FSC: Life Insurance Foreign Exchange Reserves Can Withstand NTD Appreciation to 28
Taiwan's Financial Supervisory Commission announced that as of the end of March, life insurance foreign exchange fluctuation reserves reached NT$911.1 billion, capable of withstanding a 10.6% appreciation of the NTD (to NT$28.178), following the new exchange rate accounting system introduced in late December and a decrease in hedging ratios.
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- 📰 Published: April 28, 2026 at 20:59
- 🔍 Collected: April 28, 2026 at 21:32 (32 min after Published)
- 🤖 AI Analyzed: April 28, 2026 at 22:07 (35 min after Collected)
Central News Agency message
(Central News Agency reporter Su Ssu-yun, Taipei, April 28) The Financial Supervisory Commission (FSC) stated today that as of the end of March, the balance of foreign exchange price fluctuation reserves in the life insurance industry was NT$621.4 billion. Coupled with the NT$289.7 billion in special surplus reserve for fixed foreign exchange risk, the total reached NT$911.1 billion. Considering the net exposure of the life insurance industry's overseas investments, it can withstand a 10.6% appreciation of the New Taiwan Dollar. Based on today's closing price of the NTD, it can withstand an appreciation to NT$28.178 (an appreciation of NT$3.34).
The FSC proposed a new exchange rate accounting system at the end of December last year, which aims to reduce the impact of exchange rates on financial reports through amortization. As a result, the life insurance industry has also lowered its hedging ratio. FSC data shows that the life insurance industry's hedging ratio declined from 50.23% at the end of 2025 to 47% in January this year, and further dropped to a historical low of 45.1% in February, before slightly increasing to 45.15% in March.
FSC Insurance Bureau Deputy Director Tsai Huo-yen explained at a regular press conference that the life insurance industry's foreign exchange hedging ratio was 45.15% at the end of March. Among these, currency swap (CS) tools accounted for over 75%, while non-deliverable forwards (NDF) were below 25%.
The FSC revised and issued the 'Directions for Foreign Exchange Price Fluctuation Reserves of Life Insurance Enterprises' in February this year, adjusting the existing foreign exchange price fluctuation reserves and special surplus reserves to each have two separate funds, 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)'.
Tsai Huo-yen pointed out that at the end of March, the balance of foreign exchange price fluctuation reserves was NT$621.4 billion, with P being NT$600.6 billion and Q being NT$20.8 billion. Among the other two funds, X was NT$289.7 billion, while Y will only have relevant figures next year and is currently zero. After adding the foreign exchange price fluctuation reserves and the special surplus reserve for fixed foreign exchange risk, the total reached NT$911.1 billion.
Tsai Huo-yen further explained that the life insurance industry's net foreign investment exposure at the end of March was NT$8.6073 trillion. Assuming an extreme scenario where all foreign investments are repatriated, the amount of foreign exchange reserves plus special surplus reserve for fixed foreign exchange risk can cushion a 10.6% appreciation of the New Taiwan Dollar. Based on today's closing price of NT$31.518, it can approximately withstand an appreciation of NT$3.34.
Media asked why the foreign exchange reserve level decreased from NT$627.7 billion at the end of February to NT$621.4 billion at the end of March. An official from the Insurance Bureau explained that in March, due to the NTD depreciating by 0.729 NTD or 2.28%, the foreign exchange reserve provision comes from two methods: fixed provision and volatility provision. Theoretically, if the NTD depreciates, the foreign exchange reserve should increase. Although most life insurance companies currently adopt the amortization method, when the NTD depreciates, losses occur in derivative transactions for hedging. Since this amount is greater than the foreign exchange gains/losses on the asset and liability side, it offsets the foreign exchange reserve, leading to a decrease in the reserve. (Edited by Zhai Ssu-chia) 2026/04/28
(Central News Agency reporter Su Ssu-yun, Taipei, April 28) The Financial Supervisory Commission (FSC) stated today that as of the end of March, the balance of foreign exchange price fluctuation reserves in the life insurance industry was NT$621.4 billion. Coupled with the NT$289.7 billion in special surplus reserve for fixed foreign exchange risk, the total reached NT$911.1 billion. Considering the net exposure of the life insurance industry's overseas investments, it can withstand a 10.6% appreciation of the New Taiwan Dollar. Based on today's closing price of the NTD, it can withstand an appreciation to NT$28.178 (an appreciation of NT$3.34).
The FSC proposed a new exchange rate accounting system at the end of December last year, which aims to reduce the impact of exchange rates on financial reports through amortization. As a result, the life insurance industry has also lowered its hedging ratio. FSC data shows that the life insurance industry's hedging ratio declined from 50.23% at the end of 2025 to 47% in January this year, and further dropped to a historical low of 45.1% in February, before slightly increasing to 45.15% in March.
FSC Insurance Bureau Deputy Director Tsai Huo-yen explained at a regular press conference that the life insurance industry's foreign exchange hedging ratio was 45.15% at the end of March. Among these, currency swap (CS) tools accounted for over 75%, while non-deliverable forwards (NDF) were below 25%.
The FSC revised and issued the 'Directions for Foreign Exchange Price Fluctuation Reserves of Life Insurance Enterprises' in February this year, adjusting the existing foreign exchange price fluctuation reserves and special surplus reserves to each have two separate funds, 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)'.
Tsai Huo-yen pointed out that at the end of March, the balance of foreign exchange price fluctuation reserves was NT$621.4 billion, with P being NT$600.6 billion and Q being NT$20.8 billion. Among the other two funds, X was NT$289.7 billion, while Y will only have relevant figures next year and is currently zero. After adding the foreign exchange price fluctuation reserves and the special surplus reserve for fixed foreign exchange risk, the total reached NT$911.1 billion.
Tsai Huo-yen further explained that the life insurance industry's net foreign investment exposure at the end of March was NT$8.6073 trillion. Assuming an extreme scenario where all foreign investments are repatriated, the amount of foreign exchange reserves plus special surplus reserve for fixed foreign exchange risk can cushion a 10.6% appreciation of the New Taiwan Dollar. Based on today's closing price of NT$31.518, it can approximately withstand an appreciation of NT$3.34.
Media asked why the foreign exchange reserve level decreased from NT$627.7 billion at the end of February to NT$621.4 billion at the end of March. An official from the Insurance Bureau explained that in March, due to the NTD depreciating by 0.729 NTD or 2.28%, the foreign exchange reserve provision comes from two methods: fixed provision and volatility provision. Theoretically, if the NTD depreciates, the foreign exchange reserve should increase. Although most life insurance companies currently adopt the amortization method, when the NTD depreciates, losses occur in derivative transactions for hedging. Since this amount is greater than the foreign exchange gains/losses on the asset and liability side, it offsets the foreign exchange reserve, leading to a decrease in the reserve. (Edited by Zhai Ssu-chia) 2026/04/28