The island’s insurers scaled back their hedging as costs climbed and the local dollar tracked sideways in the first three months of the year — with potentially serious consequences. These companies have more than 90% of their overseas assets denominated in the greenback, and a further drop in the US currency may leave them exposed to the wild swings that catapulted the Taiwan dollar to its biggest one-day jump in almost four decades in early May.
Taiwan’s life insurers were caught flat-footed when the local dollar surged in May, with the latest data suggesting that elevated hedging costs have hampered efforts to mitigate currency risks.
Major Taiwanese life insurers’ hedging against foreign currency volatility stood at 47.2% of their overseas asset holdings in the first quarter, the lowest level since mid-2024, according to Bloomberg’s analysis. The study was based on the firms’ quarterly presentation materials and showed that the level of protection has fallen from an all-time high of 61.9% reached in 2017.
