This report does not constitute a rating action. Heightened market uncertainty surrounding global trade and sharp forex movements will raise capital and earnings risk for Taiwan's life insurers. The New Taiwan Dollar (NT$) appreciated sharply against the U.S. dollar in early May, which poses a headache for life insurers that rely heavily on foreign-currency investments. Insurers now face a balancing act to manage their forex risk without escalating capital and earnings risk. The sector's consistently large forex exposure and need to balance risk and profit growth have led to increasingly complicated profit formulas for insurers' foreign-currency investments. As forex risk has grown, so have capital risks. Under our base-case assumptions for Taiwan's life insurance sector, potential forex-related costs could account
