Cathay Life, a prominent insurer in Taiwan, continues to demonstrate robust financial health and market leadership as it prepares for upcoming regulatory standards in 2026. According to Fitch Ratings, Cathay Life’s risk-based capitalisation remained strong at the end of 2023, standing at 323%, well above regulatory requirements. The insurer bolstered its capital reserves further by issuing subordinated debt, underscoring its proactive approach to meeting future regulatory obligations.
Despite these strengths, Cathay Life reported an increase in its financial leverage ratio to 14% by the end of the first quarter of 2024, indicating a heightened focus on managing its capital structure amidst evolving market conditions.
Cathay Life attributes its profitability to a strategic emphasis on long-term regular-premium and protection-type products, achieving a notable new business margin of 21% on first-year premiums in 2023. However, the insurer’s profitability remains sensitive to spread gains, particularly from traditional savings products.
The company faces challenges stemming from its significant exposure to risky assets, primarily stocks and equity-type investments, which constituted 166% of its equity and loss-absorbing reserves at the close of 2023. This exposure exposes Cathay Life’s earnings and capital to volatility in equity markets and foreign-exchange risks, given that 67% of its assets are held in foreign currencies.
Despite these risk factors, Cathay Life maintains a dominant position in Taiwan’s life insurance market, capturing a substantial 21.3% share of premiums in 2023. A recent report underscores the insurer’s confidence in retaining its market leadership, citing strong brand recognition, competitive advantages, a diversified business portfolio, and an expansive distribution network, including the largest agency sales force in the sector.
In conclusion, Cathay Life’s proactive capital management, strategic product focus, and robust market presence position it well for future regulatory challenges while continuing to navigate inherent market risks.
