BNP Paribas Assurance TCB Life Insurance Co (合作金庫人壽), the life insurance arm of state-run Taiwan Cooperative Financial Holding Co (合作金控), expects its gross premiums to fall 14 percent this year as it seeks to adjust product lines and break even.
The three-year-old insurer, a joint venture with the French BNP banking group, managed to stay in the black in the first quarter and is on track to break even at the end of the year, chief executive Jack Chang (張志杰) said.
“That would be unprecedented for a new insurer because it normally takes seven to eight years for new firms to turn a profit,” Chang said, adding that the insurer has devoted an increasing amount of effort to investment-linked and protection insurance policies because the former require fewer provisions and the latter generate higher margins.
The insurer posted NT$40.67 billion (US$1.36 billion) in total premiums last year, an increase of 21.13 percent from 2011, with unit-linked polices growing to 69 percent from 32.26 percent, Chang said.
Sales of lump-sum annuity products fell from NT$10.68 billion to NT$3.38 billion during the same period because the company avoided the products because they carry guaranteed interest rates and their short-term duration contradicts the spirit of life insurance, he said.
However, the product mix adjustment may constrain revenue growth this year, with gross premiums likely to decline 14 percent from last year since protection policies featuring installment payments make limited contributions, said.
Despite the insurer enjoying the exclusive support of Taiwan Cooperative Bank (合作金庫銀行), the government’s efforts to cool the property sector have hindered mortgage insurance promotion, which had been expected to be a key driver of growth given the market’s low infiltration rate, he said.
The insurer has 70 percent of its assets under management in government and corporate bonds both at home and abroad to generate a fixed income and another 8 percent in high-risk assets, Chang said.
Separately, Taiwan Life Insurance Co (台灣人壽) posted NT$660 million, or NT$0.76 in earnings per share, in net income for the first three months of the year, the company said in a stock exchange filing yesterday. The figures represent a rise of 24 percent from last year, the company said in the filing, adding that its total premiums were NT$12.4 billion, with first-year premiums standing at NT$4.6 billion.
Meanwhile, China Life Insurance Co (中國人壽) reported NT$2.08 billion in net profit in the first three months, or NT$1.24 per share, more than doubling its profit from a year earlier, with total premiums equaling NT$31.71 billion and first-year premiums of NT$17.32 billion.