02.22.2001
Disappointing results for Cathay Life

• Due to the large provisions for unrealised investment losses of NT$22.6b, Cathay Life Insurance (2805 'Guo Shou') booked disappointing 2000 net earnings of NT$9.74b, with EPS of NT$1.80, representing a 34.7% decrease YoY.

• While Cathay Life has additional earnings of NT$9.0b from a special reserve write-back last year, this will not compensate for the investment loss provisions since the latter is non-tax deductible.

• We expect Cathay Life to do better this year as the investment loss provisions can be reversed when the stock market posts a recovery. Moreover, the company can divest its 17.8m TSMC (2330 'Tai Ji Dian') shares, now standing at a profit of more than 30%, and profit from the company's pending ADR issue. Cathay, with its large land and property holdings, will also gain from any rebound in the property market following further liberalization of the real estate sector, economic recovery and increased inflow of foreign capital.

WilliamFong@Primasia.com +886-[0]2-2547-8864