Cumulative foreign-exchange losses and hedging expenses continue to climb at Taiwan’s life insurance companies, rising to NT$236.4 billion (US$8.21 billion) at the end of last month amid constant appreciation of the New Taiwan dollar against the US dollar, the Financial Supervisory Commission (FSC) said on Thursday.
The local currency has risen 3.9 percent against the greenback since the end of last year, resulting in higher foreign-exchange risks for life insurers, as two-thirds of their investment portfolios, worth more than NT$18 trillion, are overseas or in US dollars, FSC data showed.
Life insurers posted combined losses of NT$442 billion in the valuation of their US dollar-denominated assets as of the end of last month, an increase of NT$79 billion from a month earlier, the data showed.
The NT dollar was trading at NT$29.126 to the US dollar at the end of September, an appreciation of 3.3 percent from the end of last year, central bank data showed.
It closed against the greenback on Oct. 30 at NT$28.925, up 3.9 percent from the end of last year, the central bank data showed.
Despite heavy foreign-exchange losses and hedging expenses, life insurers still reported combined net profit of NT$534.1 billion from their overseas investment for the first 10 months of the year, a return on investment of 2.9 percent, higher than the return on domestic investments, the FSC data showed.
They reported a cumulative pretax profit of NT$207.9 billion as of the end of last month, up 19.6 percent from a year earlier, which boosted their combined book value to NT$2.27 trillion, the FSC data showed.
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