The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision.
The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said.
In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee on investment decisions, without any checks, Insurance Bureau Director-General Shih Chiung-hwa (施瓊華) told a news conference in New Taipei City.
Photo: Kao Shih-ching, Taipei Times
The committee, led by Wu, increased its investment by NT$96.66 billion in several US stocks and exchange-traded funds in two consecutive days in January, ignoring warnings from the insurer’s risk management department, Shih said.
However, as US stocks tumbled, the insurer’s value-at-risk, a measure of the risk of investment loss given market conditions, increased to 43.33 percent by the end of March 27, which was 2.75 times higher than the 15.73 percent limit set by the insurer’s board members, Shih added.
The investment also caused the insurer’s equity-to-asset ratio, a key solvency gauge, to fall to 2.2 percent as of the end of March, below the regulatory minimum of 3 percent, she added.
“Even though the firm’s risk-based capital ratio dropped below the board member’s goal of 250 percent, the committee did not discuss how to improve it. There were no minutes of the committee’s meetings, which indicates poor internal controls,” Shih said.
Wu, who should have ensured the firm’s financial strength and solvency, on the contrary weakened them by allowing the committee not to report to the board of directors and appointing more than half of the committee’s 16 members, so the commission suspended his chairmanship and barred him from becoming a board member until his term ends in June 2023, she said.
“We expect the insurance company to get back on track by overhauling its mechanisms for investment and risk management while Wu is absent,” Shih said.
The commission also dismissed Shin Kong Life vice president and chief investment officer James Yuan (袁宏隆), as he ignored risks by taking on fixed-income stocks with poor liquidity, asking the firm’s research team to revise reports so that the investment team could invest in targets and make at-the-close orders in the local stock market to boost its asset valuations.
The commission said that it has lowered the insurer’s ratio of overseas investment to a total investment of 39 percent, from 43 percent, which means that the firm can only sell its foreign assets and cannot buy any new targets until the ratio drops, it added.
The commission did not set a deadline for Shin Kong Life to trim the ratio, but demanded that it not buy any local or foreign stocks and exchange-traded funds before the adjustment is completed, Shih said.
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
INVEST IN TAIWAN: A metal components casting firm and the world’s largest maker of aluminum bicycle rims also obtained approvals to join the program Solar Applied Materials Technology Co (SOLAR, 光洋應用材料), a part of Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) “green supply chain,” has pledged to invest NT$1 billion (US$34.1 million) to build a new plant at the Tainan Technology Industrial Park (台南科技工業區), the Ministry of Economic Affairs said yesterday. SOLAR has been collaborating with TSMC to extract precious metals from waste and reuse them as “sputtering target” material in high-end semiconductor manufacturing, a TSMC press release issued in May said. Established in 1978, SOLAR also offers key materials and integrated services to customers in the optoelectronics, information and communications technology, petrochemicals and consumer electronics industries,
Swancor Renewable Energy Co (上緯新能源) yesterday announced plans for a 4.4 gigawatt (GW) offshore wind project off Miaoli County as part of its commitment toward Taiwan’s energy transformation, the company said in a statement. The “Formosa 4” project includes three deep-water wind farms 18km to 20km off the coast, Swancor Renewable CEO Lucas Lin (林雍堯) said, adding that planning for the project began last year. A proposal for Formosa 4 was this week submitted to the Environmental Protection Agency (EPA), the company said. Swancor Renewable jointly developed the Formosa 1 project, a 128 megawatt (MW) wind farm about 4km off Miaoli and the