Yuanta Financial Holding Co (元大金控) yesterday announced plans to raise NT$14 billion (US$451.12 million) by issuing new common shares to bolster the financial strength of subsidiary Yuanta Life Insurance Co (元大人壽).
The move followed capital injections of NT$4 billion in 2017 and another NT$1 billion last year for the insurance unit.
Yuanta Life turned profitable last year, posting a net profit of NT$277 million.
Net income in the first eight months of this year rose 59 percent from a year earlier to NT$1.916 billion.
The insurer’s risk-based ratio stood at 327 percent at the end of June, higher than the regulatory minimum of 250 percent, the parent company said.
As Yuanta Life’s asset value could easily be affected by volatility in the global financial market, a capital injection is necessary to safeguard it from future headwinds, Yuanta Financial said.
The new capital would also help it prepare for new capital accrual regulations set by the Financial Supervisory Commission, the company said.
Yuanta Financial’s board of directors passed the fundraising proposal at a meeting yesterday. The proposal still has to be approved by Yuanta Life’s board of directors and the commission.
Yuanta Commercial Bank (元大銀行) and Yuanta Securities Co (元大證券) are its major profit generators, Yuanta Financial said, adding that it hopes the life insurer would become its third profit engine.
The banking and securities companies reported net income of NT$8.59 billion and NT$8.88 billion for last year, accounting for 46 percent and 47.6 percent respectively of the parent company’s total profits, company data showed.
Yuanta Life is the sixth life insurer to have a capital injection this year, after China Life Insurance Co (中國人壽), Nan Shan Life Insurance Co (南山人壽), Shin Kong Life Insurance Co (新光人壽), Taiwan Life Insurance Co (台灣人壽保險) and Cathay Life Insurance Co (國泰人壽).
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