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Taiwan Insurers Face Capital Hikes for Foreign Bonds
13 Feb
Summary
- Taiwan's regulator considers higher capital for insurers' below-A rated foreign bonds.
- The move targets insurers' $700 billion overseas investment portfolio.
- Local lawmakers increased scrutiny after geopolitical volatility.
Taiwan's financial regulator is considering implementing additional capital requirements for life insurers holding certain lower-rated foreign government bonds. This initiative is part of a broader effort to strengthen risk management over the industry's approximately $700 billion in overseas assets.
The Financial Supervisory Commission (FSC) is evaluating the imposition of risk provisioning for sovereign debt rated below 'A'. Discussions are ongoing regarding the precise methodology for calculating these capital charges, with the final plan subject to potential modifications.
These potential new rules would heighten capital demands on insurers, which are already navigating a transition to a new accounting framework that imposes stricter solvency standards. The proposals come amidst increased scrutiny from local lawmakers, prompted by geopolitical volatility experienced in regions like Latin America.
In November 2025, Taiwanese insurers' exposure to Colombia alone amounted to NT$138.5 billion ($4.4 billion). The FSC has also been urging insurers to boost domestic investments to support the local economy and reduce currency mismatches.
