Life Insurers' Profits Hit Record High of NT$246.3 Billion in First 5 Months, Net Worth Surges to NT$3.9 Trillion

(CNA) The Financial Supervisory Commission (FSC) announced today that the insurance industry's profits for the first five months of this year reached NT$272.5 billion. Life insurers accumulated NT$246.3 billion in profits, while non-life insurers earned NT$26.2 billion, both setting new records for the same period in history. Furthermore, as of the end of May, the net worth of life insurers stood at NT$3.9103 trillion, boosted by the rise in capital markets, with a monthly increase of NT$581.2 billion, marking new highs for both figures.

The FSC released the operational overview of the insurance industry for the first five months today, with overall profits reaching NT$272.5 billion, a record high for the period.

Chen Ching-yuan, deputy director of the FSC's Insurance Bureau, stated that life insurers' profits as of the end of May were NT$246.3 billion, primarily driven by NT$90.5 billion from insurance service results and NT$188.3 billion from financial results, with other operating results showing a deficit of NT$33.6 billion. Non-life insurers' pre-tax profits for the first five months were NT$26.2 billion, mainly from NT$18.4 billion in insurance service results and NT$11.6 billion in financial results, with other operating results at a deficit of NT$4.2 billion.

The Insurance Bureau explained that life insurers' profits in May were NT$51.8 billion. Coupled with the rise in the Taiwan stock market in May, this boosted the other comprehensive income portion for life insurers, driving their net worth to NT$3.9103 trillion by the end of May, an increase of NT$581.2 billion from the previous month, both reaching historic highs.

Regarding hedging, the Insurance Bureau reported that the New Taiwan Dollar appreciated by 0.84% cumulatively in May. If no hedging measures were taken, life insurers would have incurred NT$45.1 billion in foreign exchange losses in May. However, the derivative products used by insurers, such as hedging tools, generated NT$55.8 billion in gains. The hedging ratio for life insurers in May was 43.66%. The foreign exchange hedging cost for May was NT$10.5 billion. Combined with an additional NT$11.2 billion in foreign exchange price fluctuation reserves, the total net foreign exchange loss for life insurers in May was NT$11 billion.

In February of this year, the FSC revised and issued the "Notes on Foreign Exchange Price Fluctuation Reserves for Individual Insurance Businesses." This adjustment modified the existing foreign exchange price fluctuation reserves and special surplus reserves, establishing two new funds for each, totaling four funds. These are: "Foreign Exchange Price Fluctuation Reserve - Volatility Reserve (P)", "Foreign Exchange Price Fluctuation Reserve - Fixed Reserve (Q)", "Special Surplus Reserve - Fixed Foreign Exchange Risk Reserve (X)", and "Special Surplus Reserve - Enhanced Foreign Exchange Risk Reserve (Y)".

Chen Ching-yuan stated that as of the end of May, the balance of foreign exchange price fluctuation reserves was NT$691.3 billion, with P at NT$649 billion and Q at NT$42.3 billion. Among the other two funds, X was NT$289.7 billion, and Y will have relevant figures next year, currently being 0. The combined total of foreign exchange price fluctuation reserves and the fixed foreign exchange risk reserve from special surplus reserves reached NT$981 billion.

The Insurance Bureau further explained that as of the end of May, life insurers' net foreign investment exposure was NT$8.7755 trillion. In an extreme scenario where all foreign investments were repatriated, the amount from foreign exchange reserves plus the fixed foreign exchange risk reserve from special surplus reserves could buffer a New Taiwan Dollar appreciation of 11.2%. (Editor: Lin Chia-han) 1150702

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