Taiwan’s largest insurance companies suffered combined losses of nearly NT$19 billion (US$620 million) in April as currency markets reacted to president Trump’s global tariff threats.
The April shortfall marks the worst monthly performance for Taiwan’s insurance sector in 18 months, according to the Taipei-based Economic Daily News. Nanshan Life Insurance Co. reported the heaviest losses at over NT$9 billion, while KGI Life Insurance Co. was the only major insurer to avoid negative results.
According to Bloomberg, these significant losses occurred before the Taiwan dollar’s sharp rise against the US dollar in early May, raising questions about the effectiveness of insurers’ investment and hedging strategies. Despite April’s poor results, insurance company shares gained Tuesday amid a broader market rally following a temporary tariff reduction agreement between China and the US.
“Taiwan dollar has weakened over the past few days and if that can continue, it can take pressure off of their earnings,” said Steven Lam, an analyst at Bloomberg Intelligence.
Cathay Life Insurance Co. posted a NT$2.57 billion loss in April, which its parent company attributed to higher hedging expenses resulting from Trump’s unexpected tariff announcement. Similarly, Fubon Life reported a NT$2.41 billion net loss, blaming volatile financial markets caused by US trade policies.
These losses suggest Taiwan’s life insurers may be overexposed to US dollar investments without adequate hedging protection. When the Taiwan dollar surged more than 6% during the first two May trading days, it effectively reduced the value of unhedged US dollar holdings. This prompted Taiwan’s Financial Supervisory Commission to issue statements on May 6 confirming that no insurers were facing solvency problems.
The central bank announced bank inspections the same day to ensure incoming funds were legitimate investments rather than currency speculation. Since then, the Taiwan dollar has stabilized.
Fubon Life has increased its hedging to offset potential currency impacts from Taiwan dollar gains. The company stated it would monitor market conditions and adjust hedging strategies to manage currency risks.
Cathay Life, experiencing its first monthly loss since 2024, acknowledged higher hedging costs but described the impact as “controllable.”
According to Goldman Sachs Group Inc. analysts, a 10% Taiwan dollar appreciation against the US dollar could result in approximately US$18 billion in unrealized currency losses for local insurers, who collectively hold about US$710 billion in foreign currency assets. Such a scenario would eliminate the roughly US$6.6 billion in reserves that insurers maintain for currency fluctuations.
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