Taiwan’s leading insurance companies reported a return to profitability in June, following the introduction of revised reserve regulations by the Financial Supervisory Commission (FSC).
The updated rules permit insurers to utilise additional reserves to counteract losses from currency fluctuations, particularly those resulting from the appreciation of the Taiwan dollar.
Bloomberg reported that the six largest insurers in Taiwan achieved an after-tax profit of NT$31.2 billion (US$1.1 billion) in June, according to company disclosures and industry calculations.
This marks a significant turnaround from a combined loss of about NT$35 billion in May.
Nan Shan Life Insurance Co led the sector with NT$11.3 billion in profit, while Fubon Life Insurance Co and Cathay Life Insurance Co also reported improved results.
Other major insurers, including Shin Kong Life Insurance Co, Taiwan Life Insurance Co, and KGI Life Insurance Co, returned to profit after previous losses.
The FSC reported that 10 insurers have adopted the new reserve rules, which are designed to help offset foreign exchange losses.
The Taiwan dollar experienced notable volatility in June, appreciating more than 3% before a sharp correction at the end of the month. This fluctuation led to speculation about possible intervention by the central bank.
Despite the recent improvement, currency risk remains a concern for the sector. The insurance industry in Taiwan faced approximately US$9 billion in foreign exchange losses during the first five months of the year, according to Bloomberg.
In response, insurers such as Fubon Life and Cathay Life are reallocating portions of their liability reserves to foreign exchange reserves to better manage currency exposure.
Cathay Life indicated that the regulatory changes are expected to support a return to more typical industry operations.
A note from JPMorgan Chase & Co observed that while the new requirements for foreign exchange reserves may continue to weigh on net earnings in 2025, the capital and earnings pressures for most life insurers were alleviated in June.
By the end of May, assets held by Taiwan’s insurance sector reached NT$21.7 trillion, with a hedging ratio of about 64% for firms with currency mismatch risk, according to FSC data.
The Taiwan dollar stabilised near the 29-per-US-dollar level in July, following significant swings in the previous quarter.
However, the sector remains alert to unresolved risks, including the potential impact of ongoing US-Taiwan tariff negotiations and the possibility of further currency appreciation.
Fitch Ratings has maintained a neutral outlook for the Asia-Pacific insurance industry for 2025, pointing to steady capital adequacy and earnings resilience despite ongoing market volatility and regulatory developments.
The agency noted that life insurers in several Asian markets are adopting more conservative investment strategies, while general insurers are focusing on cost efficiency.
