Sales of traditional life insurance policies — while continuing to outperform those of investment-linked products — have shown signs of decelerated growth after customers turned conservative due to major insurers lowering their declared interest rates, a Life Insurance Association report showed.
First-year premiums generated by traditional life insurance policies were NT$48.5 billion (US$1.56 billion) last month, up 9.1 percent from a year earlier, while those of investment-linked products dipped 14.7 percent year-on-year to NT$15.60 billion, the report said.
Traditional life products continued to make up the majority of products sold with a market share of 75 percent, with investors indifferent to investment-linked policies that offered lower returns amid volatility in global financial markets and surprise interest rate cuts, the report said.
Growth in sales of traditional life policies decelerated from 35.4 percent in the first quarter to 8.1 percent between April and last month as insurance companies began cutting the declared rates of their products, it said.
Higher declared rates mean higher bonuses for policyholders, but leave insurance companies vulnerable to foreign-exchange risks, as most of their investments are held overseas.
At the outset, the cuts did not discourage investors from buying the products as they still provided better returns than other policies and bank deposits, the report said.
However, with more major insurers continuing to lower their rates, investors became more conservative, which affected sales, it said.
As interest-rate-sensitive policies have dominated the life insurance market, any headwinds would be a drag on the whole industry, the report said.
Six major life insurance firms — Nan Shan Life Insurance Co (南山人壽), Cathay Life Insurance Co (國泰人壽), Shin Kong Life Insurance Co (新光人壽), China Life Insurance Co (中國人壽), Fubon Life Insurance Co (富邦人壽) and Transglobe Life Insurance Co (全球人壽) — have continued to trim their declared rates, the report said.
In the first eight months, first-year premiums generated by traditional life insurance polices grew 10.3 percent to NT$555.15 billion, while those of investment-linked policies fell 21.4 percent to NT$123.51 billion, the report said.
Total first-year premiums generated by all insurance policies fell 2.4 percent year-on-year, it said.
As insurers have continued to trim declared rates, sales of traditional life products might not improve in short term, the report said.
DEAL LIKELY DEAD: As takeovers of semiconductor firms become national security issues amid a global microchip shortage, deals are becoming more difficult GlobalWafers Co (環球晶圓) failed to reach a breakthrough in a last-ditch bid to salvage its planned takeover of Siltronic AG, likely spelling the collapse of the US$5 billion deal. The Taiwanese technology company did not resolve the government’s concerns during a private meeting between GlobalWafers chairwoman Doris Hsu (徐秀蘭) and German Federal Ministry for Economic Affairs and Climate Action State Secretary Udo Philipp, people familiar with the matter said. Siltronic shares tumbled as much as 4.7 percent on the news on Friday, extending the stock’s decline for the year to more than 20 percent. While the ministry continues to examine the deal,
The US Department of Commerce on Tuesday said that a global survey of semiconductor chip producers and users shows a shortage will persist, sparked primarily by wafer production capacity constraints. The voluntary survey of 150 companies last fall in the supply chain confirmed “there is a significant, persistent mismatch in supply and demand for chips, and respondents did not see the problem going away in the next six months.” US Secretary of Commerce Gina Raimondo told reporters that the department “in a few instances didn’t really get what we needed and we’re going to go company by company and do personal engagement
BOOMING ORDERS: As orders move away from neighboring countries such as India, Pakistan’s economic bright spot has found new customers in South America and Africa Pakistan’s textile sector is bringing cheer to its flailing economy, with exports set to swell to a record after gaining an edge over South Asian rivals during the COVID-19 pandemic. Textile exports are poised to surge 40 percent from a year earlier to a record US$21 billion in the 12 months ending in June, said Abdul Razak Dawood, commerce adviser to Pakistan’s prime minister. Dawood said that the figure would expand to US$26 billion in the next fiscal year, surpassing the nation’s total exports last year, he said. The textiles industry — which supplies everything from denim jeans to towels for buyers
Samsung Electronics Co is stepping up spending on advanced chipmaking technology as it sees growing demand for its smartphones, displays and memory products. South Korea’s largest company reported 43.6 trillion won (US$36.17 billion) in semiconductor capital expenditure last year, eclipsing rivals as it acquired extreme ultraviolet lithography (EUV) machines to pursue an aggressive expansion of its most lucrative memory and system chipmaking. It expects a recovery in server and PC memory demand, and said foldables are already helping its sales growth, although declined to offer a forecast due to the high degree of uncertainty around supply chains and the COVID-19 pandemic. Samsung