Taiwan insurers to raise fresh equity amidst new capital requirement 

The new standard also raised compliance risks for insurers.

Taiwanese insurers are preparing for significant regulatory changes with the adoption of the International Financial Reporting Standard (IFRS 17) and the Taiwan-localised Insurance Capital Standard (TW-ICS) in January 2026, said Fitch Ratings. 

These changes will introduce a mark-to-market valuation for both assets and liabilities and impose stricter capital requirements, raising the confidence level for capital calibration from 95% to 99.5%.

To comply with the new capital regime, insurers are adjusting their asset allocation strategies to improve asset-liability matching and bolster their capital reserves. 

Many are focusing on higher-margin protection and health products to strengthen their contractual service margins (CSM) and reduce exposure to interest rate fluctuations. 

Additionally, insurers are issuing capital-qualifying bonds to fortify their financial positions.

The Financial Supervisory Commission (FSC), Taiwan’s insurance regulator, has introduced a 15-year phase-in period for the new solvency regime, allowing insurers to gradually adjust to the stringent requirements. 

However, Fitch Ratings anticipates that insurers will face challenges managing interest rate, foreign exchange, and commercial real estate risks under TW-ICS. 

In response, insurers are expected to continue reshaping their investment strategies and business portfolios to mitigate these risks.

To prepare for the higher capital charges on equity and real estate investments, insurers have been diversifying their portfolios, issuing both Taiwan dollar subordinated bonds and US dollar-denominated tier 2 subordinated bonds since 2023. This move aims to strengthen their capital positions and help meet the TW-ICS requirements. 

Fitch also expects insurers to raise fresh equity and continue issuing capital bonds both onshore and offshore.