China Life Insurance Co (中國人壽), the nation’s fifth-largest life insurer by assets, plans to channel NT$40 billion (US$1.34 billion) into real-estate investments, raising its property assets to 8 percent of its total working capital from the current 3 percent, top executives said yesterday.
“We intend to build up real-estate investments that currently account for less than 3 percent of the company’s asset allocation,” company chairman Alan Wang (王銘陽) told reporters on the sidelines of the firm’s 50th anniversary celebrations.
Wang set the ideal ratio at between 5 percent and 8 percent. That means the company can place up to NT$64 billion in property investments, compared to NT$24 billion at present, with total working capital valued at NT$800 billion, company data showed.
The company had sometimes been unsuccessful in commercial property auctions in Taipei because of its conservative bidding strategy, but Wang said he would stand by this strategy, which has paid off as evidenced by the firm’s improving balance sheet and bottom lines.
China Life reported NT$2.08 billion in net profit for the first three months of this year, or NT$0.87 a share, more than doubling its results in the same period a year ago.
Over the past decade, the company’s total assets have grown sevenfold under Wang’s chairmanship, market values have soared 12 times and first-year premiums have increased fivefold, according to China Life.
The company will enter competitions for superfices rights to boost its property investments, Wang said.
Although it wants to reduce its idle funds, the firm has no intention of taking up bonds with credit ratings lower than “A” grade, after government regulators recently eased the requirement to “BB” class, China Life president Kuo Yu-ling (郭瑜玲) said.
It is scouting property investment opportunities in prime locations in Greater Taipei, central Taiwan and Shanghai, China, that meet minimum yield requirements, she said.
Kuo said the Financial Supervisory Commission was about to relax restrictions governing insurers’ property investments at home and abroad.
The commission’s drastic tightening measure has caused real-estate investments nearly to a halt for past six months, she said.
However, unlike Cathay Life Insurance Co (國壽人壽), Shin Kong Life Insurance Co (新光人壽) or Fubon Life Insurance Co (富邦人壽), China Life will not benefit from the new accounting rules because of its small property holdings, Kuo said.
Shares in China Life ended up 0.51 percent to NT$29.7 yesterday.
The company plans to distribute NT$1.6 per share in cash dividend based on earnings last year, topping other financial institutions, Wang said.