Cathay urges land rules easing

ECONOMIC BOOST::With the economy tottering and unpaid leave increasing, the company said liberalization of property deals would channel idle funds to better use

By Crystal Hsu  /  Staff reporter

Sat, Nov 03, 2012 - Page 13

Cathay Financial Holding Co (國泰金控), the nation’s largest financial services provider by assets, yesterday urged the government to allow life insurers more flexibility in purchasing undeveloped land, saying the regulatory easing may help boost job opportunities and the nation’s coffers.

The conglomerate made the plea after posting NT$7.62 billion (US$260.1 million) in net income for the July-to-September quarter. That was more than double the second quarter’s net profits of NT$3.23 billion, thanks to record-high cash dividend receipts, Cathay Financial president Lee Chang-ken (李長庚) told an investors’ conference.

Cumulative profit equaled NT$12.82 billion as of September, 10.51 percent higher than the same period last year, or earnings per share of NT$1.2, company data showed.

“With the economy tottering and unpaid leave increasing, the government should give serious thought to liberalization that may channel huge idle funds to better use,” Lee said.

The government could limit the easing of the development of commercial property so it can keep a lid on the housing market, said Lee, whose company owns the nation’s largest life insurer, Cathay Life Insurance Co (國泰人壽) and is affiliated to Cathay Real Estate Development Co (國泰建設).

To prevent land hoarding, the Financial Supervisory Commission requires life insurers to produce a building permit six months after acquiring undeveloped land and to start construction within nine months.

“It takes a much longer time to plan major development projects,” such as the insurer’s joint venture with Gloria Hotel Group (華泰) to build an integrated shopping mall as part of the Taoyuan Aerotropolis (桃園航空城) project, Lee said.

Cathay Life aims to invest NT$20 billion in construction projects that may create more than 2,000 jobs, Lee said, adding that the government would collect more taxes from retailers, employees and shoppers once the projects are completed.

Lee also called for the recognition of unrealized property gains as an increase in net worth when the regulator adopts new international accounting standards for life insurers.

The practice would increase Cathay Life’s net worth by NT$170 billion from NT$135 billion, Cathay Financial spokesman Alan Lee (李偉正) said.

Cathay Life is also willing to register property values with the government if doing so can assuage concerns over loose evaluations inflating the value of real estate, Alan Lee said.

Cathay Life reported NT$2.36 billion in net income for the first nine months, nearly flat from a NT$2.88 billion profit last year, company statistics showed.

Earnings at Cathay United Bank (國泰世華銀行) increased 10.75 percent as of the end of September to NT$10.36 billion from NT$9.36 billion, as product mix adjustments generated higher yields, Alan Lee said.

Cathay Financial shares closed up 1.87 percent at NT$29.9 yesterday compared with the TAIEX’s 0.43 percent rise, Taiwan Stock Exchange data showed.