Cathay Life Insurance secured regulatory approval to establish NT$50.8 billion ($1.74 billion) in additional foreign exchange reserves as Taiwan’s currency strength threatens the island’s insurance sector.
The move comes after Taiwan dollar appreciation created operational pressures for insurers holding substantial US dollar-denominated assets. Following the approval, Cathay Life’s total FX reserves exceeded NT$56 billion ($1.91 billion) by June’s end, according to parent company Cathay Financial Holdings.
The insurer applied for regulatory relief measures that allow adjustments to liability reserve calculations, reflecting broader industry challenges from currency volatility. Taiwan’s life insurers collectively hold over NT$23 trillion in foreign investments, with currency hedging remaining limited across the sector.
Despite currency headwinds, Cathay Financial reported strong first-half results. The holding company posted NT$45.75 billion ($1.56 billion) in net profit through June, with earnings per share reaching NT$2.88. June alone contributed NT$7.1 billion ($243 million).
Subsidiary performance remained robust, with Cathay United Bank generating NT$23.38 billion ($800 million) in half-year profits, up 16% annually. Property insurer Cathay General achieved record first-half earnings of NT$1.86 billion ($64 million), advancing 42%.
Industry analysts estimate a 10% Taiwan dollar appreciation could generate $18 billion in unrealized losses for local insurers, underscoring the significance of enhanced reserve buffers for major players like Cathay Life.
