Taiwan Insurers May Boost FX Hedging to Protect Foreign Assets

Taiwan’s life insurers look set to lift their currency hedging from near record lows in an attempt to shield overseas assets from further swings in the local dollar.

The island’s insurers hold more than $700 billion of foreign currency assets, making them a key source of demand for bonds issued overseas. But they had foreign derivatives equivalent to 47.7% of these assets by the end of June, near an all-time low, according to Bloomberg analysis of company presentations.

Taiwanese insurers were hit hard earlier this year, when the local dollar had its biggest one-day advance since 1988. The relatively low ...