Following the government’s announcement of measures to improve productivity of the insurance segment – which included raising the foreign investment limit for life insurers – the industry has taken up the idea that this limit should rise from the current 20% to 40%.
This opinion was confirmed Jorge Claude, executive vice president of the Association of Insurers (AACH), who praised the government’s initiative. “The bill on productivity, which is currently in the Finance Committee of the Chamber of Deputies, would raise the foreign investment limit, and authorize investment in the shares of public works concessions. The bill was initiated by the Executive,” Claude said.
On the potential impact of this measure on the products offered by the industry, the executive said corporate issues in Chile were limited, making it difficult for companies to find investment instruments to back their technical reserves. “Increasing the possibility of investing offshore has a direct effect on improving profitability, which will mean they can offer better conditions to policyholders,” he said.
In their foreign instrument portfolio, insurance companies generally invest in long-term fixed-income vehicles, although they also allocate a smaller part to other assets, such as private equity, Claude said.
On the instruments preferred by insurance companies, he said that undoubtedly mutual funds were a good choice “but the bulk is in direct investment in carefully selected instruments.”
Although at present the industry as a whole is well under the existing foreign investment limit, some companies are very close to the maximum allowed.
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