Local insurers' subsidiaries in China are already allowed to invest in Chinese banks and stocks under the current regulations, the Financial Supervisory Commission said yesterday.
"Subsidiaries of local insurance firms in China only need to give notice to the regulators in their home country if they want to invest or add more branches in China," commission spokesperson Susan Chang (張秀蓮) said.
"The regulator has no reason to oppose their plans unless they are determined to be improper," Chang said, citing the Regulations Governing Permission of Insurance Business Transactions Between the Taiwan and Mainland Areas (臺灣地區與大陸地區保險業務往來許可辦法).
The investment risks are not expected to extend to Taiwan as the working funds of the insurance companies come from their Chinese customers, Chang said.
The governing body of Chinese insurers in Beijing is deregulating the investment of insurers' working funds for better returns and decided earlier this month to allow insurers to invest in Chinese banks.
Since local banks are banned from investing in their Chinese rivals, the relaxation could provide an alternative path for Taiwan's financial holding companies that own insurance units to tap into China's banking market.
Asked whether or not this alternative could disadvantage financial groups that have no insurance business, Chang said that the bans on banks would not stay in place indefinitly.
"We are planning [possible solutions] now and such situations will not last for ever," she said, without elaborating further.
The deregulation of cross-strait investment is expected to greatly benefit Cathay Financial Holding Co (國泰金控), whose subsidiary Cathay Life Insurance Co (
Cathay Life, Taiwan's largest life insurer, made inroads into China in January last year by forming a joint venture with Beijing's state-run China Eastern Airlines Corp (東方航空).
But Lee Chang-ken (李長庚), chief strategy officer for Cathay Financial, yesterday declined to make any comment, saying the firm had not studied the issue.
Shin Kong Financial Holding Co (新光金控), whose flagship unit Shin Kong Life Insurance Co (新光人壽) is in the final stages of talks about a joint-venture with a Chinese insurer, expressed optimism.
"This is good news. We're happy to have this opportunity," said Victor Hsu (許澎), spokesman for Shin Kong Financial, during a telephone interview.
Shin Kong Life is among the top three life insurers in the country, with a market share last year of 10.9 percent in terms of total premiums. It is expected to become the second Taiwanese life insurer to extend its reach across the Taiwan Strait, but Hsu declined to name the potential partner.
He said that even if the 50-50 deal with its Chinese partner was sealed, it would still take another six months to one year for the Chinese government to grant approval before Shin Kong Financial could start investing in Chinese banks through its insurance operations there.
"As yet we have no idea about how banking investment will be conducted and we will need to further study the relevant regulations," Hsu said.