Taiwan Mulls Accounting Change to Cut Insurers’ Hedging Costs

Taiwan’s Financial Supervisory Commission plans to adjust the foreign-exchange accounting rules to reduce volatility in life insurers’ financial statements and curb excessive hedging, according to a report from the financial regulator to lawmakers.

• Life insurers in Taiwan currently use spot exchange rates to value long-term foreign-currency-denominated assets, a practice that creates large swings in reported gains and losses: report
• The regulator is considering allowing life insurers using accounting methods that differ from IAS 21 rule, including spreading out exchange-rate gains and losses over time for bonds measured at amortized cost
  • Under IAS 21 rule, all unrealized exchange differences for the ...