Cathay Financial Holding Co (國泰金控) yesterday said that the local currency’s sharp appreciation has limited impact on its life insurance arm, thanks to 20 years of experience in managing foreign exchange risk.
Cathay Life Insurance Co (國泰人壽) has stood by a dynamic and flexible hedging strategy, which maintained total foreign exchange losses — including valuation changes and hedging costs — at NT$7.3 billion (US$243.15 million), Cathay Life spokesman Lin Chao-ting (林昭廷) told an investors conference in Taipei.
Unrealized losses would ease to NT$5.4 billion after factoring in gains from other currency operations, compared with Cathay Life’s NT$5 trillion in overseas assets — primarily in US corporate bonds, Lin said.
Photo: CNA
The New Taiwan dollar rose 3.6 percent against the US currency last month and has increased another 6.1 percent this month, raising market concerns over possible erosion of capital sufficiency and profitability among local life insurers.
Fitch Ratings and Taiwan Ratings issued separate warnings about domestic life insurers’ profitability outlook, attributable to foreign exchange volatility.
Cathay Life’s foreign exchange exposure is well-controlled, as it has significantly increased its traditional hedging ratio since late 2023 by taking advantage of low-cost opportunities in the non-deliverable forward market, Lin said.
In the previous quarter, the insurer raised its traditional hedging ratio from 65 to 69 percent, while extending hedge tenors from one-to-three months to six-to–24 months, he added.
It also increased its allocation for non-greenback currencies, further enhancing its alternative hedging effectiveness, Lin said.
Only 22 percent of Cathay Life’s portfolio, or about NT$840 billion, is exposed to foreign exchange risk, he said.
With 40 percent covered by alternative hedging tools, the exposure impacting the income statement is limited to about NT$560 billion, Lin said.
For every 1 percent appreciation in the NT dollar, Cathay Life would incur a manageable NT$2 billion loss in foreign exchange, he said.
Cathay Life has also filed a request with the Financial Supervisory Commission to use a new foreign exchange reserve mechanism that would allow the insurer to fully offset foreign exchange losses for this month, even if the NT dollar continues to appreciate, Lin said.
As of March, Cathay’s foreign exchange reserve amounted to NT$30.5 billion, with an extra NT$3 billion provisioned for the January-through-April period, he said.
Even if the NT dollar gains 10 percent to reach NT$29.5, Cathay’s risk-based capital ratio would remain at a robust 329 percent, down from 359 percent in December last year, but still well above the regulatory minimum of 200 percent, Lin said.
The local currency yesterday closed up NT$0.047 at NT$30.023 in Taipei trading.
The net worth ratio would decline by 0.7 percentage points to 8.18 percent, also comfortably above the 3 percent threshold, Lin said.
BYPASSING CHINA TARIFFS: In the first five months of this year, Foxconn sent US$4.4bn of iPhones to the US from India, compared with US$3.7bn in the whole of last year Nearly all the iPhones exported by Foxconn Technology Group (富士康科技集團) from India went to the US between March and last month, customs data showed, far above last year’s average of 50 percent and a clear sign of Apple Inc’s efforts to bypass high US tariffs imposed on China. The numbers, being reported by Reuters for the first time, show that Apple has realigned its India exports to almost exclusively serve the US market, when previously the devices were more widely distributed to nations including the Netherlands and the Czech Republic. During March to last month, Foxconn, known as Hon Hai Precision Industry
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and the University of Tokyo (UTokyo) yesterday announced the launch of the TSMC-UTokyo Lab to promote advanced semiconductor research, education and talent development. The lab is TSMC’s first laboratory collaboration with a university outside Taiwan, the company said in a statement. The lab would leverage “the extensive knowledge, experience, and creativity” of both institutions, the company said. It is located in the Asano Section of UTokyo’s Hongo, Tokyo, campus and would be managed by UTokyo faculty, guided by directors from UTokyo and TSMC, the company said. TSMC began working with UTokyo in 2019, resulting in 21 research projects,
Taiwan’s property market is entering a freeze, with mortgage activity across the nation’s six largest cities plummeting in the first quarter, H&B Realty Co (住商不動產) said yesterday, citing mounting pressure on housing demand amid tighter lending rules and regulatory curbs. Mortgage applications in Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung totaled 28,078 from January to March, a sharp 36.3 percent decline from 44,082 in the same period last year, the nation’s largest real-estate brokerage by franchise said, citing data from the Joint Credit Information Center (JCIC, 聯徵中心). “The simultaneous decline across all six cities reflects just how drastically the market
Ashton Hall’s morning routine involves dunking his head in iced Saratoga Spring Water. For the company that sells the bottled water — Hall’s brand of choice for drinking, brushing his teeth and submerging himself — that is fantastic news. “We’re so thankful to this incredible fitness influencer called Ashton Hall,” Saratoga owner Primo Brands Corp’s CEO Robbert Rietbroek said on an earnings call after Hall’s morning routine video went viral. “He really helped put our brand on the map.” Primo Brands, which was not affiliated with Hall when he made his video, is among the increasing number of companies benefiting from influencer
RSS