OREANDA-NEWS. Fitch Ratings says in a new report that Taiwanese life insurers have been investing in higher-risk assets for better yields, leaving their capitalisation vulnerable to unfavourable capital and currency market movements.

Taiwanese life insurers have increased overseas investments (mostly fixed-income) since the early 2000s, and have shifted their portfolio from treasuries and agency bonds issued by developed countries to the corporate bonds, financial debentures and sovereign bonds of emerging markets. Overseas investments accounted for 52.9% of invested assets at end-May 2015 (37.7% at end-2011). Domestic equities and property investments also increased to 7.3% and 6.4% of invested assets from 6.2% and 4.7% at end-2011, respectively.

Non-life insurers have adequate capital buffers to withstand investment volatility and potential catastrophe losses, with an aggregate equity-to-assets ratio of 33% at end-April 2015. They have increased the retention of profitable product lines to sustain premium growth and profitability, with the sector's return on assets at 2%-4% in 2011-2014.

"Taiwan Insurance Market Dashboard 1H15" is available at www.fitchratings.com or by clicking on the link in this media release.