, FSC data showed.
So far this year, accumulation of net foreign portfolio capital inflow reached US$18.34 billion, compared with an outflow of US$12.8 billion last year, FSC figures showed.
“A side impact of the huge foreign capital inflow is that short-term treasury yields plunged as foreign money needed to buy any kind of securities to fulfill regulation requirements,” Cheng Cheng-mount (鄭貞茂), chief economist at Citigroup Inc Taiwan, said yesterday.
Taiwanese regulations stipulate that foreign portfolio investments can hold a maximum of 30 percent of a portfolio in government bonds. But some US$2.7 billion out of the net inflow of US$7.1 billion last month were reportedly not invested in local stocks, which suggests that the money was used to buy the NT dollar, the Chinese-language Liberty Times (the Taipei Times’ sister newspaper) reported yesterday, citing FSC data.
“The central bank is closely watching foreign investors to make sure they abide by the regulations” to deter currency speculation, Cheng said.
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