Latest news with #FubonLife
CNA
16-05-2025
- Business
- CNA
Fitch puts Taiwan life insurers on downgrade watch after currency surge
TOKYO :Credit ratings agency Fitch on Thursday placed five Taiwanese life insurers under review for potential downgrades after a sharp surge in the Taiwanese dollar this month put stress on their balance sheets. Fitch put Cathay Life Insurance, Fubon Life Insurance, KGI Life Insurance, Nan Shan Life Insurance and Taiwan Life Insurance on "Rating Watch Negative" due to the "substantial currency mismatch" produced by their "sizeable" U.S. dollar holdings, the ratings agency said in a press release. "While insurers have hedged a majority of their balance sheet mismatches, we believe this strategy will come under pressure due to the surge in hedging costs, and unhedged positions continue to expose them to sharp currency swings," Fitch said. "The potential for further Taiwan dollar appreciation remains." Taiwan's dollar experienced an unprecedented 8 per cent two-day surge at the start of this month in what analysts postulate was a scramble to repatriate U.S.-based investments, with confidence in the U.S. dollar tarnished by President Donald Trump's trade war, and as speculation built that U.S.-Taiwan tariff negotiations might include an agreement to weaken the greenback. Fitch estimates the insurers have sufficient capital buffers to withstand a 10 per cent rise in the Taiwan dollar against the U.S. dollar from the start of 2025. Currently, the local currency is up about 8.8 per cent this year. The ratings agency said it expects to resolve the reviews over the next three to six months.
The Star
14-05-2025
- Business
- The Star
Taiwan insurers hit by losses on US dollar slump
Among the six biggest, Nanshan Life Insurance Co posted the largest loss at more than NT$9bil. — Reuters Taipei: Taiwan's biggest insurers posted a total loss of almost NT$19bil or about US$620mil in April due to currency volatility after US President Donald Trump warned of a wave of global trade tariffs. The insurers suffered the worst shortfall in a single month in one and a half years, Taipei-based Economic Daily News reported. Among the six biggest, Nanshan Life Insurance Co posted the largest loss at more than NT$9bil. KGI Life Insurance Co was the only one among the largest to avoid a hit. The big shortfalls came even before the Taiwan dollar's spike in early May against the greenback, which raised concerns about the industry's hedging and investment strategies. Shares of the Taiwanese insurers rose yesterday, buoyed by a broad rally in the region after the United States and China agreed to temporarily lower tariffs for 90 days. 'The 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. Insurers are also benefiting from the stock market recovery, with April earnings now backward looking, he said. Cathay Life Insurance Co had a loss of NT$2.57bil in April due to higher hedging costs, Cathay Financial Holding Co said in a statement. The firm said Trump's tariff announcement in April exceeded expectations, raising hedging costs. Fubon Life reported a net loss of NT$2.41bil, citing volatile global financial markets due to US trade policies. The losses add to evidence that the island's life insurers may be over-exposed and under-hedged relative to their US dollar investments. The Taiwan dollar jumped over 6% in the first two trading days of May, effectively reducing the value of unhedged US dollar investments, leading the Financial Supervisory Commission to offer assurances on May 6 that no insurers have had solvency issues so far. The central bank the same day announced it would inspect banks to ensure that fund inflows are for investment, not currency speculation. The Taiwan dollar has since stabilised. Fubon Life said it has increased its hedging to mitigate the currency impact of Taiwan dollar gains. It said it would closely monitor the market and dynamically adjust its hedging to handle currency risks. Cathay Life, which had its first monthly loss since 2024, said hedging costs rose last month, but the impact is controllable. Goldman Sachs Group Inc analysts said in a May 8 note that a 10% appreciation of the Taiwan dollar against the greenback could lead to around US$18bil of unrealised currency losses for local insurers, who hold about US$710bil of foreign currency assets. Such a move would wipe out the roughly US$6.6bil reserves insurers have for currency volatility, the Goldman analysts wrote. — Bloomberg
Mint
13-05-2025
- Business
- Mint
Taiwan Insurers Hit by Losses in April on US Dollar Slump
Taiwan's biggest insurers posted a total loss of NT$18.7 billion in April due to currency volatility after US President Donald Trump warned of a wave of global trade tariffs. The insurers suffered the the worst shortfall for a single month in 1 1/2 years, Taipei-based Economic Daily News reported. Among the six biggest, Nanshan Life Insurance Co. posted the largest loss at more than NT$9 billion. KGI Life Insurance Co. was the only one among the largest to avoid a hit. The big shortfalls came even before the Taiwan dollar's spike in early May against the greenback, which raised concerns about the industry's hedging and investment strategies. Cathay Life Insurance Co. had a loss of NT$2.57 billion in April due to higher hedging costs, Cathay Financial Holding Co. said in a statement. Fubon Life reported a net loss of NT$2.41 billion, citing volatile global financial markets due to US trade policies. The losses add to evidence that the island's life insurers may be over-exposed and under-hedged relative to their US dollar investments. The Taiwan dollar jumped over 6% in the first two trading days of May, effectively reducing the value of unhedged US dollar investments, leading the Financial Supervisory Commission to offer assurances on May 6 that no insurers have had solvency issues so far. The central bank the same day announced it would inspect banks to ensure that fund inflows are for investment, not currency speculation. The Taiwan dollar has since stabilized. Fubon Life said it has increased its hedging to mitigate the impact of currency impact of Taiwan dollar gains, and said it would closely monitor the market and dynamically adjust its hedging to handle currency risks. Cathay Life, which had its first monthly loss since 2024, said hedging costs rose last month, but the impact is controllable. Goldman Sachs Group Inc. analysts said in a May 8 note that a 10% appreciation of the Taiwan dollar against the greenback could lead to around $18 billion of unrealized currency losses for local insurers, who hold about $710 billion of foreign currency assets. Such a move would wipe out the roughly $6.6 billion reserves insurers have for currency volatility, the Goldman analysts wrote. With assistance from Adrian Kennedy. This article was generated from an automated news agency feed without modifications to text.
Mint
07-05-2025
- Business
- Mint
Taiwan Currency Shock Splits Insurers on How to Hedge US Bonds
Two Taiwanese life insurers are taking opposite approaches to foreign-exchange hedging after a surge in the island's currency put hundreds of billions of dollars of their US bond holdings under scrutiny. Fubon Life Insurance Co. has 'enhanced' hedging as the biggest one-day surge in the currency since the 1980s threatened to erode the US dollar-denominated assets of Taiwanese companies. Taishin Life Insurance Co. said the rising costs of such protection has stayed its hands from adding more. Insurers will lock in a weak dollar if they hedge more now, while doing nothing exposes the companies to the risks of further losses, Bank of America strategist Chun Him Cheung wrote in a note to clients. 'Either way, the past business model has now shown itself to be unsustainable.' The challenge faced by Taiwan's life insurers is grabbing global attention given their huge pile of US Treasuries and corporate debt, much of which is unhedged. Their relatively low currency hedging ratio — averaging less than 60%, according to HSBC Holdings Plc calculations — is raising questions around the fate of US bond holdings that make up over half of their overseas investments on average. The Taiwan dollar closed around 3% higher on both Friday and Monday. The currency appreciated as much as 0.5% Wednesday to 30.138 to the US dollar, before trimming gains. If hedging costs were expensive before, they're exorbitant now. Life insurers seeking protection against a potentially weaker US dollar via non-deliverable forwards — a favorite hedging tool — have seen costs climb to a record as the Taiwan dollar rallied. Three-month costs jumped to 14% this week, a record high in data compiled by Bloomberg starting in 2007. 'We won't increase our hedging ratio because of short-term fluctuations,' Welch Lin, chairman of Taishin Life Insurance and president of Taishin Financial Holdings Co., said at a briefing on Tuesday. However, Fubon Life, the island's second-biggest insurer, is opting to bolster hedging in its portfolios as swings in the $7.5 trillion-a-day global currency market intensify. 'Capital levels remain well above the regulatory thresholds set by the Financial Supervisory Commission and continue to meet the required risk-based capital standards,' Fubon Life said in a statement Tuesday. 'The company has continued to strengthen its hedging operations and will closely monitor market conditions moving forward.' Fubon holds more than NT$2.9 trillion of overseas debt and more that half of that is focused on North America, according to its 2024 financial report. Taiwan's six-largest life insurers have informally proposed temporary measures to the FSC over profit concerns after the surge in the local currency, though the regulator hasn't agreed to the proposals as it sees no immediate liquidity or insolvency risks, the Taipei-based Economic Daily News reported Wednesday, citing people it didn't identify. Fubon, Cathay Life Insurance Co. and Nan Shan Life Insurance Co. told the FSC their risk-based capital ratios would remain within legal limits even if the Taiwan dollar strengthened beyond 30 to the US currency, the Economic Daily News also reported. With assistance from Masaki Kondo. This article was generated from an automated news agency feed without modifications to text.
Bloomberg
07-05-2025
- Business
- Bloomberg
Taiwan Currency Shock Splits Insurers on How to Hedge US Bonds
Two Taiwanese life insurers are taking opposite approaches to foreign-exchange hedging after a surge in the island's currency put hundreds of billions of dollars of their US bond holdings under scrutiny. Fubon Life Insurance Co. has 'enhanced' hedging as the biggest one-day surge in the currency since the 1980s threatened to erode the US dollar-denominated assets of Taiwanese companies. Taishin Life Insurance Co. said the rising costs of such protection has stayed its hands from adding more.
