Taiwan Regulator Seeks Urgent Feedback on China Investment Risk

Taiwan’s financial regulator is asking life insurance companies to urgently report on their current positions and assess risks stemming from growing turmoil in China’s financial markets, according to people familiar with the matter.

(Bloomberg) — Taiwan’s financial regulator is asking life insurance companies to urgently report on their current positions and assess risks stemming from growing turmoil in China’s financial markets, according to people familiar with the matter.

The Insurance Bureau, a unit of the Financial Supervisory Commission of Taiwan, has asked life insurers to reply by noon on Tuesday, and offer analysis and potential countermeasures to any impact on their mainland investments, the people said, asking not to be identified as the information is private. The firms were also asked to assess the market impact of the recent downgrade in the US. 

The FSC didn’t immediately respond to requests for a comment. 

Taiwan’s life insurers are being buffeted by turmoil both in mainland China and the global rise in interest rates. The $1.1 trillion sector’s combined pretax profits slumped 76% in the first half of 2023 from a year earlier. 

Still, they have cut back on their exposure significantly recently. The island’s life insurance firms held $31.2 billion of marketable securities in mainland China as of May 2023, down 43% from the same period in 2022, according to Insurance Bureau data. 

China’s markets are struggling amid growing fears over the economy and the continued weakness of the country’s real estate market. A potential default at Chinese property giant Country Garden Holdings Co. has sent the country’s high-yield dollar bonds to 2023 lows and investors positioning for who may next face debt-repayment struggles.

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.