Life Insurers in Taiwan Now Faces Higher FOREX Risks

The Taiwan Ratings Corp. released a report that life insurance firms are going to face bigger risks than the Taiwanese banks. The report said that this is because insurance companies in this country have bigger amounts of assets that are in foreign currencies.

The report called “Taiwan's Life Insurers Face Higher Foreign Exchange Risks than Banks,” Taiwan Ratings reported that interest rates have remained low and profits for the financial sectors have stagnated thus many life insurance firms and banks look for more assets outside the country. The unfavourable economic condition of Taiwan is causing this to happen.

The released report said that Taiwanese life insurance providers have a big amount of cash because of the premium they have locally and that they are more interested to invest outside the country to get more earnings.

Stated in the report is that banks in Taiwan are less sensitive to foreign currencies and that they are more cautious of the risks involved when getting into such investments.

Taiwan Ratings is a local holding firm of a U.S.-based credit rating agency Standard & Poor's.