Taiwan’s life insurers’ foreign exchange losses more than doubled to a combined NT$263.8 billion from January through May, as the US dollar’s recent slide drove down the value of their foreign holdings.
Losses grew from NT$118.3 billion during January to April, according to a statement from the Financial Supervisory Commission in Taipei on Thursday. The industry’s foreign exchange loss of NT$145.5 billion in May was the worst since the FSC started releasing the data in 2018, according to calculations by Bloomberg News.
The Taiwan dollar’s roughly 12% gain against the greenback this year has pummeled local life insurers by reducing the nominal value of their approximately $786 billion foreign currency assets. The $1.2 trillion industry’s foreign exchange loss in May doubled from the roughly NT$68 billion shortfall seen in April.
The foreign exchange loss also swung the industry’s pretax profit into a loss of NT$61.7 billion for first five months of the year. The sector reported a profit of NT$44.9 billion in the first four months.
Regulators have taken steps to give life insurers more flexibility in using their reserves. The FSC earlier this month said insurers could also use six-month average exchange rates in their semi-annual reports, a move that could help them reduce the impact of sudden swings in the currency.
The Taiwan dollar on Thursday again strengthened and rose 0.8% to 29.165 at close, marking the highest level since 2022. The central bank is closely monitoring foreign investors’ inflows in local inverse and leveraged ETF products, which are usually used as tools to profit from gains in the Taiwan dollar.
With assistance from Betty Hou and Argin Chang.
This article was generated from an automated news agency feed without modifications to text.
