Taiwan's insurance industry is bracing for heavy losses due to the appreciation of the New Taiwan Dollar, according to legislator William Tseng, who is a former chairman of the Financial Supervisory Commission (FSC). He predicts that the country’s insurance industry is set to lose between NT$120 billion (US$3.93 billion) and NT$150 billion in the first quarter of the year. Tseng said that the local currency has appreciated 5% against the US dollar so far this year. As Taiwanese insurance companies are exposed to overseas investments, the repatriation of that income would significantly decrease after the currency exchange. The FSC has reported overseas investments held by Taiwan's financial sector total US$900 billion (NT$27.4 trillion), of which NT$11.5 trillion are held by the insurance industry and NT$161.9 billion are held by securities firms. FSC insurance bureau director-general, Grace Lee, said that 74% of insurance industry investments are hedged to reduce risk and there are currency exchange mechanisms in place to further reduce losses in case of currency fluctuations. Tseng, however, believes that the 26% of investments that are not hedged pose a serious risk to the industry.
