This library case describes the attitude of Cathay Life Insurance Co., Ltd. toward the foreign exchange valuation reserves (FEVR) policy that was enacted at the end of 2011, and how it was affected by FEVR. We examine why life insurers increasingly engage in foreign investments and explore the influence of foreign investments on life insurers' financial condition and accounting numbers. By analyzing the effects of the FEVR policy on life insurers' accounting numbers and the economic reality, we discuss its effects on the stakeholders of life insurers. Our findings show that although the FEVR policy can ensure smooth earnings, insurers' exchange-rate exposure is not economically reduced. Moreover, analyses of the origin of FEVR and its real effects on business operation show that FEVR policy is harmful for policyholders.