Question & AnswerQ&A (CIRCULAR LETTER NO. 2018-45)
Circular Letter No. 2018-45 provides guidelines on the minimum capitalization and net worth requirements for composite insurance companies under the Amended Insurance Code in the Philippines.
A composite insurance company is an insurance company authorized to transact both life and non-life insurance business concurrently.
New composite insurance companies must have a paid-up capital of at least Two Billion Pesos (₱2,000,000,000), with One Billion Pesos for the life unit and One Billion Pesos for the non-life unit.
The Commissioner may require stockholders to pay in cash a contributed surplus fund of not less than Two Hundred Million Pesos (₱200,000,000), divided equally between the life and non-life units.
Existing composite insurance companies must comply with increasing net worth requirements: ₱550 million by December 31, 2016; ₱900 million by December 31, 2019; and ₱1.3 billion by December 31, 2022 for each of their life and non-life units.
An existing composite insurance company is one authorized to transact insurance business before and at the time of the effectivity of the Amended Insurance Code.
Insurance cooperatives must have a minimum capitalization or net worth of at least 50% of the requirements set for composite insurance companies.
It must meet the minimum net worth requirement for the new unit as provided under Section 194 of the Amended Insurance Code, in addition to its current net worth for its existing license.
No, the requirements in this Circular Letter are without prejudice to other requirements imposed under the Risk-Based Capital Framework, including amendments to related Circular Letters.
They must formally signify whether they will continue to transact both life and non-life insurance concurrently or run off one or both units, engaging in single unit business only.