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 may be partially offset by pressure on the company's market position and earnings as a result of strong domestic competition. Cathay Life is a wholly owned subsidiary of Cathay Financial Holding Co. Ltd. (BBB+/Stable/A-2). It is the group's flagship company and its main earnings contributor. Cathay Life accounted for 62% of its parent company's consolidated assets of Taiwan dollar (NT$) 2.5 trillion and 58% of its capital of NT$146.7 billion at the end of June 2004. Cathay Life has a strong business profile, with a dominant position and an extensive domestic distribution network. In 2003,
