Strong Stock Market Drives KGI Life to Realize Nearly NT$20 Billion in Capital Gains in First Four Months

Cathay Financial Holdings held its online Q1 investor conference on the afternoon of June 2. Cathay Financial CFO Huang Pi-ling stated that the financial holding company's cumulative profit for the first four months was NT$17.59 billion, with earnings per share (EPS) of NT$1.04. Adjusted profit, including gains from the disposal of FVOCI (financial assets measured at fair value through other comprehensive income) stocks, reached NT$37.46 billion, a record high for the same period. Although gains from FVOCI stock disposals are not included in current period profit or loss, they are still reflected in retained earnings. KGI Life has timely realized nearly NT$20 billion in capital gains as of April this year, effectively expanding the basis for distributable earnings.

Huang noted that KGI Securities, as the second-largest securities firm in the market, benefited from the expansion of the average daily trading volume on the Taiwan Stock Exchange. Its profit for the first four months was NT$9.8 billion, a 368% year-on-year increase, also a record high for the same period. The strong stock market performance this year has allowed the securities and life insurance subsidiaries to continuously capture market momentum, contributing to operational performance and boosting the financial holding company's net worth by over NT$80 billion compared to the end of last year.

Regarding dividend policy, Huang pointed out that the planning for dividends remitted from subsidiaries will consider financial planning and the business development of the subsidiaries. KGI Life has also applied to distribute dividends, but it requires approval from the competent authority. The financial holding company will also consider factors such as yield and historical payout ratio in its overall assessment, adding, "Please rest assured."

Looking at the overall economic outlook for this year, Hsieh Hsin-hsin, Senior Executive Vice President and Chief Investment Officer of KGI Life, stated that Taiwan's economic growth rate this year is very strong, and the core Consumer Price Index (CPI) is also growing moderately. She expects the Central Bank of the Republic of China (Taiwan) to likely keep interest rates unchanged by the end of the year. Regarding the new US Federal Reserve Chairman, she assessed that if inflation remains relatively moderate, US monetary policy may also continue to hold steady.

As for the outlook on the Taiwan stock market, Hsieh said that Taiwan is a technology island, and the AI trend is not a short-lived fad. She remains optimistic about the Taiwan stock market and is therefore relatively active in stock operations.

KGI Life also disclosed today that its new contract Contractual Service Margin (CSM) for the first quarter was NT$8.2 billion, maintaining its full-year CSM target of NT$33 billion to NT$35 billion. The CSM balance at the end of March was NT$240.9 billion. The CSM released in the first quarter was approximately NT$3.7 billion, with an annualized amortization rate of 6.3%. It is expected that the contribution of CSM release to the income statement this year will exceed NT$15 billion.

Hsieh Ju-han, Vice President and Chief Actuary of KGI Life, explained that this year's product strategy focuses on three main pillars: high-CSM installment payment products, investment-linked policies, and foreign currency policies. Due to the favorable capital market this year, premiums for investment-linked policies in the first quarter doubled year-on-year, and grew 3.5 times in the first four months. Its market share has risen to fifth place this year, which helps the company stably collect fees. The proportion of foreign currency policies has also increased significantly, and the company will continue to strengthen the sales of participating policies in the second quarter.

KGI Life's hedging ratio at the end of March was 39%. Hsieh Hsin-hsin stated that hedging will be adjusted according to market conditions. If non-deliverable forwards (NDFs) in the market are very cheap, the company will still hedge. The hedging range will be between 20% and 50%. The balance of foreign exchange reserves at the end of March was NT$44.8 billion.

KGI Bank also announced its results for the Kaohsiung Special Zone today. As of the end of April, the number of high-net-worth clients in the zone exceeded 400, with cumulative Assets Under Management (AUM) surpassing NT$30 billion. The bank continues to offer financial asset portfolio financing and premium financing programs.