Local life insurers assess Russian bond exposure – 台北時報

BE PATIENT?
Financial Supervisory Commission Chairman Thomas Huang said more than 90 percent of the bonds mature in 10 years to 30 years, so it is too soon to tell

By Kao Shih-ching / Staff reporter

Four local life insurers have reported combined credit losses of NT$8.4 billion (US$295.4 million) from their exposure to Russian bonds amid Russia’s invasion of Ukraine, the Financial Supervisory Commission (FSC) said yesterday.

The estimated losses accounted for 6 percent of the total booking value of the NT$138.2 billion in Russian bonds they held as of the end of last month, the commission said.

However, the losses did not factor in the fast depreciation of the ruble, which remains under selling pressure following a spate of punitive measures that the US and its allies imposed against Russia.

Photo: Wang Yi-sung, Taipei Times

Yesterday, the Russian currency was down 11 percent against the US dollar at 117.3550, a drop of almost 40 percent this year, Bloomberg News reported.

Cathay Life Insurance Co (國泰人壽), the life insurance unit of Cathay Financial Holding Co (國泰金控), on Sunday said it recognized credit losses of NT$2.6 billion for last month because of the risk that its Russian bonds might default.

Fubon Life Insurance Co (富邦人壽), the insurance unit of Fubon Financial Holding Co (富邦金控), booked losses of NT$2.2 billion for last month, while Shin Kong Life Insurance Co (新光人壽) recognized losses of NT$3.16 billion and Taiwan Life Insurance Co (台灣人壽) booked losses of NT$500 million, FSC data showed.

Other insurers such as Nan Shan Life Insurance Co (南山人壽), China Life Insurance Co (中國人壽), Transglobe Life Insurance Co (全球人壽) and Mercuries Life Insurance Co (三商美邦人壽保險) also hold positions in Russian bonds, the commission said.

Life insurers this month are likely to continue to recognize credit losses, and the commission forecast that their cumulative losses would reach NT$10 billion by the end of this month, FSC Chairman Thomas Huang (黃天牧) told a meeting of the legislature’s Finance Committee in Taipei yesterday.

The Russian bonds held by local life insurers are denominated in US dollars, but it has been reported that the Russian government is to use only rubles for interest payments.

If local life insurers are paid the interest in rubles, they risk sustaining foreign-exchange losses, as the ruble has dramatically depreciated against the greenback since the outbreak of the Ukraine war, Insurance Bureau Director-General Shih Chiung-hwa (施瓊華) said.

It is too early to say that all Russian bonds held by local life insurers will default, as more than 90 percent of the bonds mature in 10 years to 30 years, Huang said.

Among the eight life insurers with holdings in Russian bonds, Shin Kong Life Insurance holds the most, with a position of NT$29.1 billion, followed by Cathay Life with NT$28.4 billion, Fubon Life with NT$22 billion and China Life with NT$14.7 billion, FSC data showed.

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