KGI Life Insurance, based in Taiwan, has made significant strides in its financial performance in 2024 while reducing its exposure to risky assets. The company’s return on equity (ROE) reached 12.0% for the first nine months of the year, surpassing its three-year average of 10.7%. Despite maintaining strong financial results, Fitch Ratings highlights that the insurer’s earnings volatility remains a concern, particularly due to potential fluctuations in investment performance.
The company has focused on traditional life policies, which made up 72% of its premiums in the first half of the year. Its value of new business (VNB) margin showed significant improvement, expanding to 43.5% in the first half, compared to 34.3% in the previous year. This growth was primarily driven by a shift towards regular-premium policies, which offer more sustainable profit margins.
KGI Life also improved its regulatory risk-based capital (RBC) ratio, which rose to 363% by the end of the third quarter, up from 340% at the end of 2023. This improvement followed a TW$10 billion issuance of subordinated securities. Despite this issuance, the company’s financial leverage ratio remained low at 11%, signaling a healthy financial position.
Additionally, the insurer reduced its exposure to risky assets, including equities and below-investment-grade bonds, lowering it to 102% of shareholder equity and loss-absorbing reserves in the first half of 2024, down from 107% in 2023. This reduction was supported by a larger capital base, and Fitch does not anticipate any major changes to KGI Life’s investment mix in the near future.
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