According to the report titled "Taiwan Life Insurance Sector: Operating Surplus to Remain Volatile in 2025", published by Taiwan Ratings Corporation, a subsidiary of S&P Global Ratings, the performance of Taiwan's life insurance sector will remain volatile in 2025 amid the evolving composition of operating surpluses.
Interest surplus remains the main contributor to profits, followed by mortality and loading surpluses. However, insurers' mortality surprises provide a declining buffer for earnings volatility due to rising losses on health insurance products, stated an article by S&P Global Ratings.
According to the article, other takeaways include:
- An insurer’s operating surplus constitutes four parts according to their source: Interest surplus, mortality surplus, loading surplus and other surplus.
- Interest surpluses remain volatile and are the main driver behind profitability.
- The sector faces a shrinking mortality buffer to absorb market volatility amid rising morbidity loss experience risk.
- Loss experience for medical insurance shows a significant worsening trend compared with other health insurance products.
- New business inflow from products with inherent tools, such as claim payment limit, non-guaranteed renewal and adjustable premium rate, for the insurer to mitigate future unfavourable experience could help to dilute loss experience and decelerate the shrinking trend for mortality surplus.
The full report is available to subscribers of TRC’s Rating Research Service here. The report also does not constitute a rating action.