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FSC may raise insurers' investment cap

The Financial Supervisory Commission (FSC) said yesterday it was considering easing restrictions on insurance firms' property investments, allowing them to invest up to 10 percent of their owners' equities in real estate abroad.

If the amendment is approved, some NT$58 billion (US$1.8 billion) from the insurance sector may be channeled into property markets other than China, Hong Kong and Macau, George Shiu (許欽洲), a deputy director-general at the FSC's insurance department, told a press conference yesterday.

Shiu said that as of late October, life insurers had a total of NT$507.9 billion in owners' equities, while non-life insurers had NT$71.1 billion.

The revision is expected to be made public within one month, commission chief secretary Austin Chan (詹庭禎) said.

The commission yesterday also announced specific regulations for raising the cap on insurance companies' overseas investments from the previous 35 percent to 45 percent in accordance with the legislature's passage of revisions to the Insurance Law in May.

Shiu said 15 out of a total of 30 life insurers are allowed to inject a maximum of 35 percent of their capital into overseas investments.

Among these 15 insurers, 10 may be allowed to raise their cap if they meet the requirement of a 250 percent risk-based capital ratio, Shiu said.

These 10 insurers would at first be allowed to raise their cap to 40 percent and would have to wait at least another year and maintain a top-tier risk-based capital before they can move up and qualify to raise their investment ratio to 45 percent.

The investment easing in May fueled speculation that an additional NT$700 billion in insurers' capital may be channeled for investment overseas. However, local insurers may find the proposed new cap less exciting, as some had already repatriated their money from overseas investments back to Taipei following the fallout from the US' subprime mortgage crisis.
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