Cathay Life's capitalisation robust ahead of 2026 standards

The insurer holds a 21.3% market share of premiums in 2023,

Cathay Life maintains strong risk-based capitalisation, with a robust ratio of 323% at the end of 2023, above the regulatory minimum, assessed by Fitch Ratings. 

The insurer has issued subordinated debt to further bolster its capital buffer ahead of the Taiwan Insurance Capital Standard in 2026. 

Despite this, its financial leverage ratio increased to 14% by the end of the first quarter of 2024.

Cathay Life's profitability is driven by its strategic focus on long-term regular-premium and protection-type products, yielding a new business margin of 21% on first-year premiums in 2023. 

However, its profitability is sensitive to spread gains, particularly from traditional savings products.

The insurer faces challenges from high exposure to risky assets, primarily stocks and equity-type investments, which stood at 166% of equity and loss-absorbing reserves at the end of 2023. 

This exposes earnings and capital to volatility in equity markets and foreign-exchange risks, given that 67% of its assets are in foreign currencies.

Despite these risks, Cathay Life maintains a 'most favourable' business profile in Taiwan's life insurance market, holding a significant 21.3% share of premiums in 2023. 

“We believe the insurer will retain its market leadership, supported by strong brand recognition, competitive advantage, a diversified business mix and various distribution channels, including the largest agency sales force in the sector.” it said in a report.