Overseas investment would remain capped at 45 percent of local insurers’ total assets, as there are scant investment tools at home and potentially significant losses from sudden divestments, the Financial Supervisory Commission (FSC) said yesterday.
The commission’s comments came in response to a legislator’s concern over the effect of a proposed revision to the Insurance Act (保險法) to lower the upper limit to 25 percent.
The revision was proposed by Chinese Nationalist Party (KMT) Legislator Lo Ming-tsai (羅明才).
Photo: CNA
The proposed 25 percent cap is even lower than the 35 percent implemented before 2007. About 17 years ago, the legislature raised the upper limit to 45 percent.
“The FSC keeps a conservative attitude about such adjustments,” FSC Chairman Peng Jin-lung (彭金隆) said at a meeting of the legislature’s Finance Committee in Taipei.
“In our view, it will be more practical for [insurance companies] to manage businesses if such changes are not made,” he said.
About NT$9 trillion (US$275.8 billion) of overseas assets would have to be allocated back home if the upper limit were lowered to 25 percent, Peng said.
As many of the overseas investments, about 70 to 80 percent, are in foreign bonds, which deliver long-term and stable returns, insurers would incur massive losses if they were forced to sell at a discount before they mature, he said.
In addition, insurers would not be able to sell at a premium above par, especially as the US Federal Reserve and other major central banks are expected to cut key interest rates, he said.
Taiwan’s bond market is comparatively small and would not be able to absorb such an influx of funds, Peng said.
It would be difficult to track where the funds went, he said in reply to Democratic Progressive Party Legislator Wu Ping-jui’s (吳秉叡) question about whether a huge inflow of funds would inundate the local housing and stock markets.
“Stocks and real estate are the common targets of insurance companies, as they do not require permission to invest in,” Peng said.
Wu asked central bank Deputy Governor Yen Tzung-ta (嚴宗大) whether a huge inflow of funds in a short period would lead to the appreciation of the New Taiwan dollar.
“That is a question loaded with assumptions,” Yen said.
Taiwan, like many economies that have a current-account surplus, usually encourages insurance and government funds to invest overseas, which is essential to balance the economy, Yen said.
HANDOVER POLICY: Approving the probe means that the new US administration of Donald Trump is likely to have the option to impose trade restrictions on China US President Joe Biden’s administration is set to initiate a trade investigation into Chinese semiconductors in the coming days as part of a push to reduce reliance on a technology that US officials believe poses national security risks. The probe could result in tariffs or other measures to restrict imports on older-model semiconductors and the products containing them, including medical devices, vehicles, smartphones and weaponry, people familiar with the matter said. The investigation examining so-called foundational chips could take months to conclude, meaning that any reaction to the findings would be left to the discretion of US president-elect Donald Trump’s incoming team. Biden
INVESTMENT: Jun Seki, chief strategy officer for Hon Hai’s EV arm, and his team are currently in talks in France with Renault, Nissan’s 36 percent shareholder Hon Hai Precision Industry Co (鴻海精密), the iPhone maker known as Foxconn Technology Group (富士康科技集團) internationally, is in talks with Nissan Motor Co’s biggest shareholder Renault SA about its willingness to sell its shares in the Japanese automaker, the Central News Agency (CNA) said, citing people it did not identify. Nissan and fellow Japanese automaker, Honda Motor Co, are exploring a merger that would create a rival to Toyota Motor Corp in Japan and better position the combined company to face competitive challenges around the world, people familiar with the matter said on Wednesday. However, one potential spanner in the works is
HON HAI LURKS: The ‘Nikkei’ reported that Foxconn’s interest in Nissan accelerated the Honda-merger effort out of fears it might be taken over by the Taiwanese firm Nissan Motor Co has become the latest buyout target in Japan as it explores a merger with Honda Motor Co and faces an overture from Hon Hai Precision Industry Co (鴻海精密), known as Foxconn Technology Group (富士康科技集團) internationally. Shares in Nissan yesterday jumped 24 percent, the most on record, to hit the daily limit, after the two Japanese automakers acknowledged that talks are ongoing to better position themselves for competitive challenges during a time of upheaval in the global auto industry. Foxconn — a Taipei-based manufacturer of iPhones, which has been investing heavily in factories to build electric vehicles — has also
CHIP SUBSIDY: The US funding would help alleviate the financial pressure from building two fabs in the US and should lift gross margins in 2026, the company said GlobalWafers Co (環球晶圓), the world’s third-largest silicon wafer supplier, yesterday said it is to receive US$406 million in subsidies from the US Department of Commerce for two new US fabs under the CHIPS and Science Act, with the first batch of the funds likely coming next year. The grant represents 10 percent of the planned investments of US$4 billion in advanced semiconductor wafer manufacturing facilities in Texas and Missouri, GlobalWafers said. The commerce department is to disburse the funds based on the completion of project milestones over a multiyear timeframe, the company said. Along with the tax credit, which is equal to
RSS