Pacific Century Insurance not in step with PCCW's good fortune
Call it fate. Just when Richard Li Tzar-kai's PCCW appears to be on the verge of extricating itself from negative equity, trouble pops up on another front.
For the first time, his insurance flagship, Pacific Century Insurance, will report a paper loss when it issues its first-half results next Monday.
This comes despite a growing and profitable life insurance business. The company's heavy exposure to bonds is believed to have incurred a large loss.
Lai See understands that the firm's management has been locked up with its investment bank, CLSA, over the past few days, in a bid to minimise any impact on the stock market.
A back-of-the-envelope calculation suggests that the portfolio of Pacific Century Insurance, which has $3 billion exposure to bonds, could see a paper loss of up to $150 million taking into account the 52-basis point drop in yield for its average five-year maturity bond this year.
