More foreign life insurers likely to withdraw from Taiwan

So far this year, foreign life insurers such as ING (Internationale Nederlanden Groep N.V.), PCA, Aegon Insurance Group and Nan Shan Life Insurance have sold off their branch offices in Taiwan for two major reasons. One lies in their parent groups suffering financial predicaments, and the other rests with the worsening negative interest differential, especially in traditional policies, plaguing life insurance firms operating in Taiwan, according to Lee Chia-hsin, senior vice president of Fitch.

“The worst time for life insurance firms has gone, but challenges remain great for them, mainly because undesirable outlook for interest rate movement is detrimental to the development of the life insurance industry in Taiwan,” Lee said.

Lee stressed that the possibility of more foreign life insurance firms in Taiwan withdrawing from the market can't be ruled out.

But as the aggregate share of the Taiwan market recorded by the 12 foreign insurance firms still operating on the island stands at only 10 percent, the impact of their withdrawal on Taiwan's life insurance market will be quite limited.

Lee continued that it's an effective way for life insurance firms to expand its market share in Taiwan by acquiring other life insurers. Fubon Life Assurance, for instance, saw its share of the domestic life insurance market double to 14 percent after acquiring the ING life insurance arm on the island.

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