Newsletter
RESTRICTIONS RELAXED ON INVESTMENTS IN US MORT-GAGE-BACKED SECURITIES
The Department of Insurance, Ministry of Fi-nance announced on 17 June 2002 that it had relaxed the former 5% limit on insurers' invest-ments in mortgage-backed securities issued or guaranteed by three US institutions. Insurers will henceforth not need to apply for case-by-case approval if the sum of their in-vestments in such securities and their invest-ments in domestic securities does not exceed 35% of their total funds.
The three US institutions concerned are the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Government National Mortgage Association. Mortgage-backed securities issued or guaranteed by these institutions are mainly rated Aaa by Moody Investors Service or AAA by Standard and Poor's, and of low credit risk and high li-quidity which makes them suitable investments as part of insurers' long-term asset portfolios.