By Kao Shih-ching / Employees reporter
The common equity-to-asset ratio at seven native life insurers final month dropped beneath the three p.c minimal as funding worth plummeted amid price hikes, the Monetary Supervisory Fee stated on Monday.
The corporations are Nan Shan Life Insurance coverage Co (南山人壽), Cathay Life Insurance coverage Co (國泰人壽), PCA Life Assurance Co (保誠人壽), Mercuries Life Insurance coverage Co (三商美邦人壽保險), Hontai Life Insurance coverage Co (宏泰人壽), Allianz Taiwan Life Insurance coverage Co (安聯人壽) and First Life Insurance coverage Co (第一金人壽).
Nan Shan’s equity-to-asset ratio — a solvency measure — sank to minus-0.59 p.c, that means it had a unfavourable internet value final month.
The corporate on Monday blamed rising rates of interest for a plunge within the valuation of its fixed-income investments.
The fee yesterday met with the businesses to debate whether or not they may reclassify their monetary property below present accounting guidelines, the Worldwide Monetary Reporting Requirements 9 (IFRS 9).
Nevertheless, the assembly didn’t yield any conclusions.
As a substitute, the Accounting Analysis and Growth Basis would bear in mind the insurers’ opinions and determine whether or not the IFRS 9 permits such reclassification, Insurance coverage Bureau Deputy Director-Normal Thomas Chang (張玉煇) stated.
Cathay Monetary Holding Co (國泰金控) president Lee Chang-ken (李長庚) yesterday stated he helps reclassification, as it could assist life insurers mitigate the results of aggressive price hikes by the US Federal Reserve on their monetary studies.
“It’s unprecedented that the Fed boosted its coverage price by 3 share factors in seven months,” Lee stated. “Insurers have confronted issues from plunging funding valuations. It will be right for regulators to be lenient.”
With risk-based capital ratio (RBC) nonetheless above 300 p.c, Cathay Life has strong capital adequacy, Lee stated, including that if a life insurer’s equity-to-asset ratio and RBC are beneath the minimal necessities, the state of affairs ought to be examined fastidiously.
Cathay Life isn’t on this state of affairs, he stated.
The fee would use life insures’ December monetary studies to find out whether or not they need to submit enterprise enchancment plans, Insurance coverage Bureau Director-Normal Shih Chiung-hwa (施瓊華) stated.
It will ask life insurers subsequent yr to calculate their monetary studies below the IFRS 17, which is slated to take impact in Taiwan in 2025 and requires corporations to regulate their liabilities with price modifications, Shih stated.
The fee would assess the results of the brand new guidelines on native life insurers, she stated.
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