The Insurance Commission (IC) is imposing stricter regulations on investments made by insurance companies indirectly through the so-called investment-management agreements (IMAs) with fund managers.
Under Circular Letter 2015-41-A, Insurance Commissioner Emmanuel F. Dooc is requiring prior approval by the IC before insurance companies may enter into IMAs with fund managers to invest their trust funds.
The application for the IC’s approval of the IMA shall be accompanied by a board resolution authorizing the placements under IMA, a copy of the IMA, and audited financial statements of the investment or fund manager for the past three years.
The investment or fund manager should also be licensed by the Bangko Sentral ng Pilipinas.
Dooc also prescribed in the circular that the insurance companies that enter into IMAs should submit quarterly reports on the investments that are under an IMA account.
Dooc stressed that the IMA contract itself should contain the stipulations that all investments under the IMA shall be registered under the name of the insurance company, and that all investments shall be in accordance with the provisions of the amended Insurance Code and all applicable laws like circulars issued by the IC.
The investment risk exposures of investments made under IMAs shall also be identified and measured in accordance with the new Risk-Based Capital framework, which revises the formula of how much capital an insurance company should have based on the total amount of risk that it undertakes.