The FSC has amended some provisions of the Regulations Governing Foreign Investments by Insurance Companies
2017-06-14
The FSC has amended some provisions of the Regulations Governing Foreign Investments by Insurance Companies On June 14, 2017, the FSC introduced the amendments to the Regulations Governing Foreign Investments by Insurance Companies in order to improve insurers’ risk control for investments in foreign financial bonds, international bonds, real estate in foreign countries and Mainland area, and overseas insurance-related enterprises, to enhance their capabilities to manage assets and liabilities, and to increase performance and flexibility of their investments in foreign corporate bonds and private equity funds. The main points of the amendments are as follows:
1. The issuers or the guarantors of foreign financial bonds which the insurance company invests in shall have credit ratings of BB+ or above. The FSC has also set the criteria for the insurers’ investments in senior financial bonds with credit ratings of BBB to BB+ and imposed the limit for concentration risk of investments in one single bank.
2. Currently, investment ceilings are imposed on the insurers’ investments in foreign bonds with credit ratings of BBB+ to BB+. Now the insurance companies investing in foreign corporate bonds with BBB+ credit rating of the issuer or the guarantor can exclude from that investments ceilings imposed. The FSC has also revised the investment ceilings for investments in foreign corporate bonds with credit ratings of BBB to BB+ by insurance companies.
3. Insurance companies are now allowed to invest in foreign private debt funds and private real estate funds. The wording of “private equity funds” used in the Regulations is amended to “private funds”, which are clearly defined as private funds with investments in private equity, private debt, and real estates.
4. The regulation requiring that the assets managed by domestic fund management institutions be worth over USD 100 million was removed. Now insurance companies are allowed to invest in any domestic fund management institutions meeting the criteria approved by their Board of Directors.
5. The FSC has changed the issuance requirements for callable international bonds that the insurance industry is allowed to invest in. Now insurance companies may invest in callable international bonds that may be redeemed by the issuers within a pecific period of time, which has to be no less than 5 years from the issue date. For such callable bonds traded in the secondary market, insurance companies can only purchase those that will be redeemed no less than 3 years after the settlement date.
6. According to the amendment, insurance companies shall disclose in notes of their annual financial reports whether their ownership of real estate in a foreign country or Mainland area is subject to related regulatory restrictions.
7. When insurance companies acquire real estate or invest in foreign insurance-related enterprises in a foreign country or Mainland area by investing in real estate investment business for special purpose or through trust arrangements, the insurance companies shall report material matters about such investments to the competent authority. The deadline for such reporting is stipulated in the amendment.
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Update：
2017-10-02