News Risk Management09 Jan 2018

Taiwan:Regulator assesses US tax reform impact on insurers

09 Jan 2018

Taiwan's insurers and other financial institutions are unlikely to be significantly affected by US tax reforms, the Financial Supervisory Commission (FSC) has said, adding that the potential risks should be manageable.

The Commission tallied the nation’s exposure to the US economy at about NT$6.89 trillion (US$232.84 billion), with the insurance sector having the greatest exposure at about NT$5.57 trillion, reported The Taipei Times.

The US tax overhaul could make it attractive for US companies to remit a larger portion of their overseas profits back to the US, boosting the country’s economy, Insurance Bureau Deputy Director-General Tsai Li-ling said at a news conference.

While no immediate downsides have been identified, the bureau would ask insurers to bolster medium to long-term risk management measures, Ms Tsai said.

As funds flow back into the US, the greenback is expected to begin strengthening, she said, adding that at the same time, the tax cut would likely widen the deficit of the US federal budget, leading to higher US Treasuries yields.

These factors should benefit local life insurers, which grappled with foreign exchange-related losses in their massive overseas and US dollar-denominated investments as the New Taiwan dollar remained strong against the greenback throughout last year, she said.

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