Six Major Taiwan Life Insurers’ Foreign-Exchange Valuation Reserves Hit Record High as New Rules Help Cut Hedging Costs

Taiwanese life insurers hold substantial overseas assets and have long faced foreign-exchange losses when the New Taiwan dollar appreciates, requiring them to absorb volatility through hedging instruments and foreign-exchange valuation reserves. The Financial Supervisory Commission has introduced new exchange-rate accounting rules that allow insurers to lower hedging costs and gain greater operational flexibility. Taiwan Ratings, however, warned that differences in capital strength and risk-management capabilities could widen credit disparities among insurers.

By the end of February 2025, the six major life insurers’ combined foreign-exchange valuation reserves had risen to a record NT$526 billion. Fubon Life, Cathay Life and Shin Kong Life each held more than NT$100 billion. After the new rules took effect, the industry’s overall hedging ratio fell to a record low. Ample reserves can cushion the impact of New Taiwan dollar appreciation and reduce the cost burden of traditional hedging instruments.