Fitch Ratings has confirmed the financial strength and issuer ratings of five major life insurance companies in Taiwan, removing the rating watch negative (RWN) designation that had been in effect since May 2025. The insurers are Cathay Life Insurance, Fubon Life Insurance, KGI Life Insurance, Taiwan Life Insurance, and Nan Shan Life Insurance. Fitch stated that the outlook for all five companies is stable.
According to Fitch, the capital and earnings profiles of these insurers are expected to remain consistent with current ratings, assuming the Taiwan dollar–US dollar exchange rate aligns with the agency’s base-case scenario. Fitch also noted that these insurers continue to face foreign exchange (FX) risk due to the substantial volume of US dollar-denominated assets held to support Taiwan dollar liabilities.
A central issue for these insurers is the mismatch between their US dollar assets and Taiwan dollar obligations. This structure leaves them exposed to the risk of a sharp and sustained appreciation of the Taiwan dollar against the US dollar. Fitch noted that a 10% or greater appreciation from end-third quarter 2025 levels could negatively impact both capital and earnings, primarily through FX losses and increased hedging costs.
Cathay Life, for instance, is working to mitigate FX risk by increasing sales of US dollar-denominated insurance policies, which comprised 62% of its first-year premiums in the first nine months of 2025. The company is also boosting its allocation to domestic investments. “Policy surrender payments have remained stable since the ratings were placed on RWN in May following a sharp appreciation in the Taiwan dollar,” Fitch stated.
Fubon Life and KGI Life are also taking steps to manage FX exposure. Fubon Life reported that 60% of its first-year premiums during the same period were from US dollar-denominated policies. Both companies have strengthened their FX valuation reserves and issued subordinated debt to enhance capital adequacy. Fubon Life’s risk-based capital (RBC) ratio increased to 405% by the end of June 2025, supported by these measures.
Fitch’s analysis found that the capital positions of the five insurers remain robust, with most maintaining “very strong” or “strong” capital scores under the Fitch Prism Global Model. Nevertheless, capital ratios are still closely tied to currency movements. For example, Cathay Life’s regulatory RBC ratio dropped to 328% by the end of June 2025, compared to 359% at the end of 2024, mainly due to unrealized FX losses.
The insurers are also implementing strategies to maintain margins, including the release of contractual service margin (CSM) and offering products such as protection, accident, and health policies. KGI Life and Nan Shan Life have focused on distributing US dollar-denominated and long-term policies, aiming to maintain new business value (NBV).
Fitch’s review noted the market position and distribution methods of these insurers. Cathay Life and Nan Shan Life have the largest agency sales forces in Taiwan, while Fubon Life and Taiwan Life use bancassurance and other channels. Nan Shan Life reported total equity capital and FX valuation reserves of NT$368 billion at the end of the third quarter of 2025. The company distributes products through 33,000 agents, bancassurance, and digital platforms.
The recent ratings actions coincide with new data from Taiwan’s Financial Supervisory Commission (FSC), which shows a significant increase in foreign-currency denominated premium income for the life insurance sector. Through August 2025, new premium income from these products reached NT$271.813 billion, up 42% from the same period in 2024. Investment-linked insurance products contributed NT$42.313 billion, while traditional insurance accounted for NT$229.5 billion.
The FSC’s figures indicate an industry trend toward foreign-currency products, which insurers are using to manage FX risk and support capital levels amid currency fluctuations.
