As the New Taiwan Dollar has appreciated by 6.64% against the US dollar in May, numerous life insurance companies are facing foreign exchange loss pressures. However, Cathay Life, a subsidiary of Cathay Financial, has seen its stock price rise due to relatively minor exchange losses, opting instead to increase its hedge ratio, bucking the trend.

According to reports from Cathay Financial's earnings call on the 23rd, Cathay Life raised its hedge ratio from 65% to 69% in the first quarter. This move demonstrates a commitment to maintaining a solid hedge strategy amidst market fluctuations while avoiding speculation and building a protective framework.

While many insurance companies have reduced their hedge ratios in anticipation of further depreciation of the TWD, Cathay Life has chosen to enhance its hedge position and extend the duration of its NDF contracts up to 2 years. Lin Chao-ting stated that this strategy aims to mitigate potential currency risks in uncertain market conditions.

As of the end of March, Cathay Life reported foreign currency assets totaling approximately NT$5.65 trillion, 68% of which are subject to exchange rate risks, with 69% hedged through swaps and NDFs. This positioning allows Cathay Life to manage currency fluctuation pressures more easily.