Mercuries Life Insurance Co (三商美邦人壽保險) aims to turn a profit this year after losses subsided in the first quarter, but added that foreign-exchange movements remain a major downside risk, top executives said yesterday.
“We are seeking to pursue returns while avoiding risks,” newly installed president Alfred Cheung (張鎮坤) told an investors’ conference in Taipei. “The key is to strike a balance.”
The insurer, an affiliate of Mercuries & Associates Holding Ltd (三商投資控股), recorded net losses of NT$900 million (US$30 million) in the first quarter, as hedging costs and foreign-exchange losses amounted to NT$3.8 billion, company data showed.
That translated into net losses of NT$0.46 per share, compared with losses of NT$0.71 per share in the same period last year.
Cheung declined to elaborate on how he plans to steer the insurer, saying he needs more time to craft a strategy since he just joined the company two weeks ago.
Foreign-exchange losses shrank this quarter after the greenback picked up, allowing foreign-
currency assets to gain in value, chief financial officer Anderson Chen (陳鴻昇) said.
However, hedging costs remained high, he said.
Foreign-exchange movements affected all domestic insurers, but many of them managed to report profits by recognizing unrealized capital gains, Chen said.
Unlike its peers, Mercuries Life took a conservative approach on capital gains realization, he said.
“In any case, we respect our investment team and their decision to hold on to assets that promise recurring income,” Chen said.
Foreign assets accounted for NT$677.1 billion of the insurer’s total investment portfolio of NT$995.1 billion as of March, company data showed.
The Taipei-based insurer intends to press ahead with efforts to adjust its product line by placing more emphasis on unit-linked policies, Chen said.
“We will not abandon protection-type policies, but believe there is still room for improvement in sales of unit-linked policies to meet customer demand,” Chen said.
The adjustment explained why investment-oriented policies swelled to 59.5 percent of first-year premiums last quarter, from 17.3 percent during the same period last year, according to the insurer’s financial statement.
Protection-type products generated 31.5 percent of sales, slowing from 62 percent a year earlier, it said.
Mercuries Life also updated its embedded value figure, which stood at NT$128.87 billion late last year, or NT$67.1 per share.
That compared with an embedded value of NT$125.8 billion and NT$75.5 per share in 2016.
Capital increase last year accounted for the change, Chen said
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