Fitch flags Taiwan Life insurers on negative watch

Fitch Ratings placed Taiwan’s major life insurers on negative credit watch, citing risks from the sharp appreciation of the New Taiwan dollar (NTD) against the US dollar. The agency highlighted currency mismatches as insurers hold significant US dollar-denominated assets against NTD liabilities, exposing them to forex volatility and soaring hedging costs. Insurers affected include Cathay Life, Fubon Life, KGI Life, Nan Shan Life, and Taiwan Life. Fitch warned that rising hedging expenses and continued NTD strength could pressure earnings and capital adequacy, despite current buffers that can absorb a 10% NTD appreciation without triggering downgrades. The rating watch will be reviewed in three to six months based on FX volatility, insurers’ strategic responses, and financial performance. Fitch noted no surge in policy surrenders yet but flagged it as a potential risk amid ongoing currency swings.