Cathay Life Insurance Co (國泰人壽) yesterday reported a recurring yield of 3.29 percent as of the end of September, down from 3.8 percent a year earlier, as it takes a more cautious investment strategy amid the COVID-19 pandemic.
Recurring yield is a financial measure that shows how much a company earns from its investment on a regular basis.
Cathay Life registered recurring yields from a range between 3.47 and 3.8 percent during the January-to-September period over the past four years, company data showed.
Photo: Allen Wu, Taipei Times
Cathay Life was more proactive in taking advantage of the market volatility to sell stocks and secure capital gains than it was in the past few years, as it predicted that companies would distribute less cash dividends amid the pandemic, executive vice president Lin Chao-ting (林昭廷) told an investors’ conference in Taipei.
“We did not want to hold stocks just to get the dividends while losing the opportunity to earn the spread,” Lin said.
As the life insurer sold more stocks, it earned cash dividends of NT$16.2 billion (US$562.30 million) as of the end of September, down 34 percent from a year earlier, which trimmed its recurring yield by 16 basis points, he said.
Cathay Life preferred investment targets with higher credit ratings to avoid risks and disposed of those with ratings lower than triple B, which also reduced its recurring yield by 6 basis points, Lin said.
“Now we concentrate on those with ratings of triple B and A, while those with ratings of double B or lower only made up 1.6 percent of our investment portfolio, from 4.2 percent a year earlier,” Lin said.
A lower interest rate environment was also responsible for the drop in its recurring yield, he said.
Despite the lower recurring yield, Cathay Life booked capital gains of NT$112.7 billion for the first nine months of this year, which hit a record high and boosted the insurer’s cumulative net profit to a new high of NT$44.8 billion over the period.
Cathay Life said it would decide whether to raise its stake in Indonesia’s Bank Mayapada Internasional Tbk PT from 37.33 percent to 51 percent by the end of this year, after it in August booked an investment loss of NT$8.8 billion due to concerns about the lender’s operations amid a corporate scandal.
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