Taiwan Eases Rules to Help Insurers Cope With Currency Surge
Taiwan regulators have implemented measures to assist the island’s insurance sector in managing the effects of a recent significant appreciation of the local currency, which resulted in substantial unrealized losses on their foreign investments.
The Financial Supervisory Commission announced that insurers will be permitted to utilize six-month average exchange rates when calculating their risk-based capital in semi-annual reports. Currently, insurers are required to use the exchange rate prevailing on the last day of the reporting period.
This regulatory adjustment aims to mitigate the impact of currency fluctuations on insurers’ financial reporting. The move is expected to provide relief to insurance companies facing significant paper losses due to the recent currency surge.
The decision reflects the regulators’ efforts to maintain stability in the financial sector while adapting to changing market conditions. By allowing the use of average exchange rates, the regulators hope to reduce the volatility in insurers’ capital positions caused by short-term currency movements.
The new measure will be applied to insurers’ semi-annual reports, providing them with more flexibility in managing their foreign holdings and risk-based capital requirements.
