The Financial Supervisory Commission (FSC) of Taiwan has expressed concern about the financial health of three domestic life insurers following the release of their financial reports for the first half of the year.
In a report from The Taipei Times, the commission announced its intention to issue warning letters to Shin Kong Life Insurance, Mercuries Life Insurance, and Hontai Life Insurance for falling short of maintaining their risk-based capital at the required level of 200%.
Additionally, insurance regulations stipulate that all life insurers must maintain a net worth of at least 3% in at least one of the two most recent inspection periods. Life insurers failing to meet these requirements must implement measures to enhance their financial position, which could include increasing capital, selling real estate assets, or pursuing other solutions.
Among the three insurers, Shin Kong Life did not meet the initial requirement, with its capital adequacy ratio dropping to 184.38% by the end of June. The FSC had already noted a decline in the company's capital adequacy ratio last year and suggested improvements. However, as the situation did not improve, the FSC will now request specific measures to address the issue. Despite this, Shin Kong Life maintained a net worth ratio of 4.34%, surpassing the minimum required.
Mercuries Life had a capital adequacy ratio of 140.23%, and in response, the company recently introduced a plan to bolster its capital by issuing 500 million new shares. While the life insurer improved its net worth ratio from 2.19% to 2.84%, it still fell short of the statutory 3% requirement.
Hontai Life reported a risk-based capital of 145.82% and a net worth ratio of 2.42%. The company has proposed enhancing its capital by selling real estate, but it has encountered difficulties in finding buyers for these assets.
Meanwhile, a separate report indicated that the Taiwan general insurance sector is poised for robust expansion in the following years, projected to attain a compound annual growth rate (CAGR) of 6.4% from TWD248.1 billion ($8.4 billion) in 2023 to TWD317.8 billion ($11.3 billion) in 2027 in terms of gross written premiums (GWP).
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