Taipei, Nov. 17, 2008 (CENS)--Impacted by the global financial tsunami, the total owners` equity, or book value, of life insurers in Taiwan had shrunk to NT$170 billion as of the end of the third quarter, 60% less than the level at the end last year, with the number of life insurers suffering negative book values having doubled to eight during the period.

The phenomenon has alerted the Financial Supervisory Commission (FSC), which is pondering contingent plans for possible further deterioration of the situation.

In the wake of the stock market crash, life insurers have been forced to write down their book values to reflect their heavy loss in stock investments, in accordance with the requirement of No. 34 Basic Financial Statements. As a result, the total book value of the life insurance industry had plunged to NT$174.3 billion as of the end of the third quarter, 60% lower than NT$435.5 billion at the end of 2007 or NT$100 billion less than the level at the end of the second quarter.

With the rapid decline of their book values, life insurers have lapsed into a state of high-leverage operation. The FSC statistics show that the total equity capital of the life insurance industry amounts to only 4% of their assets now.

Moreover, four more life insurance witnessed their book values turning negative as of the end of the third quarter, including Farglory Life Insurance, Hontai Life Insurance, Aegon Life Insurance (Taiwan), and PCA Life Insurance (Taiwan), which joined the list of four others in chronic financial plight: Kuo Hua Life Insurance, Sinfor Life Insurance, Sinon Life Insurance, and Global Life Insurance. Both Kuo Hua and Sinfor are mired in negative book values to the tune of several tens of billions of book values.

However, Far Glory and Hontai have decided to carry out capital increments of NT$4 billion and NT$5 billion, respectively, while the British and Dutch parents firms of PCA (Taiwan) and Aegon (Taiwan) have also resolved to inject fresh funds to bolster their operations. The board of directors of Aegon (Taiwan) recently resolved to boost its capital by NT$4.8 billion to NT$28.1 billion.

(by Philip Liu)