MANILA -- An insurance executive called the recent decision of the Insurance Commission (IC), which allows regulated companies to invest in the debt or equity securities of infrastructure projects, "a welcome development."
Fortune General Insurance Corp. (FGen Insurance) president and Chief Operating Officer Mitch Rellosa said the new regulation gives insurance industry players another avenue to place their funds.
“It’s good in general because it gives us more choices in investing,” Rellosa told the Philippine News Agency (PNA) Thursday.
He explained that since insurance companies are required to have a minimum capital of PHP900 million by end-2019 and PHP1.3 billion by end-2022, these firms have more assets in their hands.
He cited that the “size of the industry does not support that amount of capital,” thus, the latest IC regulation is good for the players. “We welcome this. We may now be able to invest in the projects of the government and have better returns,” he said.
Prior to the issuance of the Circular, insurance companies are only allowed to invest in government-issued securities, mutual funds, and unit investment trust funds (UITFs) that are placed in equities, fixed income securities, or a combination.
Rellosa cited that under the additional investment options for insurance firms, those that are part of conglomerates that have construction-related businesses have an edge over those that do not have because they have better access to projects.
He, however, said that other companies are not really disadvantaged because they may be approached by construction companies for possible funding. “The whole point is, there are more chances for us now for a wide array of investment products,” he added.
Under IC Circular Letter No. 2018-74, insurance and reinsurance companies may invest in infrastructure projects under the Philippine Development Plan (PDP) as a project proponent, financiers/sponsors, or through an operation and maintenance contract.
The IC, in a press release, said the amount to be invested in infrastructure projects that the agency has approved “shall now be considered as admitted assets.”
Insurance Commissioner Dennis B. Funa said the circular aims to encourage players to invest in domestic infrastructure projects that will help boost economic growth.
“With the administration’s ‘Build, Build, Build’ Program in full swing, insurers can take advantage of investing their assets in infrastructure projects to aid them in improving their revenue that would address their compliance with the statutory net worth requirements under the Insurance Code,” he added. (PNA)
