The Financial Supervisory Commission (FSC) has voiced concern over the health of three domestic life insurers after they released their financial statements for the first six months.
The commission on Thursday said it would send warning letters to Shin Kong Life Insurance Co (新光人壽), Mercuries Life Insurance Co (三商美邦人壽) and Hontai Life Insurance Co (宏泰人壽) for failing to keep their risk-based capital above the required 200 percent.
Insurance rules also require all life insurers to maintain a net worth of more than 3 percent in at least one of the latest two inspection periods, the commission said.
Life insurers unable to meet the requirements must come up with enhancement measures such as increasing their capital, real-estate disposals or other solutions, the commission said.
Shin Kong Life failed the first test, while Mercuries Life and Hontai Life failed both requirements, Insurance Bureau Deputy Director Lin Chih-hsien (林志憲) said.
Shin Kong Life’s capital adequacy ratio slipped to 184.38 percent based on its financial statement at the end of June.
Lin said the commission first noticed the company’s capital adequacy ratio falling last year and suggested improvements to prevent further deterioration. The situation failed to improve and the commission is to request concrete measures to remedy the situation, Lin said.
However, Shin Kong Life kept its net worth ratio at 4.34 percent, higher the required minimum, the commission said.
Mercuries Life had a capital adequacy ratio of 140.23 percent and last month introduced a plan to shore up its capital by issuing 500 million new shares, it said.
The life insurer’s risk-based capital declined from 155.83 percent in the second half of last year to 140.23 percent in the first half of this year, much weaker than the 200 percent benchmark, the commission said.
At the same time, the company’s net worth ratio improved from 2.19 percent to 2.84 percent, but still lagged behind the statutory 3 percent, it said.
That explained why Mercuries Life in March increased its capital by NT$2.53 billion (US$79.41 million) and put forth plans for additional capital augmentation plans and property disposals, Lin said.
Hontai Life had a risk-based capital of 145.82 percent and a net worth ratio of 2.42 percent, and has proposed enhancing its capital by selling real estate, but it has so far failed to find buyers, Lin said.
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