Question & AnswerQ&A (VALENZUELA CITY ORDICE NO. 273 Series of 2016)
New domestic life and non-life insurance companies must have a paid-up capital of at least One billion pesos (Php1,000,000,000.00) that shall remain unimpaired at all times (Section 194).
Yes. The Commissioner may require the stockholders or parent company to pay in cash a contributed surplus fund of not less than One hundred million pesos (Php100,000,000.00) in addition to the required capital or assets (Section 194).
Minimum networth must be at least Two hundred and fifty million pesos (Php250,000,000.00) by December 31, 2013. The networth increases to Php550 million by 2016, Php900 million by 2019, and Php1.3 billion by 2022 (Section 194).
Branches of foreign insurance companies must have unimpaired capital or assets and a reserve of at least One billion pesos (Php1,000,000,000.00) and a statutory deposit of at least One billion pesos (Php1,000,000,000.00). They must also maintain a trusteed surplus starting at Php250 million in 2013, increasing to Php1.3 billion by 2022 (Section 197).
New reinsurance companies must have a capitalization of Three billion pesos (Php3,000,000,000.00), of which at least 50% should be paid-up capital and the remaining as contributed surplus, which shall not be less than Four hundred million pesos (Php400,000,000.00) (Section 289).
Existing reinsurance companies must have a networth of at least Two billion pesos (Php2,000,000,000.00) by December 31, 2013, increasing to Php2.25 billion by 2016, Php2.5 billion by 2019, and Php3 billion by 2022 (Section 289).
Networth for domestic companies consists of: Paid-up capital, Retained earnings (accumulated earnings net of dividends), Unimpaired surplus (including contributed surplus, contingency surplus, additional paid-in capital, and other equity accounts), plus revaluation of assets (appraised increment approved by the Commissioner), minus the cost of treasury shares (Section 4.1).
Trusteed surplus consists of the statutory deposit, home office inward remittances, and head office account (Section 4.2).
Yes. Upon the recommendation of the Insurance Commissioner, the Secretary of Finance may increase the minimum required amounts to assure the safety of the interests of policyholders and the public, imposing terms and conditions as deemed appropriate (Section 5).
The minimum paid-up capital and networth requirement must remain unimpaired for the continuation of the company's license to operate. If impaired, it could result in non-compliance with licensing requirements (implied in the circular).