According to amended Article 146-4 of the Insurance Act, the competent authority may impose a limit on the amount of investment by insurance companies in bonds issued by foreign entities through public offerings in Taiwan according to their financial conditions, risk management and regulatory compliance. Based on the Insurance Act, the FSC introduced amendments to the aforementioned Regulations on November 21, 2018 in order to strengthen insurance companies’ risk management for foreign exchange rate on investments and the security of foreign securities’ assets as well as increase their investment vehicles and their capital utilization efficiency and flexibility, according to the amended article. The main points of the amendment are as follows:
1.The total amount of investments in bonds issued by foreign entities through public offerings in Taiwan plus the investments that are subjected to foreign investments by an insurance company shall not exceed 145% of the insurer''s approved foreign investment limit.
2.In the calculation formula of Excluded Foreign Investment Amount, the reserve requirement for non-investment-linked life insurance business of an insurance company is raised from 25% to 35%.
3.Insurance companies may investment in bonds issued or guaranteed by subsidiary organizations of a foreign local government.
4.For an insurance company that has obtained approval of the competent authority to invest over 40% of its capital in foreign assets, the ceiling on its investments in hedge funds and privately offered funds is raised from 2% to 3%.