MANILA, Philippines — The management of non-life insurer SGI Philippines General Insurance Co. Inc. recently infused P620 million in additional capital into the company, making it compliant with the industry requirements ahead of schedule.
In a business meeting last Friday night, SGI Philippines announced that it has increased its capital by another P620 million in December last year, bringing its total paid-up capital to P1.33 billion as of end-2019.
This has made SGI Philippines compliant with the P1.3 billion net worth requirement for insurance companies due on December 2022, three years ahead of schedule. Effective Dec. 31, 2019, the requirement was only P900 million.
“The management of SGI Philippines has decided to go ahead and infuse capital sufficient enough to be compliant with 2022, in the year 2019 itself. This is our spirit of commitment beyond compliance,” SGI Philippines president and chief executive officer Farhat Hussain said in his speech.
Under Republic Act 10607 or the Insurance Code, new players in the industry are required to have P1 billion in paid-up capital when they establish business in the country.
Existing insurers must have a net worth of at least P250 million by June 30, 2013, P550 million by Dec. 31, 2016, P900 million by Dec. 31, 2019 and P1.3 billion by Dec. 31, 2022.
Jasmit Singh Gujral, executive vice chairman of Shriram General Insurance Co. Ltd., one of SGI’s parent companies, said this makes the company the number one non-life insurance player in the Philippines in terms of paid-up capital.
He said the infusion of capital ahead of schedule was SGI’s statement of commitment to the Philippine market.
“When we were supposed to be infusing capital of P900 million, we decided, let’s not split into stages, let us show the commitment to the Philippines’ insurance industry,” Gujral told reporters in an interview.
He said this also shows the company’s confidence in the Philippine economy, which has been growing as one of the fastest among its peers.
“It’s not that we were looking for profit on the year one or the next quarter, we were looking at the long term. The Philippines has a great economy, it’s doing among the best in the world in terms of growth rates,” the company official said.
With the infusion of additional capital, Gujral said SGI Philippines is expecting to see a 500-percent growth in its premium income annually for the next five years.
“Because the current premium size that we have (now) is very small, we’ll be growing around 500 percent every year in the next five years,” he said.
Gujral said there is vast opportunity for growth in the country considering the low penetration rate of the insurance industry.
SGI Philippines is a joint venture of Shriram Group, an Indian financial services conglomerate; Piramal Group, a diversified conglomerate from India; and Sanlam Group, a financial services group in South Africa.
Aside from the non-life insurance business, Gujral said Shriram Group is also looking for opportunities to invest in finance companies, distribution channels of financial and insurance products, manufacturing firms, and start ups.