Taiwan’s FSC mulls allowing insurance firms to expand overseas

22 November 2013   Category: News, Asia, Taiwan   By Asia Asset Management

William Tseng, chairman of the Financial Supervisory Commission (FSC), has announced that the commission will consult market practitioners and academics to study the feasibility of allowing insurance firms in Taiwan to expand overseas, according to a report from Commercial Times.

The move comes after Taiwan’s Cathay Life Insurance called for the loosening of controls on insurance pools, allowing it to diversify overseas via M&A activity, said the report.

The FSC is reportedly planning to trial the scheme among insurers with overseas operational experience and the insurance affiliates of financial holding companies. Applicants will be obliged to carry out risk assessments and market surveys.

Cathay Life Insurance noted that the insurance pool in Taiwan has reached a staggering NT$16 trillion (US$533.3 billion), with an annual growth at around NT$2 trillion. Relaxation of the rules would help local insurers build up a regional financial platform and bolster the efficiency of their capital usage.

Cathay Life Insurance also suggests the insurers should be allowed to invest in related industries such as asset management and banking. Under the current rules, insurance capitals must be placed in safer asset classes such as sovereign debts, corporate bonds and bank deposits.

Separately, the FSC is also encouraging overseas acquisitions among local banks, with the hope that one or two Taiwanese lenders will develop as regional banking entities within three to five years.