The Financial Supervisory Commission (FSC) on Thursday fined Fubon Life Insurance Co (富邦人壽) NT$2.4 million (US$77,315) for breaching the Insurance Act (保險法), saying that the insurer had failed to evaluate the risks of investing in foreign stocks.
During a routine inspection last year, the commission uncovered serious contraventions of Fubon Life Insurance’s internal controls when it could not provide the minutes of its investment meetings, Insurance Bureau Deputy Director-General Wang Li-hui (王麗惠) told a news conference.
The commission also found that the insurance company used loose assessment procedures before buying foreign stocks, which included failure to analyze cash flows of the targets or give reasons for their selections, Wang said.
Fubon Life did not conduct a solid risk assessment after purchasing the stocks, as it failed to pay attention to news reports about foreign companies in which it invested, and it did not update the companies’ financial statements, she said.
Fubon Life staffers did not report any information that had negatively affected the share prices of the targets to their managers, or analyze the effect on the company’s profit outlook, Wang said.
Reports on issues such as financial troubles might weigh on share prices, but Fubon Life failed to monitor such developments, she said.
“Overall, Fubon Life did not carry out sound investment assessments while investing policyholders’ money and it should have been more careful,” Wang said.
The commission declined to comment on whether Fubon Life incurred losses due to sloppy risk assessment.
Fubon Life reported total net profit of NT$25.64 billion for the first eight months of the year, down 12 percent from the same period a year earlier, company data showed.
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