Fitch puts Taiwan life insurers on downgrade watch after currency surge

Reuters

Thu, May 15, 2025, 9:06 PM 1 min read

TOKYO (Reuters) -Credit ratings bureau Fitch connected Thursday placed 5 Taiwanese beingness insurers nether reappraisal for imaginable downgrades aft a crisp surge successful the Taiwanese dollar this period enactment accent connected their equilibrium sheets.

Fitch enactment Cathay Life Insurance, Fubon Life Insurance, KGI Life Insurance, Nan Shan Life Insurance and Taiwan Life Insurance connected "Rating Watch Negative" owed to the "substantial currency mismatch" produced by their "sizeable" U.S. dollar holdings, the ratings bureau said successful a property release.

"While insurers person hedged a bulk of their equilibrium expanse mismatches, we judge this strategy volition travel nether unit owed to the surge successful hedging costs, and unhedged positions proceed to exposure them to crisp currency swings," Fitch said.

"The imaginable for further Taiwan dollar appreciation remains."

Taiwan's dollar experienced an unprecedented 8% two-day surge astatine the commencement of this period successful what analysts postulate was a scramble to repatriate U.S.-based investments, with assurance successful the U.S. dollar tarnished by President Donald Trump's commercialized war, and arsenic speculation built that U.S.-Taiwan tariff negotiations mightiness see an statement to weaken the greenback.

Fitch estimates the insurers person capable superior buffers to withstand a 10% emergence successful the Taiwan dollar against the U.S. dollar from the commencement of 2025. Currently, the section currency is up astir 8.8% this year.

The ratings bureau said it expects to resoluteness the reviews implicit the adjacent 3 to six months.

(Reporting by Kevin Buckland; Editing by Michael Perry)