Taiwan life insurance sector outlook revised to deterioriating

Written by Adam Cadle

23/05/2025

Fitch Ratings has revised its 2025 Taiwan life insurance sector outlook to ‘deteriorating’, from ‘neutral’, due to heightened risks to insurers’ earnings and capital following a recent sharp appreciation of the local currency, which has exposed insurers to significant potential losses.

The New Taiwan dollar (NTD) surged 8% against the US dollar over two days in early May, and uncertainty over the exchange rate’s trajectory remains elevated amid volatile shifts in global trade policies, particularly in the US.

Exchange-rate movements may affect Taiwan life insurers’ capitalisation and earnings, and the rise in exchange-rate risk could prompt strategy adjustments within the sector, Fitch said.
Taiwanese life insurers face substantial currency mismatches, as a majority of their NTD liabilities are backed by US dollar assets. Approximately 70% of their invested assets are in foreign currency, predominantly US dollar-denominated bonds.

“This leaves them vulnerable to further appreciation of the NTD, especially as we believe the insurers’ foreign-exchange valuation reserves have been depleted by the currency’s recent sharp appreciation,” Fitch added.

Related Articles