Wed, Nov 15, 2017 - Page 12 News List

Cathay Financial’s value at record high on equities rallies

CONSERVATIVE:Cathay Life Insurance executive vice president Lin Chao-ting said that the firm’s share price has been undervalued in relation to embedded value

By Ted Chen  /  Staff reporter

Cathay Financial Holding Co (國泰金控), the nation’s biggest financial services provider by assets, yesterday said that stock market rallies at home and abroad had pushed its book value to a new record high.

As of the end of September, the company had a book value of NT$593.7 billion (US$19.67 billion), up from NT$529.8 billion at the end of last year.

Book value per share was NT$42.5.

Cathay Life Insurance Co (國泰人壽), the company’s most profitable unit, posted a 10.6 percent return on its investments in domestic shares and 8.8 percent on international equities.

The life insurer received NT$22.5 billion in cash dividends, while unrealized gains on its available-for-sale financial assets surged to NT$43.5 billion, compared with NT$3.2 billion at the end of last year.

The life insurer said that its product mix has seen a significant shift, with traditional life policies making up 40.5 percent of annualized first-year premiums in the first nine months of this year, down from 89.2 percent the previous year.

Total annualized first-year premium collection during the period fell to NT$58.5 billion from NT$100 billion the previous year.

The life insurer said that while sales of investment-linked products jumped to NT$6.5 billion in the first nine months from NT$100 million the previous year, traditional life policies would remain its main focus.

Cathay United Bank (國泰世華銀行), the company’s banking arm, said that its earnings were helped by improving interest spreads and net interest margin from its growing foreign currency denominated loan book, which rose from NT$174 billion at the end of last year to NT$211.5 billion at the end of September.

The bank’s overseas earnings rose 26 percent year-on-year to NT$8.2 billion, accounting for 43.1 percent of overall earnings.

The lender said that while its mortgage loan book expanded 19.58 percent year-on-year in the first nine months to NT$660 billion, it would no longer pursue growth in home loans next year, and would focus on overseas and foreign currency lending operations.

Cathay Financial reported that earnings in the first three quarters rose 23 percent year-on-year to NT$48.3 billion. Earnings per share were NT$3.81.

Meanwhile, Cathay Life Insurance executive vice president Lin Chao-ting (林昭廷) reiterated that the company’s share price has been persistently undervalued in relation to its embedded value, as investors have remained conservative about its prospects due to the nation’s low interest rate environment.

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