Foreign Insurance Companies' Capital Requirements

Section 1 amends Section 178 of Act No. 2427, titled “An Act revising the insurance laws and regulating insurance business in the Philippine Islands.”
Section 1 rewrites Section 178 to govern when a foreign insurance company may engage in business in the Philippines.

Section 178 bars any foreign insurance company from engaging in business in the Philippines unless specific capital, assets, reserves, and deposit requirements are met.
Section 178 also bars any insurance company organized or existing under governments or laws other than those of the Philippines or any state of the United States from engaging in business in the Philippines unless the same deposit requirement is met.
Section 178 conditions entry on compliance that benefits Philippine policyholders and creditors.

A foreign insurance company may not engage in business in the Philippines unless it is possessed of paid up unimpared capital or assets and reserve not less than that required of domestic insurance companies.
Section 178 ties the minimum reserve standard to the level required for domestic insurance companies.
The capital/assets and reserve condition operates as a threshold prerequisite before doing business.

Section 178 requires a deposit with the Insurance Commissioner for the benefit and security of the company’s policy holders and creditors in the Philippines.
The deposit must consist of securities satisfactory to the Insurance Commissioner.
The required securities must meet one of the authorized categories listed in Section 178, and must have an actual market value of PHP 100,000.

Section 178 permits deposit securities consisting of:
- bonds of the Government of the United States; or
- bonds of the Government of the Philippines; or
- bonds of any of the branches or political subdivisions of the Philippines authorized by law to issue bonds; or
- bonds of the government in which the company is organized; or
- other good securities.
Section 178 sets the valuation requirement as the securities’ actual market value of PHP 100,000.
Section 178 requires a compliance structure that focuses on both acceptability and valuation.

Section 178 requires that at least 50% of the deposited securities or bonds must consist of securities of the Philippines.
The 50% Philippine-content requirement applies to the total deposited securities or bonds.

Section 178 provides that compliance is sufficient if the required deposit is made with the Chief of the Bureau of Insular Affairs of the War Department at Washington.
Section 178 further allows the alternative deposit to be made with a safe deposit company designated by that officer.
The safe deposit company must agree to hold the deposited securities subject to the control of the Chief of the Bureau of Insular Affairs, acting as the representative of the Insurance Commissioner of the Philippines.
This alternative method is treated as a sufficient compliance pathway for the deposit requirement under Section 178.

Section 1 operates by amending Section 178 of Act No. 2427; the operative rules on foreign insurance entry are enforced through the amended Section 178.
Section 178 assigns the deposit oversight role to the Insurance Commissioner and expressly defines the beneficiary purposes as protection of policy holders and creditors in the Philippines.