Taiwan Life Insurers Caught in Dilemma With Costly FX Hedges (1)

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.

The island’s insurers scaled back their hedging as costs climbed and the local dollar ...