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.
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
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