Reported 8 months ago
At the South China Life shareholder meeting on June 18, 2024, in a high-interest rate environment, the company saw a 340 billion NT dollar insurance payout last year, with a first-quarter surrender ratio of 60%. Concerns were raised by small shareholders about the impact of high interest rates on reinvestment, introducing AI into underwriting and claims processes, and liquidity. Chairman Yen Chung-yao cited that in the current high-interest rate environment, there are short-term long and short challenges for the insurance industry, but South China Life is still seeing cash inflows without liquidity issues. They have also established a new business unit to utilize AI in risk assessment and assisting frontline staff. Factors like Taiwan-US interest rate spread and inflation pressure have led to a decline in the industry's performance compared to last year. South China Life reported a net profit of 22.1 billion NT dollars last year, with consolidated assets exceeding 5.3 trillion NT dollars and a net worth of 343.9 billion NT dollars. Amid the high interest rates, there is a trend of policy surrenders as funds move towards the stock market and ETFs, with the company recording 75 billion NT dollars in premium income this year and 52 billion NT dollars in surrenders, resulting in a 60% surrender ratio in the first quarter. Yen Chung-yao noted that the expected interest rate cut predicted by the market has shifted lower from 6-7 basis points to 1-2, as the current real interest rates are high and might not be sustainable for the economy. The impact on the insurance industry is multifaceted, with South China Life conducting financial modeling regarding high interest rates. Ultimately, the company is looking to purchase high-interest bonds, provided there is sufficient new money available. They also highlighted their investment strategy, with 70% invested in bonds and an upcoming reinvestment amount of 100 billion NT dollars over the next 3 years. Despite a strong performance in new contract premiums last year, the company's total premium income of 270 billion NT dollars, combined with net investments of 180 billion NT dollars, totaling over 460 billion NT dollars, ensures adequate liquidity.
Source: YAHOO