SEVEN INSURANCE companies voluntarily surrendered their licenses to operate after failing to meet the minimum net worth requirement of the Insurance Commission (IC).
In a statement on Tuesday, IC said seven insurers, namely Centennial Guarantee Assurance Corp., CAP Life Insurance Corp., FLT Prime Insurance Corp., Manila Surety and Fidelity Co., Inc., Meridian Assurance Corp., The Solid Guaranty, Inc., and United Insurance Co., Inc. surrendered their licenses to act as insurers.
As a consequence, these companies — six non-life and one life insurance firms — were issued individual servicing licenses for the orderly “run-off” of their businesses.
An insurance company in an orderly run-off is prohibited from writing new insurance product and extending existing contracts. The operations of the insurer are limited to only accepting premium payments from their policyholders, paying cash surrender values of outstanding policies, reviving lapsed policies and other related services.
Insurance Commissioner Dennis B. Funa said the seven insurers turned in their licenses due to their inability to comply with the regulator’s P550-million minimum net worth requirement.
“While their companies are not compliant with the present P550 million net worth requirement, the net worth of these companies are positive, which means that they have sufficient assets to settle their obligations to their policyholders,” Mr. Funa was quoted as saying in the statement.
The commissioner added that the “more or less than 170,000” existing policyholders of the said insurers will not be affected as existing contracts will remain effective, with the firms still bound to honor their financial obligations.
The insurers voluntarily surrendered their licenses mostly because it is no longer viable to sustain business operations, Mr. Funa said, adding that some shareholders of one company had divested their shares.
The IC added that it will closely monitor the insurers to ensure their financial obligations to policyholders are paid and settled as they become due.
Under the amended Insurance Code, the minimum net worth of insurance companies shall increase every three years until 2022.
From the previous P250-million minimum net worth, IC required the insurers to have P550 million net worth effective end-2016. — K.A.N. Vidal