Newsletter
STOCKS AND REAL PROPERTY OF AFFILIATED COMPANIES OWNED BY INSURANCE FIRMS WILL NOT BE ADMITTED
Under current regulations, the purchase of shares in affiliated enterprises and their real property by insurance firms may be treated as admitted assets of the insurance firms. Because there are many insurance firms which are owned by conglomerates, the Ministry of Finance (MOF) believes it is necessary to change the classification to non-admitted assets for high-risk investments by insurance firms in affiliated companies in order to lower the risk of the conglomerates. In addition, the MOF feels it necessary to examine the asset appraisal for transactions between related parties. Therefore, on 22 June 1999, the MOF's Insurance Reform Committee resolved that the purchase of shares in affiliated enterprises and their real property by insurance firms be treated as non-admitted assets. Applicable regulations likely will be enforced within three months and will increase pressure on insurance firms to increase capitalization.