Cathay calls for easing on insurance investment

PROPERTY::The financial conglomerate said it had no problems with an overconcentration of real-estate holdings, after its peer, Shin Kong, received a warning

By Crystal Hsu  /  Staff reporter

Sat, Aug 31, 2013 - Page 13

Cathay Financial Co (國泰金控) yesterday said it hoped the government would ease investment rules to allow domestic life insurers to expand in China.

The nation’s largest financial service provider by assets made the plea as top insurance officials from Taiwan and China are scheduled to meet in October for talks on market access and other issues.

“We hope Chinese life insurance companies can invest in Cathay Life Insurance Co (國泰人壽) and Cathay Century Insurance Co (國泰世紀產險) to create win-win situations for all parties involved,” Cathay Financial president Lee Chang-ken (李長庚) told reporters on the sidelines of an investors’ conference.

Since banks on both sides of the Taiwan Strait are allowed to own shareholdings in their peers across the Strait, the opening should be extended to the insurance industry, Lee said.

Cathay Financial favors investments of more than 50 percent in peers so it can control management decisions, while the number of Chinese investors should be more than one, Lee said.

Speaking of the conglomerate’s real-estate holdings, Lee said that the company — the nation’s biggest landlord with about 200 upscale buildings — does not have problems with property concentration.

“It is true that we own more real estate in northern Taiwan in terms of property value,” Lee said.

“The investment is evenly distributed if measured by the number of deals,” he said.

The conglomerate has not received any warning from the Financial Supervisory Commission about the need to adjust its portfolio to diversify its investment risks, Lee said.

A day earlier, Shin Kong Financial Holding Co (新光金控) indicated plans to sell one of its 13 buildings in Taipei’s Neihu District (內湖) after the commission raised concerns about an overconcentration of its real-estate holdings in the area.

This concentration could lead to property speculation and may be damaging to the company’s interests should real-estate prices in the district drop, the commission said.

Real estate accounts for only 7.4 percent of Cathay Financial’s total investment, Lee said, adding that the company would purchase more if it finds suitable targets.

Lin Chao-ting (林昭廷), an executive vice president at Cathay Life, said the company’s portfolio shrank after the US Federal Reserve signaled plans in June to taper off quantitative easing, but it may benefit from interest rate increases in the long run.

Cathay Life’s bondholdings are of relatively shorter duration, averaging five to six years, allowing the company to respond to interest rate changes more quickly than peers that hold longer-term bonds, Lin said.

Cathay Financial shares rose 1.68 percent to NT$42.40 yesterday, stock exchange data showed.