Cathay Life led premium growth whilst its CSM margin remained below peers.
Taiwan’s major life insurers reported stronger second-quarter earnings as investment income increased, although strategies on new business profitability varied, according to CreditSights.
Cathay Life, Fubon Life, Nan Shan Life and Shin Kong Life all recorded higher net income in the second quarter compared with the first. Shin Kong Life was the exception in terms of the scale of improvement, due to a high base and a smaller increase in investment income.
Total financial results rose by 147% to 314% quarter-on-quarter at Cathay Life, Fubon Life and Nan Shan Life.
The gains were supported by higher recurring interest income, stronger equity investment gains, lower hedging costs and reduced foreign exchange losses.
Unrealised gains on equity investments classified as fair value through other comprehensive income also increased insurers’ equity, although these gains were not recognised in profit and loss.
This contributed to an increase of about 3 percentage points quarter-on-quarter in the insurers’ equity-to-assets ratios.
Cathay Life continued to report the strongest premium growth amongst the four insurers. However, its contractual service margin (CSM) margin remained below those of its peers.
Nan Shan Life took the opposite approach, increasing the share of products with higher CSM but at the cost of lower first-year premiums (FYP).
Both Nan Shan Life and Cathay Life reported only modest 0%-1% growth in new business CSM.
Fubon Life, positioned between the two strategies, reported a 12% increase in new business CSM.
Nan Shan Life was the only insurer to publicly disclose its Taiwan Insurance Capital Standard (TW-ICS) ratio, at 130%. The ratio was below its previous guidance, whilst the other insurers have not disclosed their latest TW-ICS ratios.