(This article was originally published Tuesday.)
--Argentina to require insurance companies to invest in public
works projects and "productive investments"
--The requirement aims to add ARS7 billion to such
investments
--Insurers will have to invest between 5% and 30% of their
available funds in these projects by the end of May 2013
By Taos Turner
BUENOS AIRES--Argentina's government will require insurance
companies to investment in public infrastructure projects and other
"productive investments," a move that aims to boost the funding of
such projects by more than more than ARS7 billion ($1.47 billion)
through mid 2013.
The imposition on the insurance industry, unveiled by President
Cristina Kirchner in a speech late Monday, comes as the government
looks for ways to boost economic growth through "counter-cyclical"
policies.
Earlier this year, the government started requiring banks to
boost lending and do it at below-market rates as part of another
program aimed at spurring growth. Now the government is requiring
direct investment.
"This is the opposite of what's happening in the rest of the
world, where they're pushing austerity policies," Mrs. Kirchner
said.
She said she expects the insurance industry to be in full
compliance with the news rules by the end of May 2013.
The amounts the companies will be required to invest will be
proportionate to the amount of insurance they offer through short,
medium and long policies.
Companies offering shorter-term workers' injury compensation
insurance will be required to invest between 5% and 20% of their
available funds, according to an Economy Ministry document.
Longer-term life insurance providers will have to invest between
12% and 30% of their funds. Other general insurance providers will
be required to invest between 10% and 20% of their funds.
Companies must have at least 5% of the relevant funds dedicated
to public works and productive investments projects by the end of
March 2013.
"We're going to move from shorter-term financial investment to
long-term productive investments," Mrs. Kirchner said, noting
insurance companies currently invest in financial instruments that
don't directly benefit taxpayers.
Mrs. Kirchner said the insurance industry is "flourishing" and
flush with billions of dollars in funding that should be put to
uses that benefit the public.
Argentina's general insurance industry has previously voiced
interested in having a greater offer of securities linked to
infrastructure projects as insurers look to diversify their
investment portfolios.
Last year, the government forced insurers to repatriate most of
the 8.2 billion pesos ($1.8 billion) they had invested abroad and
largely banned offshore investments in a move that was widely
viewed as an attempt to bolster the central bank's international
reserves.
Earlier this year, the U.K.'s RSA Insurance Group PLC (RSANY,
RSA.LN) and Australia's QBE Insurance Group (QBIEY, QBE.AU) bought
Argentine general insurers with a view to expand their existing
presence in country.
The insurance industry manages onshore investments of about
ARS64 billion pesos.
"We're turning the page on the destiny of insurance companies'
funds," Mrs. Kirchner said.
Write to Taos Turner at taos.turner@dowjones.com