Fri, Apr 09, 2010 - Page 11 News List

Earnings outlook for life insurers stable: Taiwan Ratings

By Kevin Chen  /  STAFF REPORTER

The nation’s life insurers are likely to enjoy a stable earnings outlook this year amid an economic recovery, while their non-life counterparts will face diverging profitability over the long term, Taiwan Ratings Corp (中華信評) said yesterday.

In a report released yesterday, Taiwan Ratings said life insurers’ substantial growth in their first-year premiums in the second half of last year pointed to a stable outlook over the next 12 months.

“Total first-year premiums grew 31 percent in the second half of 2009 compared with the first half, and we expect this will continue as market confidence restores,” Taiwan Ratings credit analyst Serene Hsieh (謝雅瑛) said in a statement.

“However, the government’s current low interest rate policy poses an obstacle for Taiwan’s life insurers [seeking] to realize growth in higher-margin traditional life insurance products,” Hsieh said.

For non-life insurers, Taiwan Ratings said price competition in a process of continued government deregulation would hold back major players’ total premium growth in the coming quarters.

The non-life sector entered its third stage of price deregulation in April last year, which has particularly had an impact on fire insurance premiums, credit analyst Eva Chou (周怡華) said in the report.

Also, the price competition pared down auto insurers’ potential premium income, despite a 28.3 percent increase in new vehicle sales last year thanks to the government cutting the NT$30,000 (US$950) commodity tax on new car purchases, she added.

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