Related Market Sector:
Fitch Ratings-Taipei/Hong Kong-24 November 2009: Fitch Ratings has today said in a recently published commentary 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.
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. In Taiwan, the insurance reserve provisioning is based on initial investment return assumption, meaning that current interest rates need not be reflected, and the regulatory capital regime is more lenient in addressing the interest rate risks facing life insurers.
In "The Exit of Foreign Life Insurers in Taiwan Highlights Regulatory Imparity", the agency summarises the recent merger and acquisition activities, and discusses the implications of these transactions on Taiwan's insurance regulatory regime and competitive landscape. The commentary is available at www.fitchresearch.com.
Contacts: Joyce Huang, Jonathan Lee, Taipei, +886 2 8175 7600/
joyce.huang@fitchratings.com &
jonathan.lee@fitchratings.com.
Media Relations: Karen Cho, Hong Kong, Tel: +852 2263 9935,
Email:
karen.cho@fitchratings.com.
Additional information is available at www.fitchratings.com.
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