Fri, Aug 24, 2018 - Page 12 News List

FSC revises stock listing rules for insurance firms

RAISING RESTRICTIONS:Applicants are not allowed to allocate more than 10 percent of their investable capital in real estate if they are set on gaining approval

By Ted Chen  /  Staff reporter

The Financial Supervisory Commission (FSC) yesterday previewed its revised stock listing eligibility criteria for insurance companies, which is to be based on applicants’ profitability, repayment capacity and liquidity, as well as their regulatory compliance track record.

The revision is aimed at establishing a standardized set of criteria to provide all applicants with a transparent and consistent pathway toward being listed on the Taiwan Stock Exchange (TWSE) and the Taipei Exchange (TPEX), the commission said.

Most notably, the revision has tightened real-estate investment requirements for insurers, with applicants barred from allocating more than 10 percent of their investable capital in real estate.

Applicants must also not be involved in major labor disputes.

That would likely disqualify Nan Shan Life Insurance Co (南山人壽), the only insurer to have publicized its intention to be listed, as the company’s listing bid continues to face vocal opposition from its workers’ union amid long-running labor disputes.

TPEX Emerging Stock Board-listed Farglory Life Insurance Co (遠雄人壽) would likely face obstacles to listing on the TPEX or the TWSE, as it has large real-estate investments.

The commission would assess each applicant on a case-by-case basis, and approvals might be granted if companies provide sufficient explanations and demonstrate the ability to improve on their shortcomings, Insurance Bureau Director-General Shih Chiung-hwa (施瓊華) told a news conference in Taipei.

The commission would consult with the Ministry of Labor on related disputes, Shih added.

Applicants’ net worth-to-assets ratio must be less than 6.5 percent for those wanting to be listed on the Emerging Stock Board, while the requirement is 7 percent for those looking to be listed on the TWSE or the TPEX.

Investment-linked policy products would be excluded from the assessment, Shih said.

For the profitability assessment of applicants seeking an Emerging Stock Board listing, proceeds from the sale of outstanding bonds over the past 10 years would have to be adjusted and amortized according to the number of years left until maturity.

For applicants seeking a TWSE or TPEX listing, one-time gains from the sale of real estate or bonds would be deducted from their profitability assessment, while their reinsurance activities would be included.

The adjustments are meant to exclude one-time gains out of consideration of insurers’ need to meet their long-term obligations to policyholders, Shih said.

As for liquidity and repayment capacity, applicants must maintain a risk-based capital ratio of 200 percent if they wish to gain listing on the Emerging Stock Board, with the requirement raised to 250 percent for those seeking to be listed on the TWSE or TPEX.

Applicants must also not have been involved in a major infraction in the prior three years that resulted in a fine of more than NT$1 million (US$32,478).

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