Fri, Jul 10, 2009 - Page 12 News List

FSC relaxes restrictions on property investment

WAITING FOR THE INJECTIONS Revisions would allow insurers to allocate between 1 percent and 3 percent of their total working capital in real-estate investments

By Joyce Huang  /  STAFF REPORTER

The Financial Supervisory Commission yesterday revised a legal amendment to relax restrictions on property investments by domestic insurance companies.

Some 13 life insurers are expected to benefit from the new regulation and soon be allowed to inject more capital into the real-­estate market, a commission official said yesterday.

If no opposition is raised to the revision, which was made public yesterday, the new regulation will take effect as early as late this month, the commission’s chief secretary Lu Ting-chien (盧廷劼) told a press conference.

The revision says insurers would be allowed to allocate between 1 percent and 3 percent of their working capital in real-estate investments in accordance with their risk-based capital (RBC) ratio level.

RATIOS

The legal revision said that insurers that have a RBC ratio higher than 200 percent, are allowed to invest a total of 3 percent of their working capital in properties.

Insurers whose RBC ratio is below 200 percent will be allowed to invest a total of 2 percent of their working capital in properties.

The commission’s statistics showed that as of May the local life and non-life insurance sector had NT$8.8 trillion (US$267 billion) in working capital, of which between 1 percent and 3 percent — or between NT$88 billion and NT$264 billion — can be reserved for property investments.

The current regulation limited insurers to less than 70 percent of their net worth in property assets.

Statistics showed that as of the first quarter the life insurance sector had a net worth of NT$195.2 billion, of which as much as 70 percent — or NT$137 billion — could be used to invest in properties.

AUCTIONS

In separate news, two land auctions organized by the Ministry of Finance’s National Property Administration yielded record-high returns yesterday.

An individual investor surnamed Lin yesterday outbid 51 other bidders, including well-known land developers such as Cathy Life Insurance Co (國泰人壽) and Kee Tai Real Estate Co (基泰建設), to close a 454-ping (1,500m²) plot of land in Banciao (板橋), Taipei County, for NT$700 million, or NT$1.54 million per ping — the highest land price in the district’s history, Evertrust Rehouse Co (永慶房屋) said.

That was 2.5 times its floor price, the realtor’s assistant manager, Jeffrey Huang (黃增福), said yesterday.

Another 461-ping lot located on Taipei City’s Zhonghua Rd was closed by Huang Hsiang Construction Corp (皇翔建設) for NT$1.9 billion, or NT$4.12 million per ping — 1.1 times higher than its floor price.

This was the seventh-highest closing price in the city’s history, Huang said.

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