Fitch: Taiwan insurers consolidate

Fitch Ratings said that Taiwan's life insurance market is undergoing consolidation, in light of the recent disposals of Taiwanese operations by foreign firms. The exit of foreign life insurers highlights the severity of the negative interest carry in Taiwan and the regulatory imparity in addressing the associated risks, the agency said.

According to disclosures by ING, Prudential plc and Aegon, the disposals of Taiwan's legacy policies with high-guaranteed rates has significantly reduced the companies' economical capital required under the more stringent solvency standards they practice at their home markets, the agency said.

In Taiwan, the insurance reserve provisioning is based on initial investment return assumption, meaning that current interest rates need not be reflected, Moody's said, and the regulatory capital regime is more lenient in addressing the interest rate risks facing life insurers.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.