By Kao Shih-ching / Workers reporter
Cathay Life Insurance coverage Co (國泰人壽) yesterday mentioned its after-hedging recurring yield is anticipated to hit a report excessive this 12 months, in gentle of upper overseas bond yields and decrease foreign-exchange hedging prices.
The revenue engine of Cathay Monetary Holding Co (國泰金控) noticed its pre-hedging recurring yield attain 3.16 p.c within the first half of this 12 months, up from 2.84 p.c a 12 months earlier, because of rising yields for brand new overseas bonds amid price hikes, it advised an internet buyers’ convention.
Cathay Life mentioned its money dividend earnings would doubtless develop 10 to fifteen p.c this 12 months from NT$20 billion (US$658 million) final 12 months, as its fairness investments have generated extra dividends this 12 months, in distinction to its focus final 12 months on realizing capital features by promoting shares, Cathay Life government vice chairman Lin Chao-ting (林昭廷) advised the convention.
Photograph: Allen Wu, Taipei Occasions
Like bond yields, money dividend earnings is a supply of recurring yield for all times insurers.
The life insurer mentioned it registered a hedging acquire of 0.21 p.c for the primary half of this 12 months, translating right into a acquire of US$0.21 for each US$1 invested in belongings denominated in foreign exchange.
The hedging acquire was because of the insurer’s well-performing hedging technique that helped offset hedging prices incurred in using extra conventional hedging instruments, akin to forex swaps and non-deliverable ahead, Lin mentioned.
Cathay Life continued to see hedging features final month, however whether or not it may keep the features throughout the second half would rely upon market situations, he mentioned.
“Total, contemplating our good pre-hedging recurring yield and the potential for making hedging features, we count on our after-hedging recurring yield to hit a report excessive this 12 months,” Lin mentioned.
From January to June, the life insurer made a web revenue of NT$40.5 billion, the second-highest for the interval, although it was down 48 p.c year-on-year because of a excessive comparability base final 12 months.
Requested if the implementation of the Worldwide Monetary Reporting Requirements 17 (IFRS 17) would have an effect on its monetary power, Cathay Life mentioned its e-book worth would increase below the brand new guidelines, citing inside calculations.
Beneath the IFRS 17, a life insurer’s belongings and money owed can be affected by altering rates of interest, and Cathay Life discovered that rising rates of interest would really result in an increase in its web value, Lin mentioned.
Nonetheless, it’s unsure whether or not price cuts would have an effect on the e-book worth contrarily, Lin mentioned, including that the corporate must do extra calculations.
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