MANILA, Philippines — The government has expanded the allowable investments for the insurance industry to ensure growth amid a dynamic market environment.
In its latest circular letter, the Insurance Commission (IC) released new omnibus guidelines on investments among insurance companies, reinsurers and mutual benefit associations.
IC chief Reynaldo Regalado said there is a need for prudent management of investments by insurance entities to ensure financial stability.
“We aim to enhance their investment adaptability to respond to the dynamic investment market environment,” Regalado said.
“We also aim to empower our regulated entities to make well-informed investment decisions with the goal of ensuring the stability and growth of their respective financial assets while safeguarding the interests of their policyholders,” he said.
Notably, the circular introduced a range of new allowable investments which include structured products, debt securities issued by supranational organizations and investment vehicles.
Structured products include notes that are credit-linked, equity-linked, funded fixed rate, principal protected and bond-linked.
On the other hand, debt securities issued by supranational organizations or multilateral agencies must obtain a minimum credit rating from reputable credit rating agencies.
The IC is also allowing investment vehicles that are designed to enable the aggregation of capital from multiple investors, with the aim of collectively participating in a diversified portfolio of securities and other financial instruments.
These cover mutual funds, exchange-traded funds, real estate investment funds, unit investment trust funds, money market funds and corporate debt vehicles.
While these investments do not require prior approval by the IC under the new issuance, regulatory safeguards are provided to ensure that firms will be able to maximize returns, subject to prudent levels of risk.
Specifically, the new circular also mandated that each new allowable investment must meet minimum credit rating requirements or be listed on recognized exchanges, which provides a layer of transparency and market oversight.
Likewise, the IC lifted the prior approval requirement under previous issuances for certain peso and foreign currency-denominated investments that meet accepted market-wide standards and have gone through external review processes and scrutiny, such as credit rating and listing on recognized exchanges, among others.
Other admissible investments include money market instruments, fixed income securities, marketable securities via sovereign or corporate issuances, financial derivatives, real estate properties, infrastructure projects and equities, among others. By:Louise Maureen Simeon – The Philippine Star
