Shin Kong Financial Holding (SKFH), Taiwan's fifth-largest financial conglomerate, has reported a net profit of NT$20.5bn ($640m) in the first half of the year.
This represented a turnaround of the group’s financial performance as SKFH posted a net loss of NT$6.33bn for 1H2023. For the 2023 full year, SKFH’s net loss widened to NT$7.3bn.
In its interim financial statements, SKFH — the parent company of Shin Kong Life Insurance (SKL) — said that this core subsidiary posted net profits of NT$14.92bn for 1H2024 on the back of higher capital gains from equities and lower hedging costs. In 1H2023, the life insurer reported a net loss of NT$11.35bn.
In 1H2024, driven by strong sales momentum in FX policies, SKL’s first-year premium (FYP) increased 21.3% year-on-year to NT$28.60bn, boosting its market share to 7.6%.
SKL has been focusing on foreign currency policies and high-CSM products to control hedging costs, optimise asset-liability matching, and accumulate CSM. FYP of foreign currency policies grew 22.0% year-on-year to NT$16.74bn, accounting for 58.5% of the total. First-year premium equivalent (FYPE) grew 6.0% year on year NT$11.05bn, and FYPE/FYP was 38.6%.
SKL holds overseas fixed-income instruments, deploying funds in corporate bonds with stable credit quality across sectors, including communication, consumer, utilities, and financials. As of 30 June 2024, the company’s overseas fixed income position was around NT$2.4tn, and the funds were mainly invested in investment-grade corporate bonds. Annualised investment return after hedging for 1H2024 was 4.40%, 192 bps higher year-on-year; recurring yield after hedging was 2.35%, up 30 bps year-on-year.
Takeover and merger
SKFH is currently the target of a takeover by CTBC Financial Holding, but has a mutually agreed deal to merge with Taishin Financial Holding through a share swap.
A statement released by SKFH at the conference denounced CTBC Financial’s offer as a “raid”, reported Bloomberg.
SKFH president, Mr Stephen Chen, said that the group’s preference was for a deal with Taishin Financial. “Shin Kong wants a merger to deliver sustainable development and won’t necessarily prioritise a higher offer,” Mr Chen said at an earnings conference in Taipei.
SKFH, whose founder was a brother of Taishin Financial’s founder, would keep discussing a merger with Taishin, Mr Chen said.