The Insurance Commission has placed five nonlife insurance firms under conservatorship for failing to meet the statutory minimum net worth requirement.
In a statement, the commission identified the five companies as First Integrated Bonding and Insurance Co. Inc., Investors Assurance Corp., Metropolitan Insurance Co. Inc., Plaridel Surety and Insurance Co. and Premier Insurance and Surety Corp.
Republic Act No. 10607 or the Amended Insurance Code sets the minimum net worth requirement on insurance players at P550 million starting end-2017. It will rise to P900 million next year and to P1.3 billion in 2022.
Insurance Commissioner Dennis B. Funa said placing the five companies under conservatorship “does not necessarily mean they will close shop.”
“The purpose of placing a company under conservatorship is to preserve the going concern value of the company returning it to health or ultimately resulting in a receivership. There are several routes that may result in the lifting of the conservatorship order including entering in a merger or consolidation with an existing insurer or a purchase and assumption agreement with an investor. This does not also prevent the company from infusing fresh capital from either existing shareholders or a new investor in order to meet the minimum net worth requirement,” Funa said.
Funa said the five firms were ordered to cease from issuing new and renewing any kind or character of insurance policies and were placed under conservatorship after verifying that they indeed failed to comply with the requirement.
But Funa clarified that “these companies are not operating on net losses,” citing that the insurers’ 2016 annual statements “all have positive net worth but short of the minimum amount required under the Insurance Code.”
Funa appointed conservators, who will be in-charge of managing the assets and liabilities, for all five insurers.
“Placing a company under conservatorship is aimed at restoring the viability of the company and allowing the Insurance Commission, through the appointed conservator, to become more directly involved in the management of the company,” he said.
“Under the regime of conservatorship, the operations of the company will be business as usual under the management of the Insurance Commission-appointed conservatorship, including the processing of claims and payment of valid claims, except that it cannot sell new insurance business. This means all insurance contracts issued before the conservatorship order remain valid and the obligation of the company towards its policyholders still exists until the expiration of their policies,” Funa added.