Taiwan insurance firms’ pre-tax profit plunged 50.6% to NT$187.1 billion (US$5.78 billion) in the 12 months to September as the selloff in global stock markets wiped out two-thirds of the value of their portfolios.
The firms are also raising their foreign exchange reserves to hedge against the local dollar’s decline against the greenback, which has strengthened to multi-year highs against many currencies as the US Federal Reserve raises interest rates to fight inflation.
The pre-tax profit of Taiwan’s 23 life insurers shrank 17.3% to NT$297.5 billion over the last 12 months from NT$359.7 billion in the 12 months to September 2021, while the 23 non-life firms swung to a pre-tax loss of NT$110.4 billion from a profit of NT$19 billion, the Financial Supervisory Commission (FSC) says in a brief statement on October 25.
The regulator publishes the industry figures at irregular intervals.
Stock markets have been hammered this year as global central banks hike interest rates to rein in soaring inflation, the war in Ukraine continues, and China maintains a strict Covid-19 policy.
In Taiwan, the benchmark stock index slid almost 19% in the 12 months to September.
The value of Taiwanese insurers’ equity portfolios stood at NT$905.3 billion in September 2022 – NT$828.5 billion for life companies and NT$76.8 billion for non-life firms – compared with NT$2.71 trillion a year ago.
The FSC says life insurers recorded a net gain of NT$986.5 billion on their overseas investments in the 12 months to September.
The regulator also notes that the cumulative foreign exchange reserves of life insurance firms increased by NT$230.9 billion to NT$274.6 billion in the first nine months of 2022, a period during which the Taiwan dollar weakened 12.9% against the US dollar.