Mercantile Insurance claims full compliance with state capital requirements
MANILA, Philippines—Mercantile Insurance Co. Inc. wants to make it clear that it has complied with an industry requirement of having paid-up capital of at least P175 million as prescribed by the Department of Finance.
Mercantile Insurance was one of 10 non-life insurance companies that had asked the Quezon City Regional Trial Court to stop the implementation of Department Order No 27-2006.
The order required Filipino-owned non-life firms to raise their paid-up capital by at least P50 million by the end of 2006, and further increase this to P175 million in 2010, and P250 million in 2011.
But the yearly schedule has been deferred many times, partly due to the lobbying of industry players who find it hard to meet the requirements.
In a letter to the Inquirer, Mercantile Insurance president Dionisio M. Dungca said that, as of March 26, the company had met the P175-million requirement—the deadline for which has since been moved to June 30 this year.
“Mercantile Insurance has complied [with the order] … thus, it will no longer be affected by the June 2012 deadline,” Dungca said.
In a 32-page motion filed with QC RTC Branch No. 98 last June 1, the 10 nonlife insurers said the implementation of DO 27-2006, if continued, would put them out of business because the capitalization amounts required were “way beyond what the market could support.”
The other complainants are Security Pacific Assurance Corp., Visayan Surety and Insurance Corp., Finman General Assurance Corp., Milestone Guaranty and Assurance Corp., R & B Insurance Corp., Industrial Insurance Co., Philippine Phoenix Insurance and Surety Corp., Great Domestic Insurance Co. of the Philippines and Insurance of the Philippine Islands Co.
In a joint statement issued on June 7, the insurers claimed that they “are no longer capable of raising their capital to P175 million,” adding that failure to meet the deadline by the end of this month would result in the non-issuance of their license to operate.
In their motion, the 10 companies said that with the “arbitrary” order, insurance companies are now in “grave danger of closing their business operations because the substantial increase in the capital requirements imposed by DO 27-2006 has rendered it almost impossible for [them] to comply.”
