Lawmakers are worried that the next financial storm could hit the insurance sector as the financial regulator admitted yesterday that several local insurers are seeing their book value turn negative and are in urgent need of some fresh capital.
"There are three to four insurance companies whose book value has become negative," Financial Supervisory Commission (FSC) Vice Chairwoman Susan Chang (
The commission was requiring that five insurers in urgent need of capital injection step up their fundraising in light of the widening financial gaps, Chang said.
The capital-strapped insurers are Kuo Hua Life Insurance Co (國華人壽), Global Life Insurance Co (國寶人壽), Singfor Life Insurance Co (幸福人壽), Union Insurance Co (友聯產險) and Walsun Insurance Co (華山產險).
At the end of last year, Kuo Hua had a book value of minus NT$10.2 billion (US$309 million), Global Life had minus NT$111 million and Walsun had minus NT$690 million, according to data disclosed on their Web sites.
The financial watchdog punished one insurer by restricting business -- such as suspending sales of policy products with greater risk -- for its failure to obtain fresh capital, Chang said.
But he declined to name the firm.
The regulator would closely monitor progress in fundraising and urge the troubled insurers to merge with stronger rivals before considering takeovers as a last resort, Chang said.
Yet the commission reportedly has delayed the deadline several times, including from the end of last year to the end of last month.
The Chinese-language Economic Daily said yesterday that the regulator again postponed the deadline to the end of this month.
The FSC expected insurers to complete fundraising activities as soon as possible, said Huang Tien-mu (黃天牧), director-general of the commission's Insurance Bureau, on the sidelines of the session.
But Huang declined to comment on a timeframe.
A stability fund set to handle debt-ridden life insurers amounts to a total of NT$11.6 billion, while the fund pool for non-life insurance firms amounts to less than NT$3 billion.
"You [the commission] should do something quickly, or the next storm could break out in the insurance industry," Chinese Nationalist Party (KMT) Legislator Lo Ming-tsai (羅明才) said.
Lawmakers also raised allegations of embezzlement involving Taiwan Life Insurance Co (台灣人壽), saying that the firm had incurred a loss of between NT$400 billion and NT$500 billion after using working capital to purchase 50 million shares in major shareholder Long Bon Development Co (龍邦開發).
Taiwan Life chairman Chu Ping-yu (
Chang said Taiwan Life could have committed breach of trust and the commission would look into the matter.
Lee Mao (
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