Taiwan insurers go global in search of returns
Law change paves the way for the cashed-up sector to spread its wings from Taipei, but controls mean there won't be a flood of money
Passing through Taipei's major business districts, it is common to see office buildings adorned with names of insurance companies. Indeed, about half of the grade-A office buildings in the city are owned by domestic insurers, with these companies accounting for about 40 per cent of turnover in the past few years.
But this situation is set to change. This month's announcement by the Taiwanese Insurance Bureau permitting overseas real estate investments for the first time has opened up the possibility of forays into the global investment market as the insurers look to diversify from the overcrowded domestic market.
So, can we expect capital flow into Hong Kong and other major world cities?
The Taiwan commercial market could certainly be described as "steady" and far removed from the more volatile nature of certain other Asian markets.
Of course you might think for an industry such as insurance that 'steady is good'. Taiwanese insurance companies have long been active in buying commercial properties on the island with their allocation to real estate hovering about 4 per cent of total invested capital since 2006.
However, in response to strong growth of insurance premiums at 7.6 per cent a year over the same period, there is continuous pressure for the insurers to increase investment in real estate to maintain an overall balance of their portfolios.