With overseas assets accounting for more than 30 percent of local insurers' total investment, foreign currency exposure has created a "long-term mismatch" between life insurers' assets and liabilities, Fitch said, adding that hedging has become one of the most challenging tasks facing the sector.
"The risk of Taiwanese dollar appreciation has to be dynamically managed by the insurers," the report said.
"Among the factors Fitch analyzes, the companies' risk mitigation procedures are particularly important," it said.
Overall, the ratings agency said the nation's aging population, the growing popularity of wealth management products and tax incentives offered by the government are all viewed positive to the sector's long-term development.
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