Insurance firms allowed to invest in infra projects

INSURANCE companies are now allowed to invest in infrastructure- related projects of the government.

The Insurance Commission ( IC), in a statement on Thursday, said the new rule was approved last December 28 under Circular Letter 2018- 74 and took effect immediately.

Insurance and reinsurance firms can invest in debt or equity security instruments for infrastructure projects under the Philippine Development Plan ( PDP). These include highways, railways, non- rail- based transit facilities, port infrastructure, airports, warehouses, environmental and solid waste management- related facilities and climate change mitigation and adaptation infrastructure projects.

They can join as a project proponent, financier/ sponsor or via an operation and maintenance contract.

Insurance Commissioner Dennis Funa said the new circular created a new investment channel for insurers and opened opportunities to improve risk- adjusted returns, portfolio diversification and asset- liability matching.

“This circular is aimed at encouraging insurers to invest in domestic infrastructure projects to boost our economy and to reap the benefits of portfolio diversification and higher return,” he added.

“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,” Funa continued.

For purposes of determining the net worth of an insurance and reinsurance company, meanwhile, the IC said duly-approved investments in infrastructure projects would now be considered as admitted assets.

Before an investment is approved, insurers will have to submit the infrastructure project’s financial statements, which will be evaluated by the regulator to determine the risk impact on insurance firm’s capital.