The nation’s major life insurers this month are continuing to cut the declared interest rates for interest-sensitive products, due to falling bond yields amid a low-interest rate environment, the companies said yesterday.
Life insurers release rates on a monthly basis, based primarily on their investment returns, which they use to calculate policyholders’ distributions.
Cathay Life Insurance Co (國泰人壽) on Wednesday said it would reduce the declared interest rates for 62 US dollar-denominated policies by a range of 5 to 10 basis points, and those for 77 New Taiwan dollar policies by a range of 1 to 10 basis points.
After the revision, the rates for its US dollar products slid to between 1.95 percent and 3.2 percent, while those of its NT dollar policies fell to a range of 0.47 percent to 1.9 percent, corporate data showed.
Cathay Life, the leading insurer with a market share of 19.19 percent, cut rates as yields of corporate bonds, which make up a big portion of its portfolio, declined last month, with 10-year US Treasury yields remaining at a historically low level, or less than 1 percent, Cathay Life executive vice president Lin Chao-ting (林昭廷) told the Taipei Times by telephone.
Meanwhile, the insurer’s cost of foreign exchange hedging remains high, as the NT dollar was the only Asian currency that has kept strengthening against the US dollar over the past few months, which made its hedging programs ineffective, Lin said.
Nan Shan Life Insurance Co (南山人壽) and Yuanta Life Insurance Co (元大人壽) also lowered rates.
Nan Shan Life kept the rates for its US dollar policies unchanged, but cut the rates for its NT dollar products by 10 basis points, driving the rates to 1.95 percent, corporate data showed.
Yuanta Life slashed the rates for 17 US dollar-denominated policies by a range of 40 to 50 basis points, and rates for 17 NT dollar products by a range of 10 to 25 basis points, it said.
The rates of its US dollar products stand at between 3 percent and 3.2 percent after the cuts, while those of its NT dollar policies hover between 1.9 percent and 2.1 percent, it said.
Taiwan Life Insurance Co (台灣人壽保險) bucked the trend, raising the rates for its US dollar products by 20 basis points, and increased the rates of a six-year protection-type policy to 3.25 percent, the highest among all US dollar products on the market.
The insurer aimed to bring the rates to a more “normal” level, it said in a statement.
Fubon Life Insurance Co (富邦人壽), Shin Kong Life Insurance Co (新光人壽) and China Life Insurance Co (中國人壽) did not adjust their rates.
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