Taiwanese insurers and most Asian peers may not be seriously impacted on by the US subprime mortgage crisis due to relatively low exposure to US asset-backed financial products, international rating agency Standard and Poor's Rating Services said yesterday.
"Basically, we think the impact [on Asia-Pacific insurers] is quite limited ... and manageable," Standard & Poor's credit analyst Connie Wong (黃如白) told a teleconference.
Due to the constraints of the region's regulators, insurance companies in Taiwan and other Asian countries have purchased a limited amount of US asset-backed products, Wong said.
In August, the Financial Supervisory Commission said nine Taiwanese insurance companies had invested a total of NT$30.2 billion (US$926.4 million) in home loans linked to the US subprime mortgage products as of the end of June.
Most subprime-related collateralized debt obligations (CDOs) held by Taiwanese insurers are generally highly rated, and only Taiwan Life Insurance Co (
The Hong Kong-based analyst said yesterday that Standard & Poor's reaffirmed its stable outlook on most insurance companies in the region.
But greater-than-expected volatility in the investment market dragged by the credit crisis would heighten the risk for life insurers as they have heavily invested in equities for returns, Wong said.
"If the market continues to drop, the impact will be magnified," she said.
The rating agency said the region's insurance industry, excluding Japan, would have a higher growth rate than global rivals.
"The Asia-Pacific insurance industry will have strong growth with expanding economies and higher incomes," Standard & Poor's senior insurance analyst Paul Clarkson said in the same teleconference. He gave no further details.
"We are seeing greater opportunities in under-developed countries like China, India and Vietnam because of low penetration rates and good economic fundamentals," Clarkson said.
Commenting further on the life insurance industry in China, Wong said it was a fast-growing market, but price competition was also stiff.
She said China's insurance industry may strengthen its fundamentals and profitability as a result of government reform and infrastructure buildup in recent years.
Local financial service providers are keen to tap into the burgeoning insurance market in China, but only a few companies such as Cathay Financial Holding Co (
In spite of an anticipated faster growth pace, Asia-Pacific insurance companies as a whole face challenges from regulatory reforms in this region, the rating agency said in a statement.
"Greater risk-management awareness, additional disclosure and increased corporate governance requirements as a result of the increasing regulator and accounting convergence are affecting the development of the insurance industry," the statement read.
Faced with more sophisticated and risk-based capital measurement by regulatory regimes, well-established insurers in the region will continue to outperform their smaller peers, Wong said in the statement.
PROTECTIONISM: China hopes to help domestic chipmakers gain more market share while preparing local tech companies for the possibility of more US sanctions Beijing is stepping up pressure on Chinese companies to buy locally produced artificial intelligence (AI) chips instead of Nvidia Corp products, part of the nation’s effort to expand its semiconductor industry and counter US sanctions. Chinese regulators have been discouraging companies from purchasing Nvidia’s H20 chips, which are used to develop and run AI models, sources familiar with the matter said. The policy has taken the form of guidance rather than an outright ban, as Beijing wants to avoid handicapping its own AI start-ups and escalating tensions with the US, said the sources, who asked not to be identified because the
Taipei is today suspending its US$2.5 trillion stock market as Super Typhoon Krathon approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed-income trading, statements from its stock and currency exchanges said. Yesterday, schools and offices were closed in several cities and counties in southern and eastern Taiwan, including in the key industrial port city of Kaohsiung. Taiwan, which started canceling flights, ship sailings and some train services earlier this week, has wind and rain advisories in place for much of the island. It regularly experiences typhoons, and in July shut offices and schools as
Her white-gloved, waistcoated uniform impeccable, 22-year-old Hazuki Okuno boards a bullet train replica to rehearse the strict protocols behind the smooth operation of a Japanese institution turning 60 Tuesday. High-speed Shinkansen trains began running between Tokyo and Osaka on Oct. 1, 1964, heralding a new era for rail travel as Japan grew into an economic superpower after World War II. The service remains integral to the nation’s economy and way of life — so keeping it dazzlingly clean, punctual and accident-free is a serious job. At a 10-story, state-of-the-art staff training center, Okuno shouted from the window and signaled to imaginary colleagues, keeping
FALLING BEHIND: Samsung shares have declined more than 20 percent this year, as the world’s largest chipmaker struggles in key markets and plays catch-up to rival SK Hynix Samsung Electronics Co is laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce its global headcount by thousands of jobs, sources familiar with the situation said. The layoffs could affect about 10 percent of its workforces in those markets, although the numbers for each subsidiary might vary, said one of the sources, who asked not to be named because the matter is private. Job cuts are planned for other overseas subsidiaries and could reach 10 percent in certain markets, the source said. The South Korean company has about 147,000 in staff overseas, more than half
RSS