Creation and licensing of National Reinsurance Corp.

The decree declares state policy to promote and develop a strong national insurance industry for integration in the country’s economic and social development.
The decree requires a well-coordinated and efficient reinsurance machinery to achieve a higher national retention and to grow healthy insurance and reinsurance markets.
The decree authorizes maximizing regional retention capacity through participation in regional or international cooperation or arrangements in insurance and reinsurance.
The decree recognizes the Republic of the Philippines’ signing of an agreement on September 30, 1977 establishing the Asian Reinsurance Corporation.
The decree mandates an organization enabling the Philippine insurance and reinsurance markets to participate in the Asian Reinsurance Corporation or other regional/international insurance and reinsurance cooperation arrangements.

Section 1 grants the Insurance Commissioner authority, notwithstanding any contrary law, decree, executive order, administrative order, letter of instruction, or rules and regulations, to license a corporation to be organized under Act No. 1459 (otherwise known as the Corporation Law).
Section 1 requires the corporation to be licensed as a professional reinsurer under Presidential Decree No. 612 (otherwise known as the Insurance Code).
Section 1 names the licensed corporation as the “National Reinsurance Corporation of the Philippines.”

Section 2 requires the Insurance Commissioner to approve the Articles of Incorporation and By-Laws of the corporation to ensure the carrying out of the decree’s enumerated purposes.
Section 2 provides that once the Articles of Incorporation and By-Laws are approved, the Insurance Commissioner shall forward the same to the Securities and Exchange Commission for registration.

Section 3 designates the National Reinsurance Corporation of the Philippines as the national institution authorized to subscribe to the capital stock portion of the Asian Reinsurance Corporation allotted to the Republic of the Philippines.
Section 3 fixes the subscription amount at US $500,000.
Section 3 designates the Insurance Commissioner as the Philippine representative to the Council of Members of the Asian Reinsurance Corporation.

Section 4 requires non-life insurance and reinsurance companies doing business in the Philippines to cede to the National Reinsurance Corporation of the Philippines at least ten percent (10%) of their outward reinsurance placed with unauthorized foreign reinsurers.
Section 4 requires life insurance companies doing business in the Philippines to cede to the National Reinsurance Corporation of the Philippines at least ten percent (10%) of:
- all new reinsurance placed that would otherwise be outward foreign reinsurance, and
- the renewals of those new reinsurance placements.
Section 4 commands that these compulsory cessions be accorded the best terms and conditions afforded by the existing treaties.

Section 5(a) provides that Presidential Decree No. 1270 takes effect immediately.