Taipei, May 13, 2008 (CENS)--The appreciation of the New Taiwan dollar has seriously hit the domestic life insurance industry, with a total of 29 life insurance companies operating in Taiwan suffered record loss of NT$27.374 billion (US$897.5 million at US$1:NT$30.5) in the first two months of this year, according to statistics compiled by the non-profit Taiwan Insurance Institute.

Taiwan`s two-largest life insurers, including Cathay Life Insurance Co. and Shin Kong Life Insurance Co., registered a total loss of NT$7.47 billion (US$244.91 million) in the first two months. The remaining 27 life insurance companies swallowed aggregate operating loss of over NT$20 billion (US$655.73 million) in the same period.

Earlier, Susan Chang, vice chairwoman of the Cabinet-level Financial Supervisory Commission (FSC), has noticed that domestic life insurers would post hefty operating losses in the first two months because of foreign exchange loss. It turns out the firms` operating losses were equivalent to 6% of their shareholders` equity in the first two months of this year.

The FSC noted domestic life insurance industry slashed overseas investments by NT$22.4 billion (US$734.42 million) to trim losses in the first two months because of the impact of the U.S. subprime mortgage crisis.

Despite a net increase of NT$100 billion (US$32.78 million) in investments in the first two months of this year, domestic life insurers didn`t make heavy investments in domestic bourse because of its unclear prospects. The FSC`s statistics showed domestic life insurance sector saw outstanding investments in domestic bourse reach NT$556 billion (US$18.22 billion) at the end of February this year. Most life insurers said they didn`t increase investments in domestic bourse but only shift investment portfolio in the first two months.

Domestic life insurance industry invested the most in domestically issued bonds, at NT$59.3 billion (US$1.94 billion) in the first two months of this year, leading to an outstanding investment of NT$1.79 trillion (US$58.68 billion).

The industry increased investments of NT$43.6 billion (US$1.42 billion) in benefit certificates in the first two months of this year, to see outstanding investments reach NT$88.6 billion (US$2.9 billion) at the end of February.

In addition, the industry raised investments of NT$11 billion (US$360.65 million) in domestic property in the first two months with outstanding investments reaching NT$300 billion (US$9.83 billion) at the end of February.

(by Ben Shen)