Shin Kong Financial Holding Co (新光金控) plans to raise the capital of its insurance unit by NT$3.3 billion (US$109.72 million) to bolster the unit’s financial strength, it said in a filing with the Taiwan Stock Exchange (TWSE) on Friday.
The company’s board of directors has approved a plan to buy 183.33 million common shares issued by Shin Kong Life Insurance Co (新光人壽) at NT$18 each, the filing said.
Shin Kong Financial expects the cash injection to increase the insurance unit’s risk-based capital ratio by 13 to 20 percentage points to address the implementation of new International Financial Reporting Standards, it said.
Shin Kong Life’s equity-to-asset ratio fell to 2.33 percent as of the end of March, and it was one of the four life insurers closely monitored by the Financial Supervisory Commission, as the regulator hopes life insures will maintain equity-to-asset ratios of above 3 percent.
The equity-to-asset ratio is a measure of solvency, calculated by dividing total shareholders’ equity by the total assets of a company. The higher the ratio, the less leveraged a company is, meaning that a larger percentage of its assets are owned by the company and its investors.
Shin Kong Life said its ratio last month climbed above 4 percent as global equity markets recovered.
Separately on Friday, Shin Kong Life’s board of directors approved a proposal to increase its investment in affiliated Dingcheng Life Insurance Co (鼎誠人壽) by 187.5 million yuan (US$26.27 million), it said in a filing with the TWSE.
Shin Kong Life holds a 25 percent stake in the Chinese insurer, with an investment of NT$1.38 billion.
Dingcheng Life said it plans to raise 750 million yuan in the near term.
Dingcheng Life, formerly known as Shin Kong-HNA Life Insurance Co Ltd (新光海航人壽), was a 50-50 joint venture established by Shin Kong Life and HNA Group Co Ltd (海航集團) in 2009.
In 2018, Shin Kong Life sold a 25 percent stake in Dingcheng Life to two Chinese companies as part of the Chinese insurer’s restructuring plan, company data showed.