Wed, Jul 02, 2014 - Page 13 News List

FSC seeks to boost life insurers

HELPING HAND:The commission said it will focus on making the business environment of life insurers easier and friendlier in the second half of the year

By Crystal Hsu  /  Staff reporter

The Financial Supervisory Commission (FSC) is drawing up measures to improve profitability and competitiveness of life insurance companies given their slow improvement compared with that of banks and securities houses, commission Chairman William Tseng (曾銘宗) said yesterday.

Tseng expects the measures to be ready in two weeks and regulatory easing may include purchases of undeveloped land and other investments if the moves prove merited and the timing is right.

“Domestic life insurance companies have yet to show stable profitability and peers vary significantly in terms of capital strength and earnings results,” Tseng said on the sidelines of a ceremony to celebrate the commission’s 10th anniversary.

The commission will focus on making the business environment easier and friendlier for life insurers in the second half of the year, Tseng said, adding that the recent deregulation has mainly benefited banks and securities houses.

Tseng referred to regulatory liberalizations governing offshore banking and securities units, though local securities companies have yet to actively take advantage of the relaxed rules.

The sector may need more time to appreciate the easing and make expansion moves, he said.

Compared with banks and securities houses, however, life insurers generally sit on high levels of idle funds and the commission can lend a helping hand by removing barriers that slow efficient fund utilization, Tseng said.

“If investments in undeveloped plots of land are desirable, the commission would consider lifting the ban, but when the time is right,” he said.

Currently, life insurers are barred from purchasing undeveloped land unless they can gain building permits to curb land hoarding and property speculation.

The investment in question is not unhealthy, if not driven by land hoarding, Tseng said, adding that the commission can spot wrong motives by looking at the buyer’s land stock, among other potential criteria.

The timing may be right if the property market takes a downturn as widely forecast, he said.

Financial and monetary authorities have raised tax burdens and lowered loans on extra homes to discourage property investment as the public names increasingly unaffordable housing as their top headache.

In dealing with cash-strained insurance companies, the commission prefers voluntary bailout solutions to punitive actions, Tseng said, urging insurers with insufficient capital to introduce new funds, but they must do so without violating restrictions over Chinese capital.

The commission has recently allowed insurers to acquire commercial properties overseas to generate rental income, as soaring real estate prices at home make investments unable to meet the yielding requirements at 2.875 percent.

Tseng would not comment if the commission would lower the requirement, saying the government remains committed to efforts to cool property prices.

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