Taiwan’s insurance companies are driving the institutional business of local asset management giant Cathay Securities Investment Trust Co.
Cathay SITE oversees around NT$719.4 billion (US$258.98 billion) of assets for third-party local insurers and affiliates of its parent Cathay Group, according to Andy Chang, president of Taiwan’s largest asset management firm.
That figure represents two-thirds of the company’s institutional investments, and he expects the share to grow with more outsourcing by insurers.
“With interest rates low, Taiwanese insurers are more keen to launch investment-linked funds or policy instead of traditional insurance policies that provide risk coverage,” Chang says in an interview with Asia Asset Management.
He says local insurers prefer to outsource the investments to external managers with a strong insurance and management background like Cathay SITE.
The majority of the company’s internally-managed mandates is from Cathay Group’s unit Cathay Life Insurance Co, one of Taiwan’s largest life insurers.
Cathay SITE’s total assets under management grew 28% year-on-year to a record NT$1.2 trillion in July 2021, which Chang attributes primarily to stock market rallies on the back of monetary easing by global central banks to combat financial and economic fallout from the coronavirus crisis.
He says the market rebound from the crisis is prompting more investors to increase allocations to equity funds in search of better returns.