Domestic life insurance companies have about NT$150 billion (US$5.15 billion) in idle funds that they can invest in the local stock market over the next 12 months, with NT$50 billion available by the end of this year, the Life Insurance Association (人壽保險公會) said yesterday.
“It is possible for insurance companies to invest this much money in the stock market, if market conditions allows,” association chairman Hsu Shu-po (許舒博) said by telephone.
Hsu made the remark after the association invited representatives of major life insurers for a meeting yesterday on investment outlook.
According to Hsu, local insurance companies have as much as NT$13 trillion that they can invest in the equity and real-estate markets.
While it is not likely that life insurers would put 30 percent of the NT$13 trillion in funds into the local stock market, they are considering of a proposal to inject 10 percent, or NT$1.3 trillion, into the stock market and putting 20 percent into other investments.
Life insurance companies have already placed about NT$800 billion in the stock market, Hsu said.
Asked whether these companies would invest in local real estate, Hsu said because of the Financial Supervisory Commission’s recent policy changes, companies are considering investing abroad instead.
The Financial Supervisory Commission on Nov. 19 approved plans to tighten requirements for domestic life insurers wishing to invest in real estate, such as raising the minimum rental yield to 2.875 percent, from 2.125 percent, for their commercial property investments.
Other restrictive measures, announced on Nov. 19 and taking immediate effect, included a minimum holding period of five years for office buildings after purchase, a 10-year holding period for undeveloped land after purchase, and concrete development plans within 10 days of real-estate purchase.
On Nov. 22, the commission introduced additional tightening measures for insurers' real-estate investments, such as raising their risk-based capital (RBC) weighting factor for undeveloped land purchase to 40 percent from 30 percent, which the regulator believed would substantially increase the funding costs for insurers and therefore curb property speculation.
As a result, the association said it was pushing for deregulation in overseas property investments and planned to hold a meeting on overseas housing market investment on Wednesday.
During the meeting, representatives of life insurance companies also voiced their interest in investing in public construction projects, Hsu said.
They also hoped the government can define surface rights more clearly, which would help companies to aggressively bid for such rights in land in prime locations, he added.