Cathay Life Insurance Co. Ltd.

Cathay Life's significant domestic scale, well-established distribution force, and diversified customer base should help the company to secure satisfactory business prospects over the next one to two years. In addition, we believe the insurer's very strong control over distribution channels allows it to extract slightly above-average growth from targeted product lines. The stable rating outlook reflects our view that Cathay Life will maintain its capital adequacy (under a moderate stress scenario at a 99.5% confidence level) over the next one to two years. This will be supported by the insurer's proactive asset liability management, a likely reduction in capital consumption and slower growth in invested assets. We believe the life insurer will remain the group's flagship entity and continue to

...Very strong business prospects, given the ability to effectively deploy product strategies via distribution channels. As the largest player in the domestic life insurance sector by premiums written, Cathay Life Insurance Co. Ltd. has the biggest direct agency force. This should help the insurer sustain its competitive advantages for the foreseeable future, in our view. Cathay Life's significant domestic scale, well-established distribution force, and diversified customer base should help the company to secure satisfactory business prospects over the next one to two years. In addition, we believe the insurer's very strong control over distribution channels allows it to extract slightly above-average growth from targeted product lines. Earnings are similar to other domestic life insurers. Structural weaknesses in Taiwan's life insurance sector constrain market conditions, resulting in lengthier time to resolve the legacy issue of negative spread that affects most insurers, given the low domestic...

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