Net foreign exchange losses for local life insurance companies totaled NT$248.3 billion (US$8.22 billion) for the year through last month, up 23 percent from the first 11 months last year and setting a new high for the period, the Financial Supervisory Commission (FSC) said on Thursday.
The commission attributed the increased losses to fluctuations in exchange rates and high hedging costs.
Life insurers’ cumulative hedging losses advanced from NT$110 billion for the year to Oct. 31 to NT$148.2 billion as of Nov. 30, as many had to hedge their US dollar-denominated assets amid fluctuation in foreign exchange rates, the commission said.
In the first 11 months, life insurers paid about NT$183.8 billion into hedging programs such as currency swap or non-delivery forwards, a two-party currency derivatives contract, the commission said.
For the whole of this year, net foreign exchange losses are likely to be higher than last year’s losses of NT$232.3 billion, it said.
Despite the higher losses, life insurers’ combined pretax profit totaled NT$168.7 billion for the first 11 months, up 37 percent from NT$123.1 billion in the same period last year, which the commission attributed to better investment returns due to rallies in domestic and foreign equity markets.
Insurers’ combined net value surged 71 percent year-on-year to an all-time high of NT$1.91 trillion in the 11-month period on the back of the rising value of their local and foreign equity holdings, it said.
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