CBC Approves Cathay Life to Underwrite Policies in Greenbacks

Taipei, May 12, 2008 (CENS)--The Taiwan-based Central Bank of China (CBC) recently approved Cathay Life Insurance Co. to underwrite conventional insurance policies in greenbacks, the first instance of such practice in Taiwan. Cathay Life said it was first approved by the Cabinet-level Financial Supervisory Commission in March before being approved by CBC. The insurer promises to kick off sales of the newly designed policies as soon as possible.

Originally, Cathay Life set the designated annual interest rate for the greenback-denominated policies at 3.5%, which has been slashed to 3% in the wake of the drop in interest rate for U.S. dollars. The designated annual interest rate is used to regulate the level of insurance premiums to be paid by consumers, where higher the designated interest rate, the lower the payable premiums, and vice versa.

At present, the designated annual interest rates set by domestic insurers are between 2.5% and 2.75%. Originally, domestic life insurers believed such annual interest rates for greenback-based policies would reach between 3.5% and 4%, leading to a 10% to 30% reduction in premiums for such policies. As the interest rates on the greenback-based policies have plummeted, consumers have to pay more to take out insurance than expected. The recent depreciation of the greenback has diluted the popularity of U.S.-dollar-based insurance policies; but Cathay Life argues that it`s the right time to take out greenback-based policies as consumers would pay relatively less N.T. dollars in premiums.

Cathay Life said that the U.S.-dollar insurance policies fits the need of consumers in terms of effective financial management, especially considering that the insurer is targeting people planning to move overseas, those who want to go abroad for study, and those aiming to buy overseas property. Taking out greenback-based policies can be viewed as a way to hold foreign-currency assets.

Recently Cathay Life has begun recruiting salespeople to market these U.S.-dollar insurance policies, with another four domestic life insurers, including Shin Kong Life Insurance Co., Fubon Life Assurance Co., Prudential Life Insurance Co. and Nan Shan Life Insurance Co., also having applied for approval for such business from the FSC and CBC.

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