Cathay Financial Holding Co (國泰金控), Taiwan’s largest financial service provider by assets, yesterday said its embedded value had increased to NT$55 per share as of the end of December last year, from NT$53 a year earlier, on the back of unrealized property gains.
The conglomerate’s net worth increased 33.05 percent last year to NT$379.5 billion (US$12.61 billion) in December, and grew further to NT$394.8 billion last quarter, the company said.
Unrealized property gains contributed NT$124 billion in net worth last year, a net increase of more than NT$94.3 billion to the conglomerate, said Lin Chao-ting (林昭廷), an executive vice president at Cathay Life Insurance Co (國泰人壽), the group’s main subsidiary.
Cathay Life owns more than 200 landmark buildings in prime locations across Taiwan, making the insurer the biggest beneficiary of accounting rule changes that allow firms to book property values based on market rates instead of purchase costs.
The net worth increase helped lift Cathay Financial shares to end up 4.85 percent at NT$44.35 yesterday, stronger than the TAIEX’s 0.47 percent advance and the financial sector’s 1.77 percent rally, Taiwan Stock Exchange data showed.
Following the reappraisal, Cathay Life had an embedded value of NT$635 billion last year, or NT$119.7 per share, while the assessed value rose from NT$1.0 trillion to NT$1.09 trillion, company data indicated.
Cathay Life remains interested in real-estate investment, which made up 10.6 percent of its portfolio as of the end of last quarter, Lin said.
“We have found targets [whole office buildings] in London and Tokyo and will speed up transactions to boost overall rental income,” Lin said, as property investment at home grows increasingly difficult due to tightened yield requirements.
Cathay Financial president Lee Chang-ken (李長庚) voiced reservations about the Financial Supervisory Commission’s plan to ban insurers from voting in the board elections of companies in which they have capital investment.
The restriction is intended to prevent life insurers from growing into gigantic holding firms aided by customers’ money.
The ban is both unfair and unhealthy since foreign funds — including Chinese capital — can exercise their right to vote, Lee said.
The practice would give foreign funds easier and bigger influence over local firms, he said.
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