FSC mulling eased limits on insurers' investments

The nation's financial regulator is considering loosening restrictions on domestic insurers' overseas investments, saying that the move can grant them more autonomy to pursue better profitability.

The ceiling on available funds, or working capital, that domestic insurers can invest in overseas markets will be raised from the current 35 percent to a proposed 50 percent, said Lu Daung-yen (呂東英), vice chairman of the Financial Supervisory Commission, confirming a Chinese-language newspaper report that said the commission and the central bank have reached a consensus over the issue.

"We agreed to the easing of the rule during a meeting on Monday, which was convened to seek consensus" between the commission and the central bank, Lu said. However, he said the two are far from reaching a decision.

Lu said the commission and the central bank plan to undergo several rounds of exchanging official documents to detail the change. The final decision will soon take shape and be included in an amendment to the Insurance Law (保險法), he added.

"I cannot predict the timetable as to when the new rule will be put into effect," he said.

According to the commission's statistics, domestic insurers' available funds have surpassed NT$5 trillion (US$160 billion). With the ratio to be raised by 15 percentage points to 50 percent, insurers will be able to divert at most NT$750 billion overseas, on top of the original amount of money.

Lu yesterday shrugged off market speculation that the proposal is aimed at easing pressure on the New Taiwan dollar to appreciate against its US counterpart, saying the move is designated to allow insurers more flexibility to make investments.

Lee Chang-ken (李長庚), chief strategic officer of Cathay Financial Holding Co (國泰金控), which owns the nation's largest life insurer Cathay Life Insurance Co (國泰人壽), welcomed the proposed change, saying that it will be conducive to insurers' long-term asset liability management, as the domestic bond and securities markets are too small.

Cathay Life now has available funds of NT$1.6 trillion. After the new rule takes effect, it expects to increase its overseas investment portfolio by up to NT$240 billion.