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Taiwan: Insurers are readying for US Fed interest rate hike

Source: Asia Insurance Review | Nov 2015

Local insurers are fully prepared to cope with the US Federal Reserve’s much-anticipated interest rate increase, the Chairman of the Life Insurance Association of the Republic of China, Mr Paul Hsu, has said.
 
   Insurers have begun reassessing the weighting of bonds of different classifications, such as active and inactive bonds, and are considering slashing their preferred bond maturity with yields greater than 5% from 30 years to 20 years, reported Taipei Times citing Mr Hsu.
 
   Insurers are very aware of the impact of international factors because about half of their investments are allocated overseas, he said.
 
   “Although the value of insurers’ debt investment may be impacted in the short term, the rate hike is considered a boon for the industry from a long-term perspective, as their investments in long-term debts, which were acquired with the intent of holding them until maturity, would be less affected,” he said.
 
   Mr Hsu added that a weakening yuan would not necessarily be detrimental to insurers, as the depreciation of the New Taiwan dollar has been keeping pace with the recent volatility.
 
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