Jun
16

Yield-Chasing Taiwan Insurers Face Rating Risk as Currency Gains

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Taiwan’s life insurers are drawing red flags from credit-rating firms as increased overseas investments leave them vulnerable to gains in Asia’s best-performing currency.

Foreign holdings climbed to 52 percent of their assets at the end of April from 50 percent in December and 38 percent in 2011. Fitch Ratings and Moody’s Investors Service have negative outlooks on the industry as the lowest bond yields in Asia outside of Japan prompt Taiwanese insurers to look abroad.

Taiwan’s dollar has advanced 1.8 percent against the greenback and jumped 9.6 percent versus the euro in 2015. Standard & Poor’s local unit says its strength is a risk to an industry with NT$18.97 trillion ($610 billion) of assets. Life insurers have scaled back hedging to maximize gains from the currency’s weakness over the last two years, and its rebound erodes reserves they’ve set aside to cover exchange-rate losses…

Yield-Chasing Taiwan Insurers Face Rating Risk as Currency Gains

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