Five non-life insurance companies plan a big merger before the end of 2016 to meet the minimum capital stock of P550 million, an industry source said over the weekend.
The source identified two of the companies with merger plans as Stronghold Insurance Company and Milestone Guaranty and Insurance.
“[Stronghold] is looking for troubled companies and they offer to buy,” the source said.
“Stronghold initiated the merger with Milestone, and then negotiated with BF Gen [BF General Insurance Company Inc.], and already submitted documents to the IC [Insurance Commission,” the source said.
“Now they are in talks with Premier [Premier Insurance and Surety Corp.] and Country Bankers [Country Bankers Insurance Corp.] which also wanted to sell their whole life and non-life business. They are already talking,” the source said.
The Insurance Commission recently announced possible mergers of several firms as their requirement for a minimum paid-up capital would be increased to P550 million by end of 2016.
IC issued a circular letter to clarify the minimum capital, net worth and additional requirement for all insurers in the country in compliance with Republic Act No. 10607 or the Amended Insurance Code.
Life and and non-life insurers should have a recorded net worth of P250 million at the end of 2013 and P550 million at the end of 2016. This would be further increased to P900 million by 2019 and P1.3 billion by the end of 2022.
Deputy Insurance commissioner Ferdinand George Florendo said earlier a number of insurance players had capital stock below the P550 million paid-up capital. Florendo said some of these companies were looking into merger and acquisitions.
“Others are really offering themselves up for sale or for acquisition and asking the commission on what if they convert themselves to servicing company,” Florendo said.
He said five to eight companies had expressed their opinion for merger and acquisition but the IC was still waiting for an official paper from the insurers.
“We’re waiting for a black and white from them because it has to be assessed by the commission,” he said.
Source: Other