The Cabinet yesterday approved a draft amendment to the Insurance Law (保險法) in which one of the modifications would enable local insurers to raise their overseas investment ceiling to 50 percent of their working capital, the Financial Supervisory Commission said in a release on its Web site.
Under the current law, local insurers can only appropriate a maximum of 35 percent of their working capital to invest in foreign markets.
Analysts have estimated that local insurers placed an average of 30 percent, or NT$1.79 trillion (US$55.1 billion), of their working capital in overseas investments as of the end of last year, up from 27.75 percent in 2004.
Leading insurers such as Cathay Life Insurance Co (
The commission said it would send the draft amendment to the legislature as soon as possible for lawmakers' approval.
The move, part of government efforts to deregulate the insurance industry, could hurt the nation's bond market due to decreases in demand. Daily turnover of the bond market stands at about NT$500 billion.
The 10-year government bonds yesterday reported their biggest decline in nine days on concern the central bank will increase rates further to combat inflation.
The yield on the benchmark 1.75 percent bond maturing in March 2016 climbed 1.7 basis points, or 0.017 percentage point, to close at 1.819 percent on the GRETAI Securities Market, the nation's biggest exchange for bonds.
Its price fell 0.1538, or NT$153.8 per NT$100,000 face amount, to 99.3741. Bond prices and yields move in opposite directions.
Trading rose to NT$365 billion from NT$278 billion on Tuesday.
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