Cathay cautious on insurers’ investment rule changes

By Crystal Hsu  /  Staff reporter

Fri, Nov 01, 2013 - Page 13

Cathay Financial Holding Co (國泰金控), the nation’s largest financial service provider by assets, yesterday voiced reservations about the government’s plans to tighten investment rules for life insurers, saying the move may hurt the sector and capital market.

Financial Supervisory Commission Chairman William Tseng (曾銘宗) said last week that the regulatory agency was considering restricting investment by life insurance companies in other listed firms to prevent them from growing overly influential.

Currently, domestic life insurers may buy up to 10 percent of shares in a listed company through the open market, but Tseng said the 5 percent ceiling required of all banks perhaps makes more sense.

“The issue remains under discussion and we hope that the Financial Supervisory Commission will reconsider after hearing different opinions,” Lin Chao-ting (林昭廷), an executive vice president at Cathay Life Insurance Co (國泰人壽), the flagship subsidiary of Cathay Financial, told an investors’ conference.

Cathay Life will make known its stance in a public hearing on the matter next week, Lin said, suggesting the commission may introduce other measures to help insurers diversify investment and strengthen risk control.

Cathay Financial president Lee Chang-ken (李長庚) said last week that it was unfair to apply the same supervisory standard to banks and insurers, as they offer different services and raise funds for different purposes.

Banks function chiefly as go-betweens and thereby maintain modest investment portfolios, whereas insurers provide customers with long-term coverage and need to invest funds to fulfill pledges, Lee said, adding that insurers cannot survive if authorities constrain their long-term investment channels.

Instead, the commission can require insurers not to interfere with the operations of companies in which they make capital investments, if it aims to prevent insurers from turning into giant holding companies, Lee said.