Mon, Jun 10, 2019 - Page 15 News List

FYPs of foreign-currency policies decline 19% in Q1

By Kao Shih-ching  /  Staff reporter

First-year premiums (FYPs) of foreign-currency insurance policies fell 19 percent year-on-year to NT$153.47 billion (US$4.88 billion) in the first quarter, as a weakening New Taiwan dollar and concern over foreign-exchange losses scared off potential buyers, insurance companies said.

The FYPs of investment-linked foreign-currency policies declined 39 percent annually to NT$47.61 billion in the first three months, while the FYPs generated from traditional foreign-currency life insurance policies dropped 5 percent to NT$105.86 billion, according to data released by the Financial Supervisory Commission.

Sales of US dollar-denominated insurance policies — 86 percent of the foreign-currency insurance market — fell 27 percent year-on-year to US$4.3 billion in the first three months of this year, but sales of yuan-denominated policies rose 3 percent, while Australian dollar-denominated policies increased 1 percent, the commission's data showed.

“Taiwanese investors knew that buying US dollar-denominated policies would cost them more when they exchanged the weakening NT dollar for the greenback,” a Cathay Life Insurance Co (國泰人壽) manager surnamed Au (歐) told the Taipei Times by telephone on Tuesday.

Unlike NT dollar-denominated policies, holders of policies in US dollars need to pay the premiums in the US currency, Au said.

“Even though the NT dollar only shed 0.1 percent [against the US dollar in the first quarter], which is small change for retail traders, the decline translated into quite a difference for those investing several hundred thousand dollars,” Au said.

In addition to the exchange rate, the first quarter’s volatile global financial market kept Taiwanese investors from buying investment-linked policies, Cardif Assurance Taiwan communications manager Vanessa Chang (張燕妮) told the Taipei Times by telephone on Wednesday.

Cardif Taiwan ranks first in the market for investment-linked polices, but FYPs for the company’s unit-linked products fell in the first quarter, albeit more slowly than the industry average, Chang said, declining to give figures.

Last year, foreign-currency insurance policies were hot-selling products in Taiwan, with total FYPs paid on policies increasing 22 percent year-on-year to NT$617.9 billion, commission data showed.

The NT dollar’s tumble last year did not stop investors from buying US dollar-denominated policies, because the rate hike cycle of the US Federal Reserve caused insurance companies to raise guaranteed interest rates to attract buyers, Cathay Life said.

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