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Taiwan: Forex hedging by insurers deemed more urgent this year

Source: Asia Insurance Review | May 2017

Listed companies in Taiwan have reported exchange losses of NT$133.9 billion (US$4.4 billion) in 2016, of which about NT$122 billion (91%) was posted by insurers, according to the Financial Supervisory Commission (FSC). 
 
   In 2016, the Taiwan dollar appreciated about 2.4% against the US dollar. Furthermore, so far this year, the local currency has strengthened by 6% against the greenback. 
 
   The financial regulator is urging insurers to increase their foreign exchange hedging to reduce the impact of the strengthening local currency against the US dollar on their earnings, according to a document dated 12 April 2017 from the FSC obtained by Reuters. 
 
   Taiwan’s insurers invest heavily in overseas markets. When the value of the assets overseas was converted into the Taiwan dollar, the strength of the local currency led these life insurers to book significant foreign exchange 
losses. A 
 
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