August 2017
Investment-linked insurance sold by offshore insurance units is limited to products denominated by foreign currencies(Taiwan)
Melanie Lo
The Financial Supervisory Commission issued the Jin-Guan-Bao-Shou-10400954511 Directive of December 23, 2015 (hereinafter, the "Directive") to interpret the requirement that the investment-linked insurance sold by offshore insurance units, the linked investment objects, and the scope of the utilization of segregate account assets shall be limited to foreign currency denominated products. In addition, except for those approved by the competent authority, they shall not be a New Taiwan Dollar exchange rate, a New Taiwan Dollar interest rate index or a New Taiwan Dollar-denominated product, and the investment portfolio shall not involve relevant requirements for New Taiwan Dollar-denominated products.
Under Article 9, Paragraph 1, Subparagraph 3 of the Administrative Rules for Offshore Insurance Units provides: "An offshore insurance unit shall comply with the following rules in the sale of insurance products, and in addition, comply with provisions of the Regulations Governing Pre-sale Procedures for Insurance Products on product research and development, formal product development, product sale preparation procedure, and professional training for product signatories as well as provisions of the Regulations Governing Investment of Investment-linked Insurance on the management and safekeeping of separate accounts: ...(3) The linked investment objects of an investment-linked insurance and the utilization of its separate account assets shall not be a New Taiwan Dollar exchange rate, a New Taiwan Dollar interest rate index, or a New Taiwan Dollar-denominated product, and the investment portfolio may not involve any product denominated in New Taiwan Dollars unless with the approval of the competent authority."
According to the Directive, the linked investment objects and the scope of the segregate account assets of the investment-linked insurance under Article 9, Paragraph 1, Subparagraph 3 of the Administrative Rules for Offshore Insurance Units are limited to foreign currency denominated products. In addition, with the exception of (1) offshore funds, (2) foreign currency classes (including the New Taiwan Dollar class) in the multi-currency funds issued by domestic securities investment trust enterprises and (3) foreign currency structural products issued by offshore securities units with linked objects involving stock market indexes in the ROC (including products traded in overseas exchanges and linked to ROC stock indexes), such linked investment objects and the scope of the segregate account assets of the investment-linked insurance should be denominated, cleared and settled in foreign currencies, shall not be a New Taiwan Dollar exchange rate, a New Taiwan Dollar interest rate index or a New Taiwan Dollar-denominated product, and the portfolio of investment shall not involve New Taiwan Dollar-denominated products except for those approved by the competent authority.
This Directive also points out that the percentage of the investment in the ROC securities market from (1) offshore funds and (2) foreign currency classes (including the New Taiwan Dollar class) in the multi-currency funds issued by domestic securities investment trust enterprises shall not exceed 30% of the net asset value, provided that foreign currency-denominated international bonds (including Formosa bond) may be excluded from the calculation of the above percentage restriction.
The Financial Supervisory Commission issued the Jin-Guan-Bao-Shou-10400954511 Directive of December 23, 2015 (hereinafter, the "Directive") to interpret the requirement that the investment-linked insurance sold by offshore insurance units, the linked investment objects, and the scope of the utilization of segregate account assets shall be limited to foreign currency denominated products. In addition, except for those approved by the competent authority, they shall not be a New Taiwan Dollar exchange rate, a New Taiwan Dollar interest rate index or a New Taiwan Dollar-denominated product, and the investment portfolio shall not involve relevant requirements for New Taiwan Dollar-denominated products.
Under Article 9, Paragraph 1, Subparagraph 3 of the Administrative Rules for Offshore Insurance Units provides: "An offshore insurance unit shall comply with the following rules in the sale of insurance products, and in addition, comply with provisions of the Regulations Governing Pre-sale Procedures for Insurance Products on product research and development, formal product development, product sale preparation procedure, and professional training for product signatories as well as provisions of the Regulations Governing Investment of Investment-linked Insurance on the management and safekeeping of separate accounts: ...(3) The linked investment objects of an investment-linked insurance and the utilization of its separate account assets shall not be a New Taiwan Dollar exchange rate, a New Taiwan Dollar interest rate index, or a New Taiwan Dollar-denominated product, and the investment portfolio may not involve any product denominated in New Taiwan Dollars unless with the approval of the competent authority."
According to the Directive, the linked investment objects and the scope of the segregate account assets of the investment-linked insurance under Article 9, Paragraph 1, Subparagraph 3 of the Administrative Rules for Offshore Insurance Units are limited to foreign currency denominated products. In addition, with the exception of (1) offshore funds, (2) foreign currency classes (including the New Taiwan Dollar class) in the multi-currency funds issued by domestic securities investment trust enterprises and (3) foreign currency structural products issued by offshore securities units with linked objects involving stock market indexes in the ROC (including products traded in overseas exchanges and linked to ROC stock indexes), such linked investment objects and the scope of the segregate account assets of the investment-linked insurance should be denominated, cleared and settled in foreign currencies, shall not be a New Taiwan Dollar exchange rate, a New Taiwan Dollar interest rate index or a New Taiwan Dollar-denominated product, and the portfolio of investment shall not involve New Taiwan Dollar-denominated products except for those approved by the competent authority.
This Directive also points out that the percentage of the investment in the ROC securities market from (1) offshore funds and (2) foreign currency classes (including the New Taiwan Dollar class) in the multi-currency funds issued by domestic securities investment trust enterprises shall not exceed 30% of the net asset value, provided that foreign currency-denominated international bonds (including Formosa bond) may be excluded from the calculation of the above percentage restriction.
