The ratings on Cathay Life Insurance Co. Ltd. (Cathay Life) reflect its good operating performance, and strong business franchise, liquidity, and financial flexibility. These factors are partially offset by pressure on the company's earnings as a result of strong competition and negative spreads. Cathay Life is a wholly owned subsidiary of Cathay Financial Holding Co. Ltd. (Cathay FHC, BBB+/Stable/A-2), which was set up in December 2001. Cathay Life is the flagship of the group and the main earnings contributor. Cathay Life has the leading position in Taiwan's life insurance market. In 2002, the company had a market share of 38% in terms of assets and 32% in terms of premiums. Cathay Life's asset size is about double that of Taiwan's
