State-run Mega Financial Holding Co (兆豐金控) is reportedly planning a second capital increase for its non-life insurance arm, Chung Kuo Insurance Co (兆豐產險), as losses from claims linked to COVID-19 insurance policies widen sharply.
The bank-focused conglomerate earlier announced it would participate in Chung Kuo’s capital increase of NT$2 billion (US$62.8 million) later this year to boost its capitalization.
Chung Kuo incurred a net loss of NT$3 billion in the first half of this year, with the losses likely to widen for the full year given still-sizeable outstanding pandemic policies.
Photo courtesy of Mega Financial Holding Co
The insurer last month set aside another provision of NT$2.7 billion to absorb losses from COVID-19-related claims, which have resurged after subsiding in previous months.
The extra provision is based on the assumption that 35 percent of the nation’s population would at some point contract COVID-19, unnamed sources said.
As of Tuesday, local COVID-19 cases had reached more than 6.9 million cases, or about 30 percent of the population.
Health experts now expect positive cases to reach 40 percent or even 50 percent, far above the 20 percent level on which Chung Kuo’s first capital increase was based, the sources said.
The first capital increase was intended to boost the non-life insurer’s risk-based capital to 300 percent, but the target appears untenable with COVID-19 infections spiking and a second capital increase inevitable, the sources said.
COVID-19 claim losses amounted to NT$6.6 billion as of Sept. 30 and could approach NT$10 billion, if positive cases continue climbing toward the end of the year, they said.
Mega Financial used its own money to fund the first capital increase, but would have to borrow through debt issuance or other means for the second fundraising, the sources said.
Taiwan Ratings Corp (中華信評) on Tuesday removed Chung Kuo’s ratings from the “CreditWatch” state with negative implications, as it believed the insurer’s capitalization would remain excellent for the next two to three years with the anticipated capital injection and strong support from its parent.
“These factors will help to absorb substantial claim losses on its COVID-19 pandemic insurance policies sold in the first half of 2022,” Taiwan Ratings said in a statement, affirming its “twAA” long-term financial strength rating and issuer credit rating for Chung Kuo.
Taiwan Ratings, a local arm of S&P Global Ratings, placed the company on the “CreditWatch” category on June 8.
Taiwan’s foreign exchange reserves hit a record high at the end of last month, surpassing the US$600 billion mark for the first time, the central bank said yesterday. Last month, the country’s foreign exchange reserves rose US$5.51 billion from a month earlier to reach US$602.94 billion due to an increase in returns from the central bank’s portfolio management, the movement of other foreign currencies in the portfolio against the US dollar and the bank’s efforts to smooth the volatility of the New Taiwan dollar. Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民)said a rate cut cycle launched by the US Federal Reserve
Handset camera lens maker Largan Precision Co (大立光) on Sunday reported a 6.71 percent year-on-year decline in revenue for the third quarter, despite revenue last month hitting the highest level in 11 months. Third-quarter revenue was NT$17.68 billion (US$581.2 million), compared with NT$18.95 billion a year earlier, the company said in a statement. The figure was in line with Yuanta Securities Investment Consulting Co’s (元大投顧) forecast of NT$17.9 billion, but missed the market consensus estimate of NT$18.97 billion. The third-quarter revenue was a 51.44 percent increase from NT$11.67 billion in the second quarter, as the quarter is usually the peak
The US government on Wednesday sanctioned more than two dozen companies in China, Turkey and the United Arab Emirates, including offshoots of a US chip firm, accusing the businesses of providing illicit support to Iran’s military or proxies. The US Department of Commerce included two subsidiaries of US-based chip distributor Arrow Electronics Inc (艾睿電子) on its so-called entity list published on the federal register for facilitating purchases by Iran’s proxies of US tech. Arrow spokesman John Hourigan said that the subsidiaries have been operating in full compliance with US export control regulations and his company is discussing with the US Bureau of
Pegatron Corp (和碩), a key assembler of Apple Inc’s iPhones, on Thursday reported a 12.3 percent year-on-year decline in revenue for last quarter to NT$257.86 billion (US$8.44 billion), but it expects revenue to improve in the second half on traditional holiday demand. The fourth quarter is usually the peak season for its communications products, a company official said on condition of anonymity. As Apple released its new iPhone 17 series early last month, sales in the communications segment rose sequentially last month, the official said. Shipments to Apple have been stable and in line with earlier expectations, they said. Pegatron shipped 2.4 million notebook
RSS