Taiwan: Forex impact on insurers expected to be smaller this year
Source: Asia Insurance Review | May 2019
The net impact of exchange rates on the insurance industry this year is expected to be smaller this year compared to last year, according to Financial Supervisory Commission (FSC) chairman Wellington Koo.
Addressing lawmakers recently, Mr Koo said, “This year, the net impact of exchange rates on the insurance industry will not be as large as the NT$200bn ($6.5bn) loss seen last year.”
He said that the impact of exchange rate fluctuations on insurers could be controlled within a certain range this year given that US interest rate hikes are slowing and the interest spread between the US and Taiwan is unlikely to see a huge widening. The $-NT$ exchange rate is also seen as stable.
He pointed out that as the insurance industry’s annual premium income is around $3.5tn, it is difficult for the Taiwanese economy to accommodate such a large figure, and it is inevitable that insurers would invest abroad.
According to FSC data, the net forex loss of the insurance industry last year was NT$232.3bn, and the overall pre-tax profit was NT$98.9bn. A