Taiwan Insurance: Raising Dividend Estimates, Attractive Valuation for Lifers Post Recent Pullback

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Taiwan Insurance: Raising Dividend Estimates, Attractive Valuation for Lifers Post Recent Pullback

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01 Jul 2026 12:46:47 ET │ 17 pages

Taiwan Insurance

Raising Dividend Estimates, Attractive Valuation for Lifers Post Recent

Pullback

CITI'S TAKE

Lifers’ shares were up 37% and outperformed banks by 11% in 1H26, amid

improved dividend outlook thanks to a strong equity market. With Cathay Michael Zhang AC

and Fubon shares down 9-15% over the last 8 trading days, we see a buying +852-2501-7607

opportunity for lifers, as [1] both Cathay and Fubon could now offer >5.5% michael.zhang@citi.com

FY26E dividend yield per our estimates. [2] Despite a volatile month for the

market, TAIEX was still +3% in June which benefits lifers’ dividend capacity.

[3] The strong OCI unrealized equity gain balance provides good visibility on

adjusted profit growth this year.

Solid Earnings Visibility Ahead — At the 1Q26 results briefing, Cathay suggested

OCI unrealized equity gain balance has exceeded NT$270bn in May and Fubon

suggested that the unrealized equity gain balance has exceeded NT$150bn during

April-May. This provides solid visibility on OCI gains and adjusted profits for lifers

this year, unless the equity market falls by 20-25% in 2H26 to fully wipe out Fubon

and Cathay’s unrealized equity gain balance.

Still-Improving Dividend Capacity — While there is still a lack of clarity on dividend

upstream rules for life subsidiaries, we remain constructive on life subsidiaries’

dividend capacity this year amid improved capital position. In addition, Fubon and

Cathay’s FHC double leverage ratios stood at 113% and 118% in April respectively,

well below regulatory requirement of 125%. Double leverage ratios should further