News Life and Health18 Jun 2018

Taiwan:Rising US interest rates expected to have little impact on life insurers

18 Jun 2018

Rising US interest rates will likely affect bond prices, but the impact could be limited for Taiwan's life insurance sector as life insurers amortise the losses resulting from the fall in bond prices in the longer term, the the Financial Supervisory Commission (FSC) has said.

The Commission added that it will urge the local life insurance sector to come up with measures to control risks and assuage the possible adversary impact resulting from volatility in bond yields in the US market at a time of a rate hike cycle carried out by the Federal Reserve.

The FSC also said the Fed's rate hike is expected to have a limited impact on the local securities sector as US dollar-denominated bonds accounted for 11.78% of the sector's total net worth, while greenback denominated futures products made up less than 1% of the sector's total assets.

On 13 June, the Fed decided to raise its benchmark interest rate by 0.25 percentage point to a range between 1.75% and 2.0%. This was the second time this year that the Fed raised interest rates. It also hinted it will raise its key interest rates two more times during the rest of this year, and an additional four times in 2019.

 

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