Fitch Ratings has maintained the Rating Watch Negative (RWN) on Fubon Life Insurance Co., Ltd., citing heightened risks to its earnings, capitalisation, and business profile following a sharp appreciation of the Taiwan dollar.
The ratings agency also affirmed Fubon Life’s ‘A’ Insurer Financial Strength Rating and ‘A-’ Long-Term Issuer Default Rating. Its National IFS and National Long-Term Ratings were also affirmed at ‘AA+(twn)’ and ‘AA(twn)’, respectively.
The RWN was first placed in May 2025, along with four other insurers, after the Taiwan dollar (NT$) appreciated by 8% against the US dollar over two days. Fitch said this has heightened risks to the insurer’s capitalisation, earnings and business profile, especially given Fubon Life’s sizeable holdings of US dollar-denominated fixed-income assets and Taiwan dollar liabilities. “Soaring foreign-currency hedging costs and the potential for further appreciation of the Taiwan dollar add to the risks,” the agency said.
Although Fubon Life has hedged the majority of its balance sheet mismatches, Fitch noted that “this strategy may come under pressure due to the surge in hedging costs, while its unhedged positions continue to expose the insurer to sharp currency swings.”
The insurer recorded a net loss of NT$9.14bn (US$314.22m) in May 2025 after fully exhausting its NT$27bn FX valuation reserve. This loss was driven by rising hedging costs, Taiwan dollar appreciation, and volatile financial markets. Despite this, cumulative net profit for the first five months of 2025 stood at NT$16bn.
Fitch said the insurer still maintains an RBC ratio above 350% as of end-May, with capital buffers sufficient to withstand a 10% rise in the Taiwan dollar from the start of the year without breaching downgrade triggers in the Fitch Prism capital model.
In response to market conditions, Fubon Life increased both traditional and proxy hedging ratios and reallocated NT$8bn into FX reserves after receiving regulatory approval in June. It also applied for a further NT$10bn in provisions.
Fitch expects to resolve the RWN within three to six months, taking into account the insurer’s response strategies, capital metrics, and broader sector exposure to exchange-rate volatility.
