The insurance industry is joining efforts to invigorate ‘productive finance’ that redirects funds concentrated in real estate toward advanced industries. Over the next five years, it has decided to invest 40 trillion won, including through the National Growth Fund, in productive sectors.

On the 6th, the Financial Services Commission held the ‘Insurance IndustryNational Growth Fund Roundtable’ with asset management executives from 14 major insurers and made this announcement.

Insurers will invest 8 trillion won of the 40 trillion won to be deployed to productive finance over the next five years in the National Growth Fund, which supports advanced strategic industries and innovative companies. They were reported to have shown interest in infrastructure investment and financing such as data centers and renewable energy, as well as indirect investment in high-tech industries.

For insurers, which are major institutional investors, the importance of ‘long-term asset management’ is growing in tandem with a decline in traditional insurance profits. However, insurers that manage assets mainly in long-term government bonds are finding it difficult to achieve target returns amid falling interest rates.

The financial authorities see the National Growth Fund as a potential new long-term investment destination for insurers. The portfolios of insurers, centered on long-term contracts and long-term assets, align with the National Growth Fund structure, which provides long-term support to large-scale infrastructure investments and promising companies.

An official at the Financial Services Commission explained, “National high-tech industries such as artificial intelligence (AI), semiconductors, and bio have high growth potential and, because large-scale facility investment is essential, they are suitable for long-term capital,” and added, “The National Growth Fund is attracting strong interest from insurers as a new long-term investment destination that can meet both stability and profitability.”

Insurers proposed strengthening communication between the government and the financial sector to ensure that execution and post-management of National Growth Fund investments proceed smoothly, and called for improvements to prudential regulations, including adjusting investment risk weights.

Reflecting the opinions raised at the roundtable, the Financial Services Commission plans to announce measures to improve capital regulations for the insurance industry at a forthcoming ‘Productive Finance Grand Transition Meeting’. Kim Jin-hong, Director General for Financial Industry at the Financial Services Commission, said, “We will draw up measures to refine capital regulations related to policy funds, infrastructure, venture investment, and mortgage lending, taking global norms into account.”