Taiwan to ease property investment rules for life insurers

Taipei, April 6 (CNA) Taiwan's top financial regulator, the Financial Supervisory Commission (FSC), has planned to lift a ban to allow local life insurance companies to invest in property markets overseas in order to make better use of their funds. In a statement released Friday, the FSC said it would receive comments from the public on the liberalization in seven days and consider them before formally announcing new overseas investment rules for local life insurers. Despite the new measures, a life insurance company will still have to abide by current rules which limit total property investments to 10 percent of its owner's equity, the FSC said. If an overseas property investment project is set to boost a life insurer company's total property investments beyond the 10 percent of equity limit, the life insurer will have to seek permission from the commission on a case-by-case basis. The Life Insurance Association of the Republic of China said the liberalization would help local life insurers to focus on the booming real estate market in China and a recovering market in the United States. Local life insurance companies will be required to approach a property management firm to manage their overseas investments, the FSC statement said. The commission has specified how to find an appropriate property manger, such as a requirement that a qualified manager should rank top 5 in the market in which it operated, and another that such a manager should be handling property valued at no less than NT$10 billion (US$334 million). In addition, an overseas property management company should have operated for more than three years in the market a local insurer wants to enter, while the total size of the floor area of commercial property under the charge of a manager overseas should exceed 35,000 square meters, the FSC stipulates. The Life Insurance Association said these requirements for an overseas property manager were not as restrict as the market had previously anticipated, indicating the new rules would allow flexibility for local insurers eyeing foreign real estate markets. Earlier this week, the FSC said it had planned to allow Taiwanese insurers to invest in overseas corporate bonds with lower credit ratings than currently allowed. This will allow local insurers to invest in overseas corporate bonds with at least a "BB+" rating. The current regulations require no bonds with at least a "BBB+" rating. (By Wu Ching-chun and Frances Huang)