Taiwan’s Financial Supervisory Commission is implementing new accounting rules effective January 1, 2026, allowing life insurers to spread unrealized foreign exchange gains and losses on US dollar-denominated bonds over the remaining life of those instruments. This reform could generate savings of approximately $2.9 billion per year in hedging costs. Between 2019 and 2025, Taiwan’s life insurance sector accumulated hedging costs of NT$1.6 trillion against a combined net income of only NT$1.4 trillion. Major Taiwanese insurers Cathay Life, Fubon Life, and Nan Shan Life, which together manage more than half of the sector’s NT$37 trillion in total assets, have already begun unwinding significant offshore hedge positions.
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