TIS Disclosure Cap Sparks Debate as Taiwan’s Insurance Regulator Defends Three Principles

Preface

Disclosure rules for Taiwan’s insurance capital transition have drawn public scrutiny after Fubon Financial Holding (富邦金控, 2881-TW) Chairman disclosed that Fubon Life’s actual TIS (capital adequacy ratio) was 177%. The figure prompted questions about whether the company’s reported ratio should be limited by the target it previously submitted to regulators. On the following day, Insurance Bureau Deputy Director-General Tsai Huo-yen (蔡火炎) defended the disclosure framework, arguing that it is intended to protect market stability and fairness during a 15-year transition period. He also said that insurers who believe their capital position is sufficiently strong may apply to end the transition early, although that choice cannot be reversed. Separately, the bureau confirmed that a two-asterisk marker, “**,” may appear as early as the end of April 2027 to identify insurers that fail to meet their capital-improvement commitments. The debate centers on how to balance meaningful disclosure with consistent supervision.

Lazy bag

The dispute began when Fubon Life’s reported TIS of 177% was compared with a disclosure ceiling of 140%, the target figure cited in the report. Under the current rules, insurers using the optional transition measures must disclose no more than their declared target capital adequacy ratio, even if their own calculations indicate a higher figure. Regulators say transition-related adjustments mean the resulting ratios do not represent full economic reality and that uncapped figures could fluctuate sharply with markets. Insurers may apply to exit the transition, after which they disclose their actual figures without the cap—but cannot return to the measures if their financial position later weakens. The bureau also plans to assess whether insurers meet capital-improvement plans; a “**” marker could first appear when year-end TIS figures are published by the end of April 2027. The central trade-off is between greater company-specific transparency and consistent, stability-focused supervision.

Main Body

Public discussion of Taiwan’s insurance capital framework intensified after the chairman of Fubon Financial Holding disclosed on the 5th that Fubon Life’s actual TIS ratio was 177%. On the 6th, Insurance Bureau Deputy Director-General Tsai Huo-yen addressed questions from the media about whether the disclosure was consistent with Financial Supervisory Commission rules. The discussion focused on a specific feature of the transition framework: insurers that have chosen to use transitional measures are subject to a cap when publicly disclosing their capital adequacy ratios.

Taiwan’s insurance industry is moving toward a new-generation solvency system. The Financial Supervisory Commission has provided insurers with optional transition measures lasting 15 years. Under the rules described by the bureau, a life insurer that has applied for those measures must disclose its “target capital adequacy ratio” as the upper limit, even if its own calculation after applying transition measures produces a higher TIS ratio. The example cited in the report is a target of 140%. In such cases, the disclosed figure is accompanied by an asterisk, “*,” placed at the upper right.

The policy question raised by media representatives was whether the cap could obscure differences between insurers. They argued that if Fubon Life’s investment performance and profitability supported a TIS ratio of 177%, displaying a capped figure of 140% could make it difficult for the market and foreign analysts to identify companies with stronger financial positions. They also questioned whether disclosure should make stronger companies visible while encouraging weaker ones to improve. Capital adequacy ratios and equity ratios have long been used by policyholders and investors as indicators when assessing insurers’ financial risk. Critics said that limiting reported ratios could therefore reduce the basis for comparison.

Tsai set out three principal regulatory positions in response. The first concerns how transitional ratios are calculated. According to the bureau, both the numerator and denominator include capital adjustments granted for regulatory purposes. Tsai characterized these adjustments as amounts that are, in effect, borrowed for the calculation. As a result, a ratio calculated after applying the transition measures does not necessarily represent the insurer’s full economic position. The bureau’s view is that publishing uncapped figures during the transition could give readers an incomplete impression of an insurer’s underlying capital strength.

The regulator also links the cap to broader market stability. Over the 15-year transition period, insurers’ TIS ratios could move substantially as market conditions change. The bureau argues that such fluctuations, if presented without the target-based limit, could affect perceptions of individual companies and contribute to instability in the financial market. On that basis, it describes the rule that disclosure is capped at the target value as part of an established supervisory framework, rather than a measure introduced in response to the latest controversy.

The second issue is whether insurers that believe their financial condition is stronger than the target-based disclosure suggests can leave the transition measures. Tsai said that the Financial Supervisory Commission allows companies to apply for early termination of the optional transition. If an insurer exits, it must report the resulting figure as calculated; the disclosure is no longer subject to the target-value ceiling. This offers a route for a company that wants its uncapped position to be visible, but it comes with a significant restriction. Tsai warned that once a company applies to terminate the measures early, it cannot later return to them if its financial condition proves weaker than expected. The decision therefore involves more than a disclosure preference: it changes the company’s future eligibility for the transition arrangements.

The second regulatory principle also concerns how capital ratios should be interpreted. Tsai emphasized that capital adequacy is a supervisory tool used by the Insurance Bureau to monitor an insurer. In the bureau’s view, it is not designed to rank companies against one another. Nor should it be used by insurance agents as a sales tactic to attract policyholders or disparage competitors. This position does not eliminate the public interest in understanding insurers’ financial condition; instead, it cautions against treating a single regulatory ratio as a definitive league table or as a complete measure of company quality.

Tsai recommended that policyholders and investors consider a broader set of public financial and business information. The examples cited include financial statements, EPS, the equity ratio, and policy persistency, alongside more than 20 other publicly available financial and business indicators. The recommendation reflects the bureau’s view that a balanced assessment should draw on multiple measures, rather than rely exclusively on a TIS figure that may be affected by transitional adjustments. It also recognizes that financial strength and operating performance are multidimensional, and that one ratio cannot by itself explain every relevant risk.

The third regulatory issue is accountability for capital-improvement commitments. The bureau is preparing to check insurers’ performance against the capital improvement plans they have stated. Tsai said the bureau will assess at the end of this year whether major life insurers have done what they promised. If an insurer does not meet its capital-improvement target for this year, it may receive a punitive two-asterisk marker, “**.” The marker could first appear when year-end TIS ratios are announced by the end of April 2027.

This proposed marker differs from the single asterisk used to identify disclosure subject to the target-based cap. The single “*” indicates that an insurer is operating under the transitional disclosure arrangement described in the rules. The “**” marker, by contrast, is intended to draw attention to a failure to achieve a stated capital-improvement objective. The distinction matters because the markers communicate different information: one relates to the application of a transition rule, while the other would signal that a commitment was not fulfilled.

The timing and purpose of the two-asterisk marker make it a form of public accountability. Its appearance would indicate that regulators have assessed a company’s progress against a plan, rather than merely presented an uncapped or capped capital figure. The bureau’s review is expected to take place at the end of this year, with a possible first disclosure at the end of April 2027 alongside year-end TIS figures. Until the assessment is completed, the marker remains a potential consequence rather than a confirmed outcome for any particular insurer.

Overall, the controversy illustrates the challenge of communicating capital strength during a lengthy transition to a new solvency regime. Companies and investors may seek figures that make differences in financial positions easier to see, while regulators may prioritize consistent treatment and limit the risk of market overreaction to ratios affected by temporary adjustments. The rules also provide an option for companies willing to accept the consequences of leaving the transition early. Alongside these choices, regulators are developing a separate signal for insurers that fail to meet their own improvement commitments. The debate is therefore not only about which number appears publicly, but also about what that number represents and how it should be used.

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