QuestionsQuestions (CIRCULAR LETTER NO. 2018-45)
PD No. 63 prohibited an insurance company from transacting both life insurance and non-life insurance concurrently.
PD No. 612 allowed concurrent life and non-life insurance provided the company is specifically authorized to do so, but it did not expressly provide the minimum paid-up capital for composite insurers.
It required paid-up capital of at least Php150 million (Php75M for non-life; Php75M for life) and contributed surplus of at least Php50 million (Php25M for non-life; Php25M for life).
The capitalization required must apply to the new unit in addition to its existing capitalization for the business it is currently licensed.
At least Two Billion Pesos (Php2,000,000,000.00) paid-up capital, split equally: Php1,000,000,000 for the life unit and Php1,000,000,000 for the non-life unit.
In addition to paid-up capital stock, the Commissioner may require stockholders to pay in cash a contributed surplus fund of not less than Php200,000,000.00, allocated as Php100,000,000 for the life unit and Php100,000,000 for the non-life unit.
Composite insurance companies other than those existing and licensed at the time of the effectivity of the Amended Insurance Code are considered new composite insurers.
The minimum paid-up capital must remain unimpaired for the continuance of the license.
Life unit and non-life unit each must comply with: Php550,000,000 by 31 December 2016; Php900,000,000 by 31 December 2019; Php1,300,000,000 by 31 December 2022.
Php1,100,000,000.00 total net worth, comprised of Php550 million for the life unit and Php550 million for the non-life unit.
It is “existing” if it is already authorized to transact insurance business prior to and at the time of the effectivity of the Amended Insurance Code.
The minimum net worth requirement under Section 194 of the Amended Insurance Code applies to the new unit, in addition to its present net worth for the business it is currently licensed.
At least fifty percent (50%) of those provided above (i.e., of the capitalization/net worth requirements applicable to insurers under Sections 1 and 2).
The capitalization/net worth requirements are without prejudice to other requirements under the Risk-Based Capital framework, including amendments to those existing circular letters.
If any portion is held invalid, the remaining provisions or their application to other persons/circumstances remain valid.
They must formally signify within 65 days whether they will: (1) continue transacting life and non-life concurrently, (2) run-off one unit and engage in a single unit, or (3) run-off both units and engage in a single unit of business only (life or non-life).
One (1) year from the effectivity of the Circular Letter to comply with Section 2, with specific milestones: by 03 September 2019 net worth of Php550 million for each unit; by 31 December 2019 net worth of Php900 million for each unit.
Those who choose to continue both concurrently but are not compliant with Section 2 within the allowed one-year period are subject to the stated compliance limits; otherwise they must consider running-off under the voluntary cessation rules referenced in the Circular Letter.