Taiwan Life Insurers’ $700 Billion Bet on the US Is Backfiring

For decades, Taiwan’s life insurance companies boasted of above-average returns from their heavy investment in US bonds. That reliance is now a major risk threatening more than $700 billion of assets.

Unlike insurers in other countries like Japan where diversification is the norm, Taiwanese firms have more than 90% of their overseas assets denominated in the dollar. This puts them at risk of a long-term decline in the US currency as the appeal of American exceptionalism wanes.

Worse, there are few signs that the $1.2 trillion industry is ready for a major overhaul of its investment model given the limited ...