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Regulations Governing Insurance Enterprises' Investment in Beneficiary Rights of Real Estate Trust
The Financial Supervisory Commission (FSC) stipulated the Regulations Governing Insurance Enterprises' Investment in Beneficiary Rights of Real Estate Trust on 29 August 2013, effective on the same date. Main points of the Regulations are as follows:
1. Insurance enterprises may invest in beneficiary rights of real estate trust according to Subparagraph 8 of Paragraph 1 of Article 145 of the Insurance Act, excluding beneficiary rights of real estate trust used as a mechanism for ensuring building contract performance.
2. The aggregate investment amount that an insurance enterprise invests in beneficiary rights of real estate trust and the balance of the actual cost of the insurance enterprise's investment in beneficiary certificates and asset backed securities which do not have a credit rating or the rating is lower than twBBB- or equivalent rating shall not be more than 2% of the insurance enterprise's funds.
3. Insurance enterprises' investment in beneficiary rights of real estate trust shall comply with the following requirements:
(1) An insurance enterprise shall not invest in beneficiary rights of real estate trust if the insurance enterprise's RBC ratio is lower than 200%.
(2) An institutional trustee of the real estate trust shall be rated by a credit rating agency and its long term debt credit rating shall be higher than twBBB+ or an equivalent rating.
(3) An insurance enterprise may invest in beneficiary rights of real estate trust, if the insurance enterprise establishes the procedure for investment in beneficiary rights of real estate trust and the procedure is approved by the board of directors; in addition, before making each investment in beneficiary rights of real estate trust, an insurance enterprise shall confirm whether the trust procedure and the construction license are in place for the underlying real estate.
(4) For its investment in beneficiary rights of real estate trust, the person in charge appointed by an insurance enterprise shall have relevant work experiences or have been trained professionally, confirm the trust procedure and the construction license are in place for the underlying real estate, and submit the investment evaluation report.
4. Insurance enterprises' existing investment in beneficiary rights of real estate trust which is not in compliance with these Regulations shall not be increased since the effective date of these Regulations.