Global equity market volatility wreaked havoc on the earnings of Taiwan’s financial institutions with life insurance units last month because risky assets accounted for sizable shares of their investment portfolios, company executives said yesterday.
Cathay Financial Holding Co (國泰金控), the nation’s largest financial services provider by assets, reported NT$1.29 billion (US$42.66 million) in net losses last month, reversing a net profit of NT$1.41 billion in October and compared with NT$1.41 billion profit for the same period last year, the company’s statement showed.
The conglomerate’s flagship unit, Cathay Life Insurance Co (國泰人壽), incurred net losses of NT$2.07 billion last month as equities at home and abroad fell, Cathay Financial spokesman Alan Lee (李偉正) said by telephone.
The TAIEX shed 9 percent last month as Europe’s debt crisis unnerved investors, local stock exchange data showed.
Lee said foreign exchange hedging costs also picked up moderately, although they remained within the company’s target range. He declined to supply detailed figures.
For the first 11 months of the year, cumulative earnings at Cathay Financial remained in positive territory at NT$11.69 billion, translating into NT$1.13 earnings per share, unaudited company data showed.
Fubon Financial Holding Co (富邦金控), the nation’s second-largest financial services provider, reported a meager profit of NT$5 million last month, down from NT$1.2 billion profit in October and compared with NT$1.35 billion a year earlier, according to the filing.
Fubon Life Insurance Co (富邦人壽) appeared to be the main drag, with net losses of NT$620 million, wiping out the profit of NT$540 million generated by Taipei Fubon Commercial Bank (台北富邦銀行), the filing said.
Fubon Financial, whose corporate image has suffered from the sports lottery scandal at its lottery unit, blamed foreign exchange losses linked to currencies other than the US dollar, a company official said.
The group’s securities and non-life insurance subsidiaries reported net profits of NT$2 million and NT$130 million respectively, the filing said.
Despite the earnings slowdown, Fubon Financial continued to top its peers in profitability, with cumulative net income standing at NT$32.69 billion as of Nov. 30, or NT$3.63 earnings per share.
Shin Kong Financial Holding Co (新光金控), which draws its income mainly from its life insurance unit, also performed dismally, with a net loss of NT$724 million last month.
The group’s flagship unit, Shin Kong Life Insurance Co (新光人壽), reported a net loss of NT$898 million attributable chiefly to unprofitable equities investments, Shin Kong Financial senior vice president Sunny Hsu (徐舜鋆) said.
“The losses applied both to domestic and overseas equities investments, which should come as no surprise by now,” Hsu said by telephone.
Equities investment constituted 11.5 percent of Shin Kong Life’s overall portfolio, valued at NT$1.38 trillion as of the end of September, company data said.
The losses weakened Shin Kong Financial’s earnings to NT$5.42 billion for the first 11 months.