The nation’s major financial conglomerates yesterday told their shareholders that the New Taiwan dollar’s rapid appreciation is taking a toll on their US-dollar based assets, but that the impact is manageable.
Shareholders gave their go-ahead to Fubon Financial Holding Co’s (富邦金) plan to distribute a NT$4.25 cash dividend and a NT$0.25 stock dividend per share from last year’s net income of NT$150.8 billion (US$5.08 billion), or earnings per shares of NT$10.77.
That represented a conservative payout ratio of 41.8 percent and came after the group incurred NT$5.79 billion of losses last month when the NT dollar gained 7 percent against the US dollar and caused NT$9.1 billion of losses at its main subsidiary, Fubon Life Insurance Co (富邦人壽).
Photo: CNA
Combined losses at the six major life insurance companies amounted to NT$34.891 billion last month, company data showed.
The Financial Supervisory Commission on Thursday announced temporary relief measures to help insurers cope with mounting capital strain and sharp declines in the valuations of US Treasuries.
Life insurers would be permitted to use an average exchange rate — mirroring the six-month average approach applied to equities — when calculating regulatory capital, excluding foreign currency and deposits, the commission said.
The regulator is also offering greater flexibility in liability reserve calculations, allowing a one-notch increase in interest rate assumptions for certain products and permitting full use of the latest mortality table if reserves remain above minimum policy values.
However, insurers must boost provisions for foreign exchange price fluctuation risk, the commission said.
Under the old system monthly reserve rates would rise from 0.06 percent to 0.085 percent, while the new system’s rate would increase from 0.1 percent to 0.125 percent, it said.
Insurers are also required to earmark 30 percent of this year’s pretax profit toward those reserves, it added.
Fubon Life said the relief measures would substantially mitigate its losses and that it is increasing its hedging ratio to maintain its financial health.
Meanwhile, Cathay Financial Holding Co (國泰金) shareholders approved a proposal to issue a NT$3.5 cash dividend per share from last year’s net income of NT$111.23 billion, or earnings per share of NT$7.29.
Cathay Financial chairman Tsai Hong-tu (蔡宏圖) said the local currency’s appreciation was quite shocking and the company delivered an acceptable performance despite room for improvement.
Flagship subsidiary Cathay Life Insurance Co (國泰人壽) managed to post a small gain of NT$440 million last month, company data showed.
State-run Hua Nan Financial Holdings Co (華南金控) told its shareholders that for every NT$1 appreciation against the US dollar, Hua Nan Commercial Bank (華南銀行) would post NT$120 million less profit.
A strong NT dollar also would affect exports and the broader economy, the company said, adding that the foreign exchange market appears relatively calm this month compared with last month.
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