Sat, May 17, 2014 - Page 13 News List

Unrest affects insurance firms

PRICE OF PROTEST:Cathay Century Insurance said that 35 of its customers were hit by the Vietnam riots, with damages of US$3.5m expected to rise as more claims come in

By Crystal Hsu  /  Staff reporter

The anti-China protest in Vietnam might take a heavy toll on Taiwan’s major non-life insurance companies, which are counting their losses as hundreds of Taiwanese firms there halt operations due to property damage and safety concerns.

A preliminary estimate by Cathay Century Insurance Co (國泰產險), the non-life insurance unit of Cathay Financial Holding Co (國泰金控), showed that 35 customers are affected, but the number is not final as the situation in Binh Duong Province has not stabilized, Cathay Financial president Lee Chang-ken (李長庚) said.

“We remain in the process of collecting damage claims that appear to be US$3.5 million [NT$10.57 billion] for the time being,” Lee said by telephone.

The figures do not include business covered by the reinsurance program and far exceed the net profit of NT$200 million Cathay Century posted for the first quarter, company data showed.

The reinsurance program covers about 70 percent of Cathay’s non-life insurance operations in Vietnam, Lee said.

All foreign investments in Vietnam are required to purchase fire, strike and riot insurance, and Cathay Century is reaching out to customers for help, Lee said.

About 1,100 Taiwanese firms reportedly stopped operations as rioters broke into and set fire to factories in protests over Beijing’s installation of an oil rig close to the Paracel Islands (西沙群島, Xisha Islands) in the South China Sea claimed by Taiwan, China and Vietnam.

Cathay Financial’s bank, life insurance and non-life insurance subsidiaries have offices in Vietnam and it shut down operations on Tuesday as the unrest began, Lee said.

Similarly, Fubon Insurance Co (富邦產險), the non-life insurance wing of Fubon Financial Holding Co (富邦金控), said it has set up a task force to handle the aftermath in Vietnam, but is not able to tally potential losses yet.

Fubon Insurance Vietnam has its head office in Ho Chi Minh City and a branch office in Hanoi, one of the hardest hit areas.

Taiwan’s Formosa Plastics Group (台塑集團), footwear supplier Pou Chen Corp (寶成工業) and China Steel Corp (中鋼) all have operations in Vietnam and are the customers of Cathay Century or Fubon Insurance, local Chinese-language media said.

It may take years for non-life insurance companies to recover from losses of about NT$10 billion caused by the unrest, local media said, citing unnamed sector analysts.

The Non-Life Insurance Association has asked peers to file damage reports and so far Taiwan Fire and Marine Insurance Co (台灣產物), Zurich Insurance Co (蘇黎世產險), Chung Kuo Insurance Co (兆豐產物保險), South China Insurance Co (華南產險), Union Insurance Co (旺旺產險), Asia Insurance Co (亞洲產物保險公司) and Central Reinsurance Co (中央再保險) have said they will not be affected.

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