KGI Life Raises Hedge Ratio, Each 1 Pct Appreciation of TWD Impacts NT$1.7 Billion
KGI Life stated at a recent earnings conference that each 1-pct appreciation of the New Taiwan Dollar (TWD) would impact their foreign exchange exposure by approximately NT$1.7 billion. The strong performance of the TWD has put pressure on life insurance stocks, with financial stocks like Cathay Financial and CTBC also facing declines.
Since April of this year, the TWD has appreciated more than 10% against the US dollar, leading several life insurance companies to endure forex losses. KGI has raised its hedge ratio to around 55% to 60% to mitigate potential losses from currency fluctuations.
According to KGI's assessment, their foreign exchange price reserves can counteract future conversion losses, and the existing foreign exchange system allows for a greater offset of losses. KGI emphasized that while the appreciation of the TWD does affect the income statement, other forex factors, investment returns, and insurance business revenues must also be considered.
