Taiwan Life Insurance Co (台灣人壽保險) is to stop selling insurance savings plans that promise high returns within one year, company president Tony Chuang (莊中慶) said on Thursday.
The move came after the Financial Supervisory Commission on Wednesday announced that it would enhance reviews of insurance savings plans and lower the ratio of death benefits, which would discourage insurers from selling savings plans.
“The commission’s new regulations will affect insurers’ marketing strategies, but we agree that insurance is not intended for wealth management,” Chuang told reporters on the sidelines of an event in Taipei.
Taiwan Life stopped selling single-premium insurance savings plans in July last year.
Chuang said the products had forced the company to prepare a larger special reserve after adopting the International Financial Reporting Standards 17.
The insurer is to first stop sales of savings plans that are subject to a six-year payment requirement and would gradually suspend the sale of other plans that promise high returns, Chuang said.
Taiwan Life is not worried about the effect on its premium income after the plans are ended, he said.
The company would set a long-term plan to achieve stable profit growth, Chuang added.
The company’s equity-to-asset ratio has climbed to 5 percent after it injected NT$10 billion (US$317.26 million) in new funds last month, he said.
Insurers whose equity-to-asset ratio is lower than 3 percent must increase their capital, the commission said on Wednesday.
Separately, local life insurers reported foreign-exchange gains of NT$66.7 billion in the first four months of the year.
However, those gains were offset by cumulative hedging losses of NT$135.8 billion over the period, which saw combined pretax profit plunge 10.9 percent annually to NT$47.6 billion, Insurance Bureau data showed.
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