Networth Requirements for Domestic Insurance Companies
- All licensed domestic life and non-life insurance companies must have a minimum networth of Php250,000,000 by December 31, 2013.
- The minimum networth must stay unimpaired and increase progressively:
- Php550,000,000 by December 31, 2016
- Php900,000,000 by December 31, 2019
- Php1,300,000,000 by December 31, 2022
Capital and Reserve Requirements for Branches of Foreign Insurance Companies
- Foreign insurance companies must possess unimpaired capital, assets, and reserves of not less than Php1,000,000,000 to do business in the Philippines.
- New branches must have a statutory deposit of at least Php1,000,000,000 unimpaired at all times.
Trusteed Surplus for Foreign Branches
- Branches must maintain a trusteed surplus of at least Php250,000,000 by December 31, 2013.
- The trusteed surplus must be unimpaired and increase as follows:
- Php550,000,000 by December 31, 2016
- Php900,000,000 by December 31, 2019
- Php1,300,000,000 by December 31, 2022
- The Commissioner may require, for new branches, an additional fund of not less than Php100,000,000 beyond the trusteed surplus.
Capitalization Requirements for Reinsurance Companies
- New reinsurance companies must have a capitalization of Php3,000,000,000, with at least 50% as paid-up capital.
- The remaining amount should be contributed surplus, not less than Php400,000,000.
- Existing reinsurance companies must have a networth of at least Php2,000,000,000 by December 31, 2013.
- Networth for existing companies must remain unimpaired and increase as follows:
- Php2,250,000,000 by December 31, 2016
- Php2,500,000,000 by December 31, 2019
- Php3,000,000,000 by December 31, 2022
Definitions and Composition of Networth for Domestic Companies
- Networth includes:
- Paid-up capital (capital stock issued at par value)
- Retained earnings (accumulated earnings net of dividends)
- Unimpaired surplus consisting of contributed surplus, contingency surplus, additional paid-in capital, and other equity accounts
- Revaluation increments as approved by the Commissioner
- Networth is reduced by treasury shares cost.
Components of Trusteed Surplus for Foreign Branches
- Composed of statutory deposit, home office inward remittances, and head office account.
Requirements of Unimpaired Capital and Networth
- Both networth and paid-up capital must remain unimpaired and meet or exceed the minimum required amounts at all times.
Authority to Increase Minimum Capital and Networth Requirements
- The Secretary of Finance, upon recommendation of the Commissioner, may increase minimum paid-up capital or cash assets for insurance companies.
- Such increase aims to protect policyholders and the public.
- Minimum capitalization and networth must remain unimpaired for license validity.
Effectivity
- This Circular Letter takes effect immediately upon issuance.