Life insurance companies’ positions in fixed-income assets have fallen to alarmingly low levels compared with their peers abroad, the Financial Supervisory Commission (FSC) said, adding that regulators would work toward deregulation to revive local fixed-income investors’ — mainly insurers’ — appetite for structured-finance products.
Fixed-income assets make up less than 20 percent of local life insurers’ total investments, while they make up between 80 and 90 percent of the portfolios of their peers abroad, FSC Vice Chairman Cheng Cheng-mount (鄭貞茂) said on the sidelines of a forum on economic trends and the bond market outlook in Taipei on Friday.
Local life insurers have trimmed their government bond holdings to 8 percent at the end of last year from a historical average of 10 percent, Cheng said.
While foreign life insurers usually make the bulk of their investments in government debt issued in their home markets, many local life insurers have increased their overseas investments to levels close to the regulatory ceiling, he said.
“We are concerned about the decline in bond investments by local insurers, as the trend suggests that the domestic market is lacking viable fixed-income products,” Cheng said.
At the same time, life insurers’ exposure to real-estate investments has been stable at about 4 percent of their total investments, which is significantly higher than those of their global peers, Cheng added.
To address the issue, the commission is mulling easing regulations to stimulate investors’ interest in domestic real-estate investment trusts (REITs), which have been neglected in recent years due to lower expected returns, Cheng said.
REITs are corporations or trust funds that use pooled capital to purchase and manage income, property or mortgages for investors.
REITs are traded on major exchanges just like stocks and offer several benefits over traditional real-estate investments in that they are highly liquid and have a high level of transparency for investors.
However, due to stringent listing requirements in Taiwan, local REITs are mostly issued by life insurers to investors seeking a portion of rent income, Cheng said.
As these REITs are designed as held-to-maturity securities, capital gains are low, he said.
The commission is considering easing listing requirements for REITs to encourage the participation of real-estate companies, Cheng said, adding that the scope of the instrument would also be broadened to include “green” energy investments, such as wind farms.
The FSC is also considering raising the amount of funds that may be directed into property development projects by private placement REITs from 30 to 100 percent, he said.
The FSC plans to streamline the approval process for new investments made by REITs to improve operating efficiency, Cheng said.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
FUTURE PLANS: Although the electric vehicle market is getting more competitive, Hon Hai would stick to its goal of seizing a 5 percent share globally, Young Liu said Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler and supplier of artificial intelligence (AI) servers powered by Nvidia Corp’s chips, yesterday said it has introduced a rotating chief executive structure as part of the company’s efforts to cultivate future leaders and to enhance corporate governance. The 50-year-old contract electronics maker reported sizable revenue of NT$6.16 trillion (US$189.67 billion) last year. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), has been under the control of one man almost since its inception. A rotating CEO system is a rarity among Taiwanese businesses. Hon Hai has given leaders of the company’s six