The Insurance Commission (IC) expects acquisitions to clutch the industry in the next few months.
For one, Insurance Commissioner Dennis B. Funa told the BusinessMirror that a company submitted to the IC a Letter of Intent to acquire Plaridel Surety & Insurance Co. (PSIC), which was placed under conservatorship in March last year. Funa said the LOI was sent to the IC in February.
“One insurance company is interested to buy Plaridel; it was placed under conservatorship,” Funa said in an interview. “But if there will be a buyer, then it can be rehabilitated.”
Funa also revealed that two foreign companies have expressed interest to acquire local insurance companies, as well.
He added that amid this consolidation, the IC wants the health of insurance companies in the country as stable.
“What is important is that an insurance company is stable, that a company would have enough resources to meet and to be able to pay claims; that’s the bottom line,” Funa said. “So whether it’s 60 or 30 [insurance companies], it doesn’t matter as long as they are stable and financially strong.”
Based on IC data, there are currently 54 insurance companies doing business in the country. Five of these firms, mostly offering nonlife products, were placed by the IC under receivership in March last year for failing to meet the statutory capital requirement of P550 million. PSIC was among these firms.
Being placed under conservatorship status means that the company cannot engage in selling new insurance products. The company, however, is obliged to serve its existing pool of policyholders.
Aside from PSIC, the companies placed under conservatorship were First Integrated Bonding & Insurance Co. Inc., Investors Assurance Corp., Metropolitan Insurance Co. Inc. and Premier Insurance & Surety Corp.
Under the Insurance Code, existing insurance companies are required to have a minimum net worth of P550 million, from the previous P250 million, by the end of 2016. The capitalization requirement will again increase to P900 million in 2019, and further jump to P1.3 billion by 2022.