Major life insurers in Taiwan have lowered their declared interest rates on local currency denominated policies to 2% and US-dollar policies to 3% on expectations of reduced returns on investment following interest rate cuts by the authorities in an already low interest-rate environment.
Life insurers announce each month the declared interest rates, which are used to calculate the size of policyholders’ distributions, reported The Taipei Times.
Fubon Life Insurance, the island’s second largest life insurer with a market share of 17.2%, slashed the rates for its 101 NT dollar-denominated products by 25 basis points — the same as the central bank’s 19 March rate cuts — to between 1.05% and 2.25%.
The rates for its US-dollar policies were cut by 40 basis points to a range from 2.7% to 3%, Fubon said.
Nan Shan Life Insurance, the third largest insurer with a market share of 13.39% cut its rates by 25 basis points for its 90 NT dollar products to between 1.9% and 2.05%, as well as 50 basis points for its 70 US-dollar products to between 2.85% and 3%, it said in a statement.
Shin Kong Life Insurance, the fourth biggest insurer with a market share of 9.18%, reduced rates by a range of eight basis points to 45 basis points for its NT-dollar products and a range of 5-45 basis points for its US-dollar policies.
As a result, the maximum declared interest rates for the company’s NT dollar and US dollar policies were 2.05% and 3.1% respectively.
However, Cathay Life Insurance, the nation’s largest life insurer with a market share of 19.45%, only cut rates by five basis points for its 54 US-dollar products to a range of 2.25-3.4%, and reduced them by 6-15 basis points for its NT-dollar products to between 0.52% and 2%.
Cathay Life executive vice president Lin Chao-ting told The Taipei Times, “The revision in declared interest rates does not always correspond with the change in the benchmark rates, as they are primarily based on companies’ investment performance.”