Amid a rally on the local bourse this year, Cathay Financial Holding Co (國泰金控) yesterday said that its life insurance unit has reversed unrealized losses of NT$3.9 billion (US$119.91 million) last quarter to post gains of NT$5 billion this quarter.
Cathay Life Insurance Co (國泰人壽), the nation’s largest insurer and the most profitable unit of Cathay Financial, said its financial assets have experienced swings since plummeting to NT$20.9 billion in the red at the end of the third quarter last year.
Despite falling to this year’s low at 7,627.89 points on Jan. 18, the TAIEX yesterday rebounded more than 15 percent to close at 8,785.68 points.
Cathay Life said that net income last year rose 21.74 percent year-on-year to NT$38.4 billion, while maintaining a risked-based capital ratio of 304.6 percent, with total premium collections seeing a 1 percent annual rise to NT$645.2 billion.
The insurer said that dividend income last year was NT$20.3 billion, adding that the figure would be higher this year.
Cathay Life is to place higher weighting on foreign currency-based bonds by 2 percent to 3 percent, while reducing holdings of domestic bonds in light of the nation’s suppressed interest rates, Cathay Life executive vice president Lin Chao-ting (林昭廷) said.
Lin said investments in Taiwan shares would see continuous adjustments according to market conditions, adding that in response to rising default risks and falling prices, holdings of high yield, commodity and energy sector-linked bonds currently account for about 2 percent, 4 percent and 4 percent of the insurer’s overall investments respectively.
The group’s banking unit, Cathay United Bank (國泰世華銀行), reported that net income last year rose 5.62 percent annually to NT$18.8 billion, but earnings from overseas operations fell 19 percent to NT$7.6 billion, due to two long-term debt write-offs.
In addition, following the central bank’s interest rate cut in September last year, the bank’s net interest margin last quarter fell 0.03 percent to 1.2 percent.
The bank forecast losses of NT$3.2 billion relating to yuan-linked target redemption forward contracts.
“We have collected NT$1.6 billion from clients holding the instruments and furnished provisions of NT$1.4 billion against related risks,” Cathay Financial spokesman Alan Lee (李偉正) said.
Cathay Financial last year recorded net income of NT$57.9 billion, or NT$4.98 per share, to reach a new record high.
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