The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision.
The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said.
In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee on investment decisions, without any checks, Insurance Bureau Director-General Shih Chiung-hwa (施瓊華) told a news conference in New Taipei City.
Photo: Kao Shih-ching, Taipei Times
The committee, led by Wu, increased its investment by NT$96.66 billion in several US stocks and exchange-traded funds in two consecutive days in January, ignoring warnings from the insurer’s risk management department, Shih said.
However, as US stocks tumbled, the insurer’s value-at-risk, a measure of the risk of investment loss given market conditions, increased to 43.33 percent by the end of March 27, which was 2.75 times higher than the 15.73 percent limit set by the insurer’s board members, Shih added.
The investment also caused the insurer’s equity-to-asset ratio, a key solvency gauge, to fall to 2.2 percent as of the end of March, below the regulatory minimum of 3 percent, she added.
“Even though the firm’s risk-based capital ratio dropped below the board member’s goal of 250 percent, the committee did not discuss how to improve it. There were no minutes of the committee’s meetings, which indicates poor internal controls,” Shih said.
Wu, who should have ensured the firm’s financial strength and solvency, on the contrary weakened them by allowing the committee not to report to the board of directors and appointing more than half of the committee’s 16 members, so the commission suspended his chairmanship and barred him from becoming a board member until his term ends in June 2023, she said.
“We expect the insurance company to get back on track by overhauling its mechanisms for investment and risk management while Wu is absent,” Shih said.
The commission also dismissed Shin Kong Life vice president and chief investment officer James Yuan (袁宏隆), as he ignored risks by taking on fixed-income stocks with poor liquidity, asking the firm’s research team to revise reports so that the investment team could invest in targets and make at-the-close orders in the local stock market to boost its asset valuations.
The commission said that it has lowered the insurer’s ratio of overseas investment to a total investment of 39 percent, from 43 percent, which means that the firm can only sell its foreign assets and cannot buy any new targets until the ratio drops, it added.
The commission did not set a deadline for Shin Kong Life to trim the ratio, but demanded that it not buy any local or foreign stocks and exchange-traded funds before the adjustment is completed, Shih said.
RECYCLE: Taiwan would aid manufacturers in refining rare earths from discarded appliances, which would fit the nation’s circular economy goals, minister Kung said Taiwan would work with the US and Japan on a proposed cooperation initiative in response to Beijing’s newly announced rare earth export curbs, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. China last week announced new restrictions requiring companies to obtain export licenses if their products contain more than 0.1 percent of Chinese-origin rare earths by value. US Secretary of the Treasury Scott Bessent on Wednesday responded by saying that Beijing was “unreliable” in its rare earths exports, adding that the US would “neither be commanded, nor controlled” by China, several media outlets reported. Japanese Minister of Finance Katsunobu Kato yesterday also
Jensen Huang (黃仁勳), founder and CEO of US-based artificial intelligence chip designer Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on Friday celebrated the first Nvidia Blackwell wafer produced on US soil. Huang visited TSMC’s advanced wafer fab in the US state of Arizona and joined the Taiwanese chipmaker’s executives to witness the efforts to “build the infrastructure that powers the world’s AI factories, right here in America,” Nvidia said in a statement. At the event, Huang joined Y.L. Wang (王英郎), vice president of operations at TSMC, in signing their names on the Blackwell wafer to
‘DRAMATIC AND POSITIVE’: AI growth would be better than it previously forecast and would stay robust even if the Chinese market became inaccessible for customers, it said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday raised its full-year revenue growth outlook after posting record profit for last quarter, despite growing market concern about an artificial intelligence (AI) bubble. The company said it expects revenue to expand about 35 percent year-on-year, driven mainly by faster-than-expected demand for leading-edge chips for AI applications. The world’s biggest contract chipmaker in July projected that revenue this year would expand about 30 percent in US dollar terms. The company also slightly hiked its capital expenditure for this year to US$40 billion to US$42 billion, compared with US$38 billion to US$42 billion it set previously. “AI demand actually
RARE EARTHS: The call between the US Treasury Secretary and his Chinese counterpart came as Washington sought to rally G7 partners in response to China’s export controls China and the US on Saturday agreed to conduct another round of trade negotiations in the coming week, as the world’s two biggest economies seek to avoid another damaging tit-for-tat tariff battle. Beijing last week announced sweeping controls on the critical rare earths industry, prompting US President Donald Trump to threaten 100 percent tariffs on imports from China in retaliation. Trump had also threatened to cancel his expected meeting with Chinese President Xi Jinping (習近平) in South Korea later this month on the sidelines of the APEC summit. In the latest indication of efforts to resolve their dispute, Chinese state media reported that
RSS