From Maturity to Momentum: Insurance Regulation in Taiwan and Vietnam

In this episode of “The Standard Formula” global prudential solvency series, host Robert Chaplin is joined by colleagues Connor Williamson and Dev Jain to examine the prudential solvency regimes of Taiwan and Vietnam. Together, they explore Taiwan's capital adequacy regime under the Taiwan Insurance Capital Standard, currency risk challenges facing life insurers, market entry requirements in both jurisdictions and policyholder protection mechanisms. They also examine Vietnam's ambitious growth agenda, as well as the country’s push to establish International Financial Centers in Ho Chi Minh City and Danang to attract foreign investment and become a regional financial hub. ## 🗝️ Key Points 🗝️ *Top takeaways from this episode* 1. Taiwan has implemented the Taiwan Insurance Capital Standard (TWICS), which aligns with the International Association of Insurance Supervisors' ICS 2.0. Insurers must maintain a ratio of total adjusted net capital to risk-based capital of at least 100%, with a tiered regulatory intervention ladder applied to firms falling below that threshold. 2. Approximately 70% of Taiwanese life insurers' invested assets are held in foreign currency, predominantly U.S. dollar-denominated bonds, creating a significant mismatch against their New Taiwan dollar liabilities. In response to sharp Taiwan dollar appreciation in 2025, the country’s insurance regulator introduced new rules allowing insurers to use additional reserves to offset foreign exchange losses, with 10 insurers adopting the new reserve rules. 3. Vietnam welcomes foreign investment with no statutory caps on foreign ownership, and a commercial presence can be established through joint ventures, wholly foreign-owned enterprises, acquisitions or foreign branches — though branches cannot carry out life insurance business. Vietnam's 2025 amendments set out a roadmap for a risk-based capital regime, which will become mandatory starting in 2031. 4. Insurers, reinsurers and foreign branches operating in Vietnam must contribute annually to a compulsory reserve fund at 5% of after-tax profits, capped at 10% of charter capital, providing a safety net for policyholders in the event of insolvency. 5. Vietnam’s government has established two international financial centers in Ho Chi Minh City and Danang that are designed to attract foreign capital, foster innovation and offer fast-track licensing and sandbox approvals. ## 💡 Meet Your Host 💡 **Name:** Robert Chaplin **Title:** Partner, Insurance at Skadden **Specialty:** Rob primarily focuses on transactional and advisory work in the insurance sector. He advises on mergers and acquisitions, disposals, joint ventures and strategic reinsurances. He also counsels on regulatory issues, with an emphasis on Solvency II. **Connect:** LinkedIn ## 💡 Featured Guests 💡 **Name:** Connor Williamson **What he does:** Connor has a wide-ranging financial institutions and regulatory practice, with extensive experience advising insurers, asset and wealth managers, banks, payment institutions, credit rating agencies, non-bank lenders and financial sponsors on transactional and stand-alone advisory matters. **Organization:** Skadden **Words of Wisdom:** “Policyholder protection is another cornerstone of Taiwan's regime. In particular, the Stabilization Fund, a private organization sponsored by insurers, is designed to safeguard policyholders’ interest. It can provide loans to troubled insurers, advance claims payments if an insurer's unable to pay, and can make other payments as approved by the FSC. All insurers are required to contribute to the fund.” **Connect:** LinkedIn **Name**: Dev Jain **What he does**: Dev Jain advises on a wide range of domestic and cross-border mergers and acquisitions, disposals, investments, carve-outs, consortium deals, group restructurings, governance issues and regulatory matters. **Organization**: Skadden **Words of Wisdom**: “Taiwanese life insurers face substantial currency mismatches as a majority of their New Taiwan dollar liabilities are backed by U.S. dollar assets. Approximately, 70% of their invested assets are in foreign currency predominantly U.S. dollar-denominated bonds. This imbalance in the denomination of invested assets therefore render Taiwanese insurers highly vulnerable to future appreciation of the New Taiwan dollar.” **Connect**: LinkedIn ## Connect with Skadden ☑️ Follow us on X and LinkedIn. ☑️ Subscribe to The Standard Formula on Apple Podcasts, Spotify, or your favorite podcast app. *The Standard Formula is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.*