Cathay Life net profit surges to $2b despite premiums decline

Premium slump was driven by weaker demand for investment-linked and interest-sensitive annuities.

In the first half of 2024 (H1 2024), Cathay Life's net profit surged to $1.46b (NT$47b), compared to $0.43b (NT$14b) in H1 2023.   

However, the Taiwanese insurer saw a decline in total premiums to $5.89b (NT$190b) from $6.23b (NT$201b) in H1 2023, driven by weaker demand for investment-linked and interest-sensitive annuities, said CreditSights.  

Although, its product mix improved with a greater focus on protection policies. Investment income increased to $5.21b (NT$168b) in 1H24 from $4.06b (NT$131b) a year earlier, with an improved yield of 4.28%, up from 3.44%.  

The company's risk-based capital (RBC) ratio remains robust at 352%, well above the regulatory minimum of 200%. Under Taiwan's new ICS regime, the RBC ratio is approximately 160%, lower than that of regional peers but still above the 100% regulatory requirement.  

Cathay Life's investment portfolio reached $244.90b (NT$7.9t) as of 1H24, with around 70% allocated to overseas investments, exposing the firm to significant FX risks, despite hedging costs remaining between 1-1.5%.  

Cathay Life, established in 1962, has a leading market share in Taiwan's life insurance sector, holding 21.3% as of 1H24, ahead of competitors such as Fubon Life (14.8%) and Nan Shan Life (12.3%).

($1.00 = NT$32.06)