Shin Kong Financial Holding Co (新光金控) aims to raise its holdings of locally issued foreign-currency bonds to NT$110 billion (US$3.6 billion) by the end of this year, as the company’s insurance unit seeks higher yields.
The life insurance-focused conglomerate gave the guidance after posting net income of NT$6.95 billion, or earnings per share of NT$0.71, for the first nine months, company data showed.
The results represented a 36.6 percent decline from the same period last year, mainly due to losses incurred at its life insurance unit in the first quarter.
“In a bid to increase investment returns, the company’s life insurance unit has continued investing in foreign-currency bonds here,” Shin Kong Financial senior vice president Sunny Hsu (徐舜鋆) told an investors’ conference.
Shin Kong Life Insurance Co (新光人壽), the group’s main subsidiary and its biggest source of income, saw its holdings of foreign-currency bonds reach NT$93.9 billion at the end of last quarter, translating into 3.9 percent of its overall investment portfolio, Hsu said.
By the end of this year, the life insurer plans to increase the holdings to NT$110 billion, and to NT$160 billion by the end of next year, with an annual yield target set at between 3.35 percent and 3.5 percent, Hsu added.
In terms of real-estate investments, Hsu maintained a neutral outlook, as the life insurer does not plan to use market prices to re-evaluate its real-estate assets in the short term.
However, the insurer might dispose of some assets located on Taipei’s Nanjing E Road following the formal operation of the new Songshan Line of Taipei’s Mass Rapid Transit (MRT) system, Hsu said.
For a better asset allocation, the insurer is set to boost its total interest income to NT$5 billion next year, with cost of liability further continuing its downturn trend, he said.
Meanwhile, the company’s Shin Kong Commercial Bank (新光銀行) plans to lower its non-performing loan ratio to 0.26 percent by the end of this year, from 0.32 percent recorded at the end of the third quarter, while raising the coverage ratio of allowances for bad debt to at least 400 percent.
Shin Kong Financial shares dropped 0.65 percent to close at NT$9.16 yesterday, just below their face value of NT$10, Taiwan Stock Exchange data showed.
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