Taiwan’s biggest life insurance companies saw their losses nearly double in May compared to the previous month, primarily due to the appreciation of the local currency against foreign currencies in which they had invested. The combined losses of four major insurers reached NT$35.4 billion ($1.2 billion) in May, as per their latest financial statements released on Tuesday.
Shin Kong Life Insurance Co. recorded the largest loss among the four, amounting to NT$15.4 billion. In contrast, Cathay Life Insurance Co. and Nan Shan Life Insurance Co. managed to post small profits, attributing their success to effective hedging strategies that mitigated the negative impact of currency fluctuations.
The significant losses incurred by these insurers were largely a result of the historical gains in the New Taiwan Dollar (TWD), which negatively affected the value of their foreign investments when converted back to the local currency. This situation highlights the challenges faced by insurance companies in managing their foreign investments in a volatile currency market.
The performance of these insurers in May serves as a reminder of the importance of robust risk management practices, particularly in the context of foreign exchange exposure. Effective hedging strategies, as employed by Cathay Life and Nan Shan Life, can make a significant difference in protecting against adverse currency movements.
