Domestic life insurance companies now have more financial leeway for property investments, as the required minimum yield on real-estate investments have been cut from 2.97 percent to 2.419 percent, effective on Tuesday, the Financial Supervisory Commission (FSC) said.
The deregulatory revisions came after local insurance companies complained the previous requirement made investment in real estate impossible in light of soaring commercial property prices across Taiwan.
The FSC agreed to lower the threshold in October last year, but the new formula needed to go through a 60-day public notice period before going into practice, it said.
Photo: Taipei Times
Local life insurers used to be the main players in Taiwan’s commercial property market, but stayed on the sidelines in recent years after the central bank raised interest rates five times to tame inflation and indirectly drove up the minimum yield for real estate investment to 2.97 percent.
The commission arrived at the old formula by taking cues from interest rates on the post office’s two-year time deposits plus a premium of 125 basis points.
Now the commission keeps the premium of 125 basis points but uses the average interest rates of the post office’s two-year time deposits for the past five years, effectively muting the impact of rate hikes in 2022 and 2023.
The revision brings down the yield requirement by 55 basis points to 2.419 percent, the commission said.
The relaxation is intended to mitigate pains induced by short-term interest rate changes for life insurers, it said.
Life insurers need to utilize idle money to stay financially healthy and cover assorted claims from policyholders, it added.
Commercial properties proved attractive investment targets in recent years on strong office demand from technology and financial firms, analysts said, adding that there has been a lack of new office space in Taipei’s central business districts.
Rather, life insurers shifted their focus to logistics and warehousing facilities as well as industrial land plots, and collected rent incomes of 3 percent to 5 percent.
The easing would provide much-needed funds into the commercial property market that observed 7 percent decline last year, according to property broker CBRE Ltd Taiwan (世邦魏理仕台灣).
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
Prices of gasoline and diesel products at domestic gas stations are to fall NT$0.2 and NT$0.1 per liter respectively this week, even though international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices continued rising last week, as the US Energy Information Administration reported a larger-than-expected drop in US commercial crude oil inventories, CPC said in a statement. Based on the company’s floating oil price formula, the cost of crude oil rose 2.38 percent last week from a week earlier, it said. News that US President Donald Trump plans a “secondary
RSS