No gov’t bonds from PIIGS countries bought recently: Fubon


TAIPEI–Fubon Financial Holding said it did not acquire any government bonds from debt-ridden Portugal, Ireland, Italy, Greece and Spain (the PIIGS countries) in the past two years.

At an investor conference held Friday, Fubon Financial said Fubon Life Insurance, one insurance arm of the financial holding, has not purchased government bonds issued by the PIIGS countries in the last two years.

Instead, Fubon Financial said, Fubon Life Insurance holds government bonds issued by highly regarded financial institutions in Germany, France and the United Kingdom, which remain financially strong in Europe. The comments came amid rising worries over the exposure of the local insurance industry to the debt shouldered by the PIIGS countries.

The local media cited the Financial Supervisory Commission, the top financial watchdog in Taiwan, as saying exposure of the local insurance industry to the PIIGS countries at the end of April rose more than 20 percent from the end of last year to about NT$75.7 billion (US$2.56 billion).

Due to its prudence toward the financial situation in Europe, Fubon Financial said the value of its investment portfolio remained stable, although the escalating debt problems in the eurozone have sent ripples through the global financial markets and hurt many investors.

Fubon Financial also said its total assets at the end of March totaled NT$3.82 trillion, up 9.4 percent from a year earlier, making the company the second largest stock market-listed financial firm in Taiwan.

Fubon Financial said the increase in its total assets partly reflected the appropriate investment strategy and growing insurance premiums of Fubon Life Insurance, which posted NT$1.14 billion in net profit for the first quarter of this year.

According to Fubon Financial, the embedded value of Fubon Life Insurance at the end of 2011 rose 13.18 percent from a year earlier to NT$176 billion, while the embedded value of Fubon Financial reached NT$19.5 per share.

Embedded value is calculated based on the adjusted net asset value and the present value of future profits of a firm.

In the first quarter of this year, Fubon Financial posted NT$6.86 billion in net profit, or NT$0.76 per share, becoming the most profitable financial holding company in Taiwan.

Meanwhile, Fubon Financial said Taipei Fubon Bank posted NT$3.91 billion in net profit for the first quarter, up 44.74 percent due to an improving interest spread and investment growth.

Taipei Fubon Bank enjoyed a 10.9 year-on-year percent increase in outstanding loans in the past quarter and maintained its non-performing loan ratio at 0.24 percent.