The Philippines’ insurance regulator has authorized non-life insurers to invest their assets in real property. The Insurance Commission (IC) announced Thursday that its chief Dennis Funa recently signed off on conditions and guidelines for such transactions.
“Easing the investment policy of non-life insurance companies in real properties will create a new revenue stream for the non-life insurance sector," said Funa.
Only non-life firms with a minimum net worth of at least PHP550m (about US$10.75m), who have complied with liquidity requirements, may invest in income-producing properties.
The Insurance Commission requires firms to have adopted a comprehensive risk liquidity framework approved by the regulator’s board of directors.
Real property investments will be subject to a 20% ceiling. “The aggregate book value of investments in any income producing real property shall not exceed twenty percent (20%) of its total net worth of a non-life insurance company as shown it its latest financial statement approved by the IC. Included in the computation of the threshold is the cost of improvement or development of the real property,” said Funa.
Applications will have to be submitted with a five-year projection of the property’s income, as well as the property tile bearing the insurance company’s name.
Funa said the initiative seeks to provide new investment options. “As traditional fixed income investments have generated declining returns in the low-yield environment, non-life insurance companies have been spurred to search for new investment opportunities.”
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