Taiwan’s FSA contemplates risky offshore investments for insurers
22 January 2013
News, Asia, Taiwan
By Hui Ching-hoo
Taiwan’s Financial Supervisory Commission (FSC) is in talks with the Life Insurance Association (LIA) in regard to allowing increased exposure for insurers to overseas high risk and high return assets, according to a report from Economic Daily News on Tuesday (January 22).
The regulators are studying the feasibility of allowing local insurers with a capital adequacy ratio (CAR) of more than 250% to invest 3% of their working capital in overseas risky asset classes. The initiative is aimed at providing risk-taking players with a channel to search for high returns.
LIA chairman Paul Hsu says he expects the move will be implemented by permitting the eligible insurance firms to set up special vehicles for overseas investments.
Taiwan’s insurers are currently only allowed to invest in bonds with a BBB+ rating. Mr. Hsu says he thinks they will be able to access BBB- or lower rated credits if the new measures are introduced.
According to figures from LIA, insurers’ overseas investment grew to NT$5.07 trillion (US$169 billion) as of the end of 2012 from NT$2.07 trillion in 2006.
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