Mercuries Life Insurance Co (三商美邦人壽保險), the nation’s fifth-largest by market share, yesterday said it expects first-year premiums to decline by double digits this year as stop-sale effects fade.
The insurer, a member of Mercuries Group (三商企業), posted NT$1.54 billion (US$51.45 million) in net profit last year, an 85 percent increase from 2011, or earnings of NT$1.4 per share.
First-year premiums increased 36.8 percent year-on-year to NT$44.87 billion last year, as fears of higher policy costs drove up sales, president and chief executive officer Roy Meng (孟嘉仁) told an investors’ conference.
The cost hikes came after the Financial Supervisory Commission cut assumed interest rates twice last year to reflect the monetary easing policies adopted by central banks worldwide.
“For this year, we aim for first-year premiums to reach NT$40 billion,” as the stop-sale effect would weaken, Meng said, adding that agency and bancassurance are each expected to achieve 50 percent of the target.
Mercuries Life will focus on protection insurance policies, which generate better profits, but it still has to sell lump-sum annuity and investment-linked products to keep its market share at 3.5 percent, from 3.77 percent last year, he said.
Annuity and investment-linked products sell well, but generate thin margins because of commission payments, he said.
Like Cathay Life Insurance Co (國壽) and Shin Kong Life Insurance Co (新壽), Mercuries Life has filed plans to recognize NT$593 million in unrealized property gains under new accounting rules, Mercuries Life chief financial officer Winston Yang (楊棋材) said.
Mercuries Life intends to keep its foreign exchange hedging costs within 120 basis points after standing at 112 basis points last year, Yang said.
The insurer is also eyeing the Chinese market, but prefers to own stakes in Chinese peers, rather than invest money in a joint venture, Meng said.
“The company is in talks with potential partners, but the attempts may not bear fruit any time soon,” Meng said.
Shares in Mercuries Life ended flat at NT$17.4 yesterday, stronger than the TAIEX’s 0.35 percent fall, Taiwan Stock Exchange data showed.