Compliance with new accounting rules could affect equity and profit recognition patterns for insurance companies, but might not change their creditworthiness, Moody’s Investors Service said earlier this week.
When the International Financial Reporting Standards 17 (IFRS 17) take effect in 2025, financial regulators would require insurers to calculate contract liabilities at their present value, while amortizing gains over the policies’ duration.
“The new practice will transform insurance accounting, but will not change insurers’ underlying economic positions,” Moody’s said in a report.
The effects of IFRS 17 would depend on the business mix and current accounting standards of insurers, the ratings agency said.
Annuity writers and traditional life insurers in Taiwan, Germany and South Korea are likely to report a decline in equity due to their relatively heavy exposure to liabilities with high guarantees, it said.
The new rules are designed to improve earnings visibility and make it easier to compare the performance of insurers. The rules are being adopted in 2022 in major markets, except for the US and Japan.
The Financial Supervisory Commission said the rules are to take effect in 2025 in Taiwan, allowing local insurers more time to adjust.
Moody’s said that the implementation of IFRS 17 is unlikely to affect its view of insurers operating under regimes that tailor capital requirements to underlying risks, such as Europe’s Solvency II regime.
In other markets, the new standards could expose weak balance sheets and might trigger capital enhancement measures, it said.
This has occurred in South Korea’s life insurance sector. An unexpected drop in reported equity would lead to a corresponding increase in leverage, it said.
The adoption of IFRS 17 should improve the visibility of earnings drivers and new business performance by product line, Moody’s said, adding that it encourages insurers to optimize their business mix, re-evaluate products and manage their back books.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said that its investment plan in Arizona is going according to schedule, following a local media report claiming that the company is planning to break ground on its third wafer fab in the US in June. In a statement, TSMC said it does not comment on market speculation, but that its investments in Arizona are proceeding well. TSMC is investing more than US$65 billion in Arizona to build three advanced wafer fabs. The first one has started production using the 4-nanometer (nm) process, while the second one would start mass production using the
A TAIWAN DEAL: TSMC is in early talks to fully operate Intel’s US semiconductor factories in a deal first raised by Trump officials, but Intel’s interest is uncertain Broadcom Inc has had informal talks with its advisers about making a bid for Intel Corp’s chip-design and marketing business, the Wall Street Journal reported, citing people familiar with the matter. Nothing has been submitted to Intel and Broadcom could decide not to pursue a deal, according to the Journal. Bloomberg News earlier reported that Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is in early talks for a controlling stake in Intel’s factories at the request of officials at US President Donald Trump’s administration, as the president looks to boost US manufacturing and maintain the country’s leadership in critical technologies. Trump officials raised the
‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
CHIP BOOM: Revenue for the semiconductor industry is set to reach US$1 trillion by 2032, opening up opportunities for the chip pacakging and testing company, it said ASE Technology Holding Co (日月光投控), the world’s largest provider of outsourced semiconductor assembly and test (OSAT) services, yesterday launched a new advanced manufacturing facility in Penang, Malaysia, aiming to meet growing demand for emerging technologies such as generative artificial intelligence (AI) applications. The US$300 million facility is a critical step in expanding ASE’s global footprint, offering an alternative for customers from the US, Europe, Japan, South Korea and China to assemble and test chips outside of Taiwan amid efforts to diversify supply chains. The plant, the company’s fifth in Malaysia, is part of a strategic expansion plan that would more than triple
RSS