Taiwan’s biggest insurers posted a total loss of almost NT$19 billion (US$624 million) last month due to currency volatility after US President Donald Trump warned of a wave of global trade tariffs.
The insurers sustained the worst shortfall in a single month in one-and-a-half years, the Chinese-language Economic Daily News reported.
Among the six biggest, Nan Shan Life Insurance Co (南山人壽) posted the largest loss at NT$9.09 billion. KGI Life Insurance Co (凱基人壽) was the only one among the largest to avoid a hit, reporting a net profit of NT$431 million.
Photo: Tyrone Siu, Reuters
The big shortfalls came even before the New Taiwan dollar’s spike early this month against the greenback, which raised concerns about the industry’s hedging and investment strategies.
Shares of the insurers rose yesterday, buoyed by a broad rally in the region after the US and China agreed to temporarily lower tariffs.
“Taiwan dollar has weakened over the past few days and if that can continue, it can take pressure off their earnings,” Bloomberg Intelligence analyst Steven Lam said.
Insurers are also benefiting from the stock market recovery, with last month’s earnings now backward looking, he said.
Cathay Life Insurance Co (國泰人壽) reported a loss of NT$2.57 billion last month due to higher hedging costs, Cathay Financial Holding Co (國泰金控) said in a statement.
The firm said Trump’s tariff announcement last month exceeded expectations, raising hedging costs.
Fubon Life Insurance Co (富邦人壽) reported a net loss of NT$2.41 billion, citing volatile global financial markets due to US trade policies, while Shin Kong Life Insurance Co (新光人壽) posted a net loss of NT$3.81 billion and Taiwan Life Insurance Co (台灣人壽) had a net loss of NT$1.32 billion last month.
The losses add to evidence that Taiwan’s life insurers might be overexposed and under-hedged relative to their US dollar investments.
The NT dollar rose more than 6 percent in the first two trading days of this month, effectively reducing the value of unhedged US dollar investments, leading the Financial Supervisory Commission to offer assurances on Tuesday last week that no insurers have had solvency issues so far.
The central bank the same day announced it would inspect banks to ensure that fund inflows are for investment, not currency speculation. The NT dollar has since stabilized.
Fubon Life said it has increased its hedging to mitigate the currency effects of NT dollar gains, adding it would closely monitor the market and dynamically adjust its hedging to handle currency risks.
Cathay Life, which had its first monthly loss since last year, said hedging costs rose last month, but the effect is controllable.
Goldman Sachs Group Inc analysts said in a note released on Thursday last week that a 10 percent appreciation of the NT dollar against the greenback could lead to about US$18 billion of unrealized currency losses for local insurers, who hold about US$710 billion of foreign currency assets.
Such a move would wipe out the roughly US$6.6 billion reserves insurers have for currency volatility, Goldman’s analysts wrote.
The domestic unit of the Chinese-owned, Dutch-headquartered chipmaker Nexperia BV will soon be able to produce semiconductors locally within China, according to two company sources. Nexperia is at the center of a global tug-of-war over critical semiconductor technology, with a Dutch court in February ordering a probe into alleged mismanagement at the company. The geopolitical tussle has disrupted supply chains, with some carmakers reportedly forced to cut production due to chip shortages. Local production would allow Nexperia’s domestic arm, Nexperia Semiconductors (China) Ltd (安世半導體中國), to bypass restrictions in place since October on the supply of silicon wafers — etched with tiny components to
Singapore-based ride-hailing and delivery giant Grab Holdings Ltd has applied for regulatory approval to acquire the Taiwan operations of Germany-based Delivery Hero SE's Foodpanda in a deal valued at about US$600 million. Grab submitted the filing to the Fair Trade Commission on Friday last week, with the transaction subject to regulatory review and approval, the company said in a statement yesterday. Its independent governance structure would help foster a healthy and competitive market in Taiwan if the deal is approved, Grab said. Grab, which is listed on the NASDAQ, said in the filing that US-based Uber Technologies Inc holds about 13 percent of
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday received government approval to deploy its advanced 3-nanometer (3nm) process at its second fab currently under construction in Japan, the Ministry of Economic Affairs said in a news release. The ministry green-lit the plan for the facility in Kumamoto, which is scheduled to start installing equipment and come online in 2028 with a monthly production capacity of 15,000 12-inch wafers, the ministry said. The Department of Investment Review in June 2024 authorized a US$5.26 billion investment for the facility, slated to manufacture 6- to 12nm chips, significantly less advanced than 3nm process. At a meeting with
Taiwan’s food delivery market could undergo a major shift if Singapore-based Grab Holdings Ltd completes its planned acquisition of Delivery Hero SE’s Foodpanda business in Taiwan, industry experts said. Grab on Monday last week announced it would acquire Foodpanda’s Taiwan operations for US$600 million. The deal is expected to be finalized in the second half of this year, with Grab aiming to complete user migration to its platform by the first half of next year. A duopoly between Uber Eats and Foodpanda dominates Taiwan’s delivery market, a structure that has remained intact since the Fair Trade Commission (FTC) blocked Uber Technologies Inc’s
RSS