Nine insurance companies have beefed up their capitalization to meet the government’s minimum requirement while one has been placed under voluntary receivership, the Insurance Commissioner Eduardo Malinis said yesterday.
Thirty-five companies, comprising of 29 non-life insurance providers and six life insurance companies, initially failed to increase their paid-up capitalization in compliance with the required level of P75 million last year.
The number was reduced to 10 consisting of seven non-life and three life insurance firms. These firms were given until April 30 to beef up their resources to comply with the minimum paid-up capital requirement. Malinis declined to name the nine companies.
Malinis told reporters that the Insurance Commission would issue the certificates of authority to the companies that have complied with the higher capital requirement.
Insurance Deputy Commissioner Vida Chiong said owners placed Covenant Assurance Co. Inc. under voluntary receivership after failing to come to terms with a potential investor.
Chiong said owners of Covenant Assurance were in talks with potential buyers but negotiations bogged down.
The Finance Department issued an order in 2006 increasing the capitalization requirement of both life and non-life insurance companies to make the industry in the Philippines at par with those in neighboring countries.
Under the capital requirement, Filipino-owned life and non-life insurance companies must increase their minimum paid-up capital from P50 million to P250 million and the minimum statutory net worth from P100 million to P500 million by 2011.
Insurance providers are required to increase their paid- up capital to P100 million and their net worth to P200 million by the end of this year from the current level of P75 million worth of paid-up capital and a net worth of P150 million last year.
Insurance providers in the country represented by the Philippine Insurers and Reinsurers Association, however, have asked the Finance Department to defer to 2015 the full compliance to the minimum capitalization and net worth requirement instead of 2011.
Finance Secretary Margarito Teves turned down the request, saying it was necessary to pursue the higher capitalization requirement to protect the interest of the insuring public especially amid the global financial crisis.
The government wants insurance providers to beef up their capitalization to help boost the confidence of the insuring public despite the financial meltdown in the US brought about by the collapse of insurance giant American International Group, investment bank Merrill Lynch, Lehman Brothers and other financial institutions.–Lawrence Agcaoili, Manila Standard Today
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