Four insurance companies have expressed their intention to close shop—three nonlife and one life-insurance firm—while eight nonlife insurers are merging, according to the Insurance Commission (IC).
Insurance Commissioner Dennis B. Funa said the four insurance firms formally expressed their intention to voluntary cease operations, and four pairs of nonlife insurers have taken the merger and acquisition route with another two nonlife players who manifested their intention of bringing in new investors who will acquire control over their these companies.
“We are now reviewing their formal proposals. However, we can only reveal their identities upon approval of their application for voluntary cessation or their plan for merger/consolidation,” Funa said.
Funa added that there are several companies who are trying to bring in new investors in order to comply with the mandatory increase in capitalization requirements from P250 million to P550 million.
In 2016 there were four companies licensed to engage in life- and nonlife-insurance business, 66 nonlife insurers and 27 life insurers. As of the third quarter of 2016, the total assets of the insurance industry amounted to P1.32 trillion, a 21.27-percent increase, from P1.08 trillion registered in the same period in 2015.
The results of the audit conducted by the IC based on the 2015 financial statements of insurance companies showed that all companies have composite licenses, and 24 life insurance and 13 nonlife-insurance companies were found compliant with the P550-million capital requirement. With an estimated 10 nonlife-insurance companies only needing a negligible amount to comply with the existing capitalization requirement.
“In light of the increased financial stability in the insurance industry, better protection for and strengthened confidence from the insuring public is expected. Furthermore, with the increase in the required minimum capitalization requirement, the continued phenomenal growth of our country’s insurance industry is, likewise, expected,” Funa said.
The compliance of all insurance companies to the statutory capitalization requirement will be verified and determined based on the 2016 financial statements to be submitted to the IC. Under the Amended Insurance Code, the capital requirement of insurance companies will increase every three years until 2022.
Despite the expected decrease in the number of industry players, the IC remains optimistic on its robust growth backed-up by the mandatory increase in capitalization requirement, among others.