Taiwan insurers face consolidation as capital strain deepens

Fitch expects weaker firms to keep issuing subordinated bonds through 2026.

Mergers and acquisitions involving life insurers with weak risk-based capital positions reflect ongoing strain in Taiwan’s insurance sector. 

Whilst consolidation may provide some capital relief, Fitch Ratings’ APAC Insurance Outlook 2026 published in December 2025 showed that the effectiveness of integrating operations remains uncertain.

Insurers’ earnings and capital positions also remain exposed to foreign exchange volatility due to persistent mismatches between assets and liabilities. 

This risk is expected to remain a key challenge as companies adapt to the new capital regime.

Fitch said further consolidation amongst weaker insurers could continue into 2026. It expects insurers to keep issuing capital-qualifying subordinated bonds, both onshore and offshore, often through wholly owned special purpose vehicles. 

Many firms are also relying on transitional measures under TW-ICS.

The agency added that it will focus on the stability of insurers’ TW-ICS ratios, the extent of transitional relief used, their ability to build contractual service margins, and improvements in risk management.

Profitability is likely to remain sensitive to exchange rate movements, hedging costs and global equity market volatility. Insurers are targeting more stable earnings through contractual service margin releases following the adoption of IFRS 17 in 2026. 

Regulators and industry participants are discussing measures to reduce volatility in financial results by smoothing the impact of exchange rate changes on foreign currency bonds. 

A decision is expected in the first half of 2026.

Fitch expects total premium growth to reach the mid-single digits in 2026, supported by demand for US dollar-denominated products, which remain a key driver of new business.