Law Summary
Criteria for Approval of Entry
- Approval of entry considers:
- Geographic representation and complementation.
- Strategic trade and investment relations between the Philippines and the applicant's home country.
- Applicant's demonstrated capacity, global reputation, underwriting innovation, and competitive stability.
- Reciprocity in allowing Philippine companies to operate in the applicant’s country.
- Willingness of the applicant to share technology openly.
Applicant Qualifications
- Only applicants ranking in the top 200 insurance/reinsurance companies in their country with at least 10 years of business operation qualify.
- To qualify as a branch or new incorporated company, the applicant must be publicly listed and widely-owned unless majority government-owned.
- "Widely-owned" means no single stockholder holds more than 20% voting stock.
- "Publicly listed" refers to shares listed on recognized stock exchanges.
Capital Requirements
Insurance Companies:
- P250M paid-up capital + P50M contributed surplus for foreign equity ≥ 60%.
- P150M + P50M surplus for foreign equity > 40% but < 60%.
- P75M + P25M surplus for foreign equity ≤ 40%.
Reinsurance Companies:
- Minimum paid-up capitals: P500M (≥60% foreign equity), P300M (>40% <60%), P150M (≤40%).
Branches must deposit securities valued at least:
- P300M (insurance), P500M (reinsurance) with the Insurance Commission.
Intermediaries:
- Minimum capital of US$1,000,000 or peso equivalent; 50% invested in Philippine Government Securities.
Scope of Operations
- No composite licenses are issued under these guidelines for insurance company applicants.
Head Office Guarantee
- The foreign company's head office guarantees prompt payment of all branch liabilities in the Philippines.
Restrictions on Entry Numbers and Equity
- Entry for branches or companies with >40% foreign equity allowed within 2 years from guideline effectivity.
- Limit on new entrants: 5 foreign companies/intermediaries each, increaseable to 10 by President's approval.
Board of Directors Composition
- Non-Filipino nationals may serve on the board up to the proportion of foreign equity ownership.
Employment of Expatriates
- Expatriates may hold managerial roles subject to applicable laws and regulations.
Procedural Rules for Application
- Applicants must comply with the Insurance Commission's existing pre-licensing rules applicable to new domestic companies or intermediaries.
Transitional Provisions
- Foreign companies or intermediaries already doing business with Philippine partners who increase foreign equity >40% must comply with these guidelines.
Effectivity
- These guidelines took immediate effect upon promulgation on October 24, 1994.