Fri, Sep 01, 2017 - Page 12 News List

Shin Kong Life Insurance to seek yield as cap for overseas investments nears

By Ted Chen  /  Staff reporter

Shin Kong Financial Holding Co (新光金控) yesterday said its insurance unit would look to construction projects for yields as the subsidiary approaches its cap for overseas investments.

As of the end of June, Shin Kong Life Insurance Co’s (新光人壽) overseas investments made up 42 percent of total assets, limiting further investments to 2 percent before reaching the 44 percent regulatory limit, Shin Kong Financial senior vice president Sunny Hsu (徐順鋆) said.

At the same time, the insurer’s cash position has swelled to about NT$110 billion (US$3.64 billion), or 4.9 percent of total investments, as it trims holdings of overseas equities and continues to collect insurance premium payments, Hsu said.

Hsu told an earnings conference in Taipei that the company plans to spend NT$13 billion on 10 construction projects and has committed NT$2.5 billion so far.

During the first half of this year, the company saw stable inflows with first-year premiums dipping 0.3 percent annually to NT$57.84 billion and total premiums rising 12 percent annually to NT$142.85 billion.

The insurer also saw its net loss narrow to NT$0.39 billion during the first half, compared with a loss of NT$3.32 billion a year earlier.

Hsu attributed the improvement to rising sales of foreign currency-denominated insurance products, which rose to 44.4 percent of first-year premiums collected, compared with less than 30 percent a year earlier.

Rising sales of foreign currency-denominated products have helped ease the company’s hedging costs, Hsu said, adding that despite the New Taiwan dollar’s appreciation this year, the life insurer’s foreign-exchange valuation reserves have returned to about NT$2.3 billion to provide a favorable buffer against volatility.

The insurer also saw its cost of capital improve to 4.31 percent at the end of the first six months, from 4.44 percent a year earlier.

Shin Kong Commercial Bank (新光銀行), another subsidiary of Shin Kong Financial, reported that net income in the first half dipped 11.2 percent annually to NT$1.97 billion, due to NT$1.08 billion in general provision charges.

The lender said that higher sales of overseas equities and debts had helped offset a decline in bancassurance fees income that was caused by regulators’ orders to rein in incentive payouts to distribution channels.

The company’s turnaround strategy is on track, Shin Kong Financial vice chairperson and president Catherine Lee (李紀珠) said.

“Management teams across the company’s subsidiaries have reached a consensus in identifying the issues that need to be addressed, as well as the order of priority in which each improvement measure is implemented,” Lee said.

In particular, the company’s improved risk control measures are expected to prevent strategic mistakes, she said.

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