Monday, July 24, 2017

Philippines raises investment limit for pre-need firms

The Insurance Commission has raised the cap on the amount of funds that pre-need firms could set aside for investments.

According to insurance commissioner Dennis Funa, the investment threshold has been increased by 2% under the Pre-Need Code.

This increases the allowable investment in long-term commercial paper from 15% to 17% of the total amount of the trust fund, in direct loans from 5% to 7%, in equities from 30% to 32%, and in real estate from 10% to 12%.

The rise in investment cap was seen as a lifeline to the troubled pre-need sector.

Based on the latest data from the Insurance Commission, the local pre-need industry had total assets of P120 billion (US$2.4 billion) at the end of 2016, of which only P10 billion was invested.

Funa said the commission decided to raise the investment threshold after a recent troubling trend of flat and declining investment yields.

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