Taiwanese Insurance Companies Predicted to Face Volatility as Middle East War Continues
GLOBAL – S&P Global Ratings assesses that Taiwanese life insurance companies could face valuation losses on their Middle Eastern investments due to the ongoing war. However, the impact is likely to be containable.
“We anticipate short-term volatility in the valuations of Middle Eastern investments held by Taiwanese life insurers. Currently, we are not factoring in impairment losses because our base case scenario assumes the war is likely to end after a few weeks,” said S&P Global Ratings Credit Analyst Effie Tsai.
Citing Insurance News on Wednesday, 25 March 2026, an article titled ‘Insurance Brief: Taiwan Life Sector Could Handle Potential Losses on Middle East Holdings’ states that scenario testing shows the insurance companies have sufficient capital buffers to absorb potential losses.
However, a prolonged conflict could increase revenue volatility and gradually reduce those buffers.
Taiwanese life insurers have increased their investments in the Middle East in recent years, attracted by higher yields on sovereign and corporate bonds as well as the need to diversify portfolios.
By the end of 2025, the sector had a combined exposure of US$55 billion (NT$1.77t) to the region. This amount is far larger than the US$4.31 billion (NT$138 billion) losses suffered by Russia before the Russia-Ukraine War began in 2022.
Direct investments in the Middle East, particularly in Israel, Saudi Arabia, Qatar, and the United Arab Emirates, accounted for 4.1% of invested assets for rated Taiwanese life insurers at the end of 2025.
The highest allocation by a rated insurer was eight percent. Around 99% of the sector’s exposure is in high-rated bonds. These investments equate to about 22.1% of total adjusted capital, a measure that combines analytical adjustments to shareholders’ equity.
Initial stress tests conducted by S&P Global Ratings indicate that capital buffers would remain adequate even if regional exposure suffers a 15% decline.
S&P Global Ratings notes that the duration and scale of the Middle East conflict remain uncertain, as do its potential impacts on commodity prices, supply chains, economies, and credit conditions.