Taiwan's insurance companies are more vulnerable to market volatility triggered by US tariffs due to their smaller capital buffers according to a major international ratings agency. The nation's banks, however, remain well-capitalised and are able to absorb potential economic shocks, the rating agency said.
Moody’s Ratings said key equity markets across the Asia-Pacific region have fallen by more than 10% on average since US President Donald Trump announced sweeping tariff hikes on 2 April 2025.
Moody’s Ratings said the sweeping import tariff regime is credit negative for regional insurers. Taiwan’s growing reliance on the US economy is likely to expose it most to market volatility due to the US tariffs. Also, the Taiwanese insurers have lower capital buffers, which makes them particularly vulnerable.
Several major life insurers have already reported a 15% decline in unrealised capital gains during the first quarter — a figure that could worsen this month amid continued global stock market turbulence.
Taiwan’s financial regulator, Financial Supervisory Commission has asked the country’s domestic life insurers to assess their cash and debt positions. It has conveyed to the insurers to adopt and ensure adequate liquidity to protect the interests of policyholders.FSC has said all measures should be taken to avoid a potential liquidity trap.
The commission continues to monitor whether there is any abnormal surge in policy cancelations or terminations following the stock market slump. So far, there has been no significant or abnormal spike in cancellations. The regulator said it would, however, continue to monitor the situation as uncertainty lingers.