IC allows insurers to invest in pooled funds, structured notes

INSURANCE COMPANIES, professional reinsurers, and mutual benefit associations (MBA) will now be allowed to invest in more instruments and entities under new guidelines issued by the Insurance Commission (IC).

IC Circular Letter (CL) 2025-09 dated April 8 lays out the new omnibus guidelines on investments of IC-regulated entities (ICREs), which consolidate and supersede previous related issuances to streamline and update the framework for these firms’ allowable investments.

“The new Circular Letter aims to enhance investment adaptability of insurers, reinsurers, and MBAs to respond to the dynamic investment market environment. It aims to further empower the commission’s regulated entities to make well-informed investment decisions with the aim of ensuring the stability and growth of their respective financial assets while safeguarding the interests of their policyholders,” Insurance Commissioner Reynaldo A. Regalado said in a statement on Thursday.

“By issuing these new Omnibus Guidelines, we are addressing the bottlenecks that hinder timely investment decisions and strain regulatory resources,” he said.

Under the guidelines, ICREs can now invest in structured products like credit-, bond- or equity-linked notes, debt securities issued by supranational organizations, and investment vehicles, which include pooled funds like mutual, exchange-traded, unit investment trust, and money market funds, as well as real estate investment trusts.

This is in addition to admissible investments under previous IC issuances, which include securities issued by the government and corporates, loans, real estate, derivatives, and infrastructure projects under the Philippine Development Plan, among others.

“While these investments do not require prior approval by the commission under the new issuance, regulatory safeguards are provided to ensure that ICREs will be able to maximize returns, subject to prudent levels of risk,” the IC said.

“Specifically, the new CL mandates that each new allowable investment must meet minimum credit rating requirements or be listed on recognized exchanges, which provides a layer of transparency and market oversight.”

ICREs will likewise be allowed to make certain peso- and foreign currency-denominated investments without prior IC approval, provided that these “meet accepted market-wide standards and have gone through external review processes and scrutiny, such as credit rating and listing on recognized exchanges, among others,” the regulator said.

The guidelines also include the list of investment limitations per instrument or entity and enumerate non-admitted assets of insurers, professional reinsurers, and MBAs in the determination of their financial condition.

The IC said it will conduct a regular review of insurers, reinsurers and MBAs to ensure that their investment activities and portfolios comply with its regulations.

“Further, the commission may, at any time, implement appropriate regulatory measures for prudential reasons if the ICRE failed to maintain an adequate risk management system and conducted business in an unsafe and unsound manner,” it said.

“The commission reserves the right to issue warnings, order liquidation of investments, non-admit assets, and suspend, modify, downgrade, limit or revoke any ICRE’s investment authority, among others.”

Companies must submit regular reports on their investments to the regulator, with a separate report required for those with investments in complex instruments.

The insurance industry’s premium income rose by 12.82% to P440.39 billion in 2024, latest IC data showed. Its combined net income grew by 15.88% to P56.29 billion. — A.M.C. Sy