2013-01-07
Proposed Relaxation on Insurer’s Funds Operation
Under Taiwan’s Insurance Act, insurance companies’ investments are limited to investment tools open under the Insurance Act or by the authority’s approval, which include categories of, among others, deposits, securities, real estate, loans, foreign investments, investments in insurance-related businesses, derivatives trading as well as special projects, public utilities and social welfare enterprises as approved by the authorities.
On January 2, 2013, Taiwan’s Financial Supervisory Commission (FSC) announced a proposed amendment of the Regulations Governing Use of Insurer’s Funds in Special Projects, Public Utilities and Social Welfare Enterprises (“Regulations”).
Per the FSC’s announcement, the proposed amendment is aimed at directing insurers’ funds toward public investment, as well as for the insurers’ benefits so as to expand their fund operation tools and enhance the efficiency and return of their capital utilization.
The primary changes under the proposed amendment are 1) that insurers can invest in funeral facilities and in the development or construction of software and hardware needed by social welfare enterprises (neither is permitted under the current Regulations), and 2) the ceiling on shareholding ratio in social welfare enterprises held by an insurer is lifted to 35% of the paid-in capital of the invested social welfare enterprise.
The proposed amendment must still be officially announced by the FSC before the amendments can become effective.
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