Taiwan’s life insurance companies posted a significant boost in profitability in January, with pretax earnings reaching NT$32.1 billion (US$978.06 million), the highest for the same period in three years, Financial Supervisory Commission data showed on Thursday.
The improvement came after recurring income and capital gains increased, while hedging costs were significantly reduced, it said.
It remains to be seen if the profit uptrend would sustain going forward as US President Donald Trump’s tariffs on imports have created big swings on global markets, analysts said.
Photo: Kelson Wang, Taipei Times
Net investment income, including gains from foreign exchange reserves, totaled NT$113.7 billion, a 40 percent increase from December last year, the data showed.
The growth was down to shares rallying in the US and Taiwan, which is favorable for asset valuations, the commission said.
Net income from investments in domestic securities and debt stood at NT$50.6 billion, an increase of 80 percent from the previous month, while overseas investments generated NT$69.8 billion of profit, a two-month high, it said.
The pickup might have vanished last month when the local currency weakened against the greenback and US bond yields fell, analysts said, adding that the shifts benefited US dollar-denominated assets and bond evaluations, but did not bode well for US and local stock holdings, as it limits the room for realizing capital gains, the main profit driver for life insurers.
The TAIEX rose 2.13 percent in January, but shed 2.85 percent last month to close at 23,053.18 on Thursday, as foreign portfolio managers pared their holdings in technology shares on fears of potential US tariffs.
Local life insurance companies are forecasting two rate cuts by the US Federal Reserve this year and expect hedging costs to remain stable even if the Fed opts to maintain rates, a local insurer said.
Should the US bond yield curve turn positive, local life insurers would receive support in the form of recurring income, it said.
By contrast, the New Taiwan dollar edged up 0.3 percent versus the US dollar in January, but a hedging strategy using a basket of currencies helped tame losses by 55 percent year-on-year after factoring in related provisions, the commission said.
As a result, the life insurance industry’s net worth stood at NT$2.59 trillion, a 16.6 percent increase from a year earlier.
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