Thu, Mar 06, 2014 - Page 14 News List

FSC loosens rules on insurers’ real-estate purchases

By Crystal Hsu  /  Staff reporter

The Financial Supervisory Commission (FSC) on Tuesday announced deregulation plans aimed at allowing Taiwanese life insurers to buy real estate abroad.

The planned revision in the Regulations Governing Foreign Investments by Insurance Companies (保險業辦理國外投資管理辦法) will also facilitate life insurers to buy yuan-denominated bonds in Taiwan, the commission said in a statement.

The commission is expected to implement the revised regulations later this month, after it this week released the amended rules on its Web site for public review for seven days to weigh up public and administrative views.

Under the revised rules, local insurers can lend money to their separate entity, or special purpose vehicle (SPV), to acquire real estate overseas, including in China.

Insurers can also finance their property purchases via setting up trust funds, the commission said.

An SPV is a subsidiary that is protected even if the parent firm becomes insolvent. The entity can help save tax expenses when it purchases real estate abroad and can write off the borrowing costs to boost investment returns.

Meanwhile, the revised regulations stipulate that insurers can buy yuan-based bonds — known as Formosa bonds — a move that allows insurers more investment options and helps develop an offshore yuan market in Taiwan, the commission said.

The commission will also allow weak insurers whose risk-based capital fall below the required 200 percent level to invest in security investment funds, exchange-traded funds, derivatives, corporate bonds and bank debentures in China, if they meet certain criteria.

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