Taiwanese life insurers’ foreign exchange losses continued last month due to volatility in the exchange rate of the New Taiwan dollar against the US dollar and the high cost of hedging programs, Financial Supervisory Commission (FSC) data showed.
Losses last month totaled NT$18.6 billion (US$615.2 million), flat from a year earlier, but slightly down from losses of NT$22.2 billion that insurers reported in January, the data showed.
Still, life insurers’ combined pretax profit last month increased 103 percent year-on-year to NT$26.4 billion, as the TAIEX was higher than a year earlier, which helped boost the valuation of their financial investments, the commission said.
Their combined net value advanced 46.9 percent annually to NT$1.99 trillion as of the end of last month, it said.
Life insurers posted hedging losses last month of NT$40.9 billion, when the New Taiwan dollar depreciated 0.2 percent against the US dollar, data showed.
Overseas investment plays an important role in life insurers’ portfolios, as they pursue high returns in foreign markets, given a low benchmark rate in Taiwan.
To hedge against exchange-rate fluctuations, life insurers usually buy foreign currency-denominated hedging programs for their foreign currency-denominated investments, the commission said.
Life insurers’ combined assets totaled NT$29.8 trillion as of the end of last month, 59 percent of which were foreign currency denominated, or NT$17.8 trillion, the data showed.
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