Cathay Financial Holding Co (國泰金控), the nation’s largest financial services provider, yesterday said the government’s plan to tax capital gains would have only a limited impact on its asset allocations.
The group’s flagship subsidiary, Cathay Life Insurance Co (國泰人壽), held NT$271.5 billion (US$9.2 billion) in local shares as of March 31, accounting for 8.8 percent of total investment funds, from 8.5 percent a year earlier, company data showed.
“The capital gains tax is acceptable in light of the Cabinet’s version,” but it is still subjected to revision by lawmakers before being written into law, Cathay Financial president Lee Chang-ken (李長庚) said.
Currently, the insurer pays a 10 percent minimum income tax for capital gains on securities investments, Lee said.
The Ministry of Finance has suggested raising the tax rate to 12 percent for institutional players, but providing a 50 percent discount for gains from investments held in excess of three years.
“The bulk of our share holdings are intended for dividend yields and would meet the long-term requirement,” Lee said.
Cathay Life, which owns more than 200 buildings in prime locations nationwide, would continue searching for real estate investment targets despite the government’s plan to tax properties based on their market value instead of publicly designated worth, Cathay Financial spokesman Alan Lee (李偉正) said.
“Real estate investment will continue to carry a significant weight in our portfolio,” Alan Lee said.
Real estate properties accounted for 5.2 percent of the insurer’s asset allocations in the first quarter, down from the 5.4 percent one year ago because of a lack of supply, the company’s report said.
The finance ministry has indicated plans to reform property taxes next year to promote a more equitable distribution of the nation’s wealth.
Cathay Financial yesterday also unveiled its latest estimate of the insurer’s embedded value, which stood at NT$475 billion (US$16.2 billion) last year, an increase of 5.8 percent on NT$449 billion a year earlier, the report indicated.
The figures, used to gauge the present worth of insurance firms, translate into an embedded value of NT$89.4 per share, the report said.
The appraisal value used to project future cash flows from the insurer’s assets as well as current and future operations, is estimated at NT$870 billion for last year, an increase of 7.4 percent from NT$810 billion a year earlier, the report said.
However, shares in Cathay Financial ended the day down 2.21 percent at NT$30.75 yesterday, a deeper fall than the 2.11 percent decline of the TAIEX, Taiwan Stock Exchange data showed.