Why Taiwanese Life Insurers Are The Great 'Whodunit' Of The Financial World

Joe Weisenthal (0:11)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

Tracy, I've been really happy with some of the strings of episodes that we've had lately, particularly sort of talking about the relationship between a country's own domestic balance sheets, savings, profits, et cetera, and then how those funds interact with the rest of the world.

Tracy Alloway (0:38)

That's good, Joe. I'm happy that you're happy.

Joe Weisenthal (0:40)

Thank you, Tracy. I really appreciate that.

Tracy Alloway (0:47)

Did I just ruin your intro?

Joe Weisenthal (0:50)

You just ruined it. It felt so condescending.

Tracy Alloway (0:53)

I'm sorry. I'm sorry. Yes, I agree with you.

Joe Weisenthal (0:56)

I feel like I've been learning a lot from our recent string of guests, is all I'm trying to say.

Tracy Alloway (1:00)

I mean, I feel personally like we are tackling some of the really big picture question and issues in financial markets. We're talking about these huge flows of money that actually dictate how the markets work.

Joe Weisenthal (1:14)

Exactly right. So today we're going to talk about what is something that I feel like probably 99% or more of our listeners have never thought of. I'm only saying that because I had never even really heard of this issue up until a few weeks ago when I heard about it from a friend of mine, a friend on the playground with my daughter.

But apparently there's like this sort of interesting phenomenon in the world of finance and it relates to Taiwanese life insurer.

Tracy Alloway (1:50)

So first of all, I love the idea that you're on a playground in New York talking about Taiwanese life insurers.

But secondly, I think you're right in framing this as something that not a lot of people think about and that's kind of a shame because we do hear people talking about the Asia savings glut all the time. This idea that there's just this huge amount of money coming from Asia and it has to go somewhere. And most people think about China or most people think about Japan, but rarely do people think about Taiwan. And that place actually has this huge, huge financial industry, not just banks, but life insurers.

Joe Weisenthal (2:32)

Right, so obviously we talked to Michael Pettis a few weeks ago and you talked about the high savings rate in China and the result of, that being the result of a few different factors, such as the poor social safety net and so on. And there's also, for similar reasons, I think a massive incredibly high savings rate in Taiwan. And that is also showing up in very strange and unusual ways, and it's kind of through the life insurance sector that it's apparent.

And that is going to be what we examine today.

Tracy Alloway (3:09)

I'm glad you said strange and unusual, because I have to say the piece of work that this podcast is based on, or this particular episode is based on, once you're done listening to this episode, don't turn it off just yet, but once you're done listening, go and read the actual work that this is based on, because it's framed like a giant financial whodunit. It's like a mystery novel about Taiwanese life insurers, and it's great.

Joe Weisenthal (3:37)

I completely agree. And without further ado, I want to bring in the author who is, I think now the record holder for the most frequent times appearing on the Odd Lots podcast. He's Brad Setser of the Council on Foreign Relations and Exante Data. He was also a recent guest at the recent Odd Lots live podcast, Talk About All Things Trade.

And today he is going to talk about his work on the Taiwanese life insurance sector, of which he has co-written a six-part series. And Brad, thank you for joining us. As I mentioned, I'm not making this up. I was at the playground, my daughter's friend's dad was there and he's in the insurance industry.

Tracy Alloway (4:23)

Did she ask you about Taiwanese life insurers?

Joe Weisenthal (4:25)

Yeah, my three and a half year old daughter asked me about Taiwanese life insurers. No, his friend, he's in the insurance industry and somehow I always ask him about insurance questions. Somehow Taiwan came up, but it just so happened that you wrote this huge series on it.

So I guess what I want to start with is this question, why are we talking about this? Why are we having a podcast on this? Why did you write a co-author, a six-part series on Taiwanese life insurers? What's going on here?