IC orders liquidation of 7 insurers; 3 more lined up

Seven non-life insurance companies has been ordered for liquidation while three more have been placed under receivership by the Insurance Commission (IC) for capital inadequacy and margin of solvency deficiency.

All nine firms were issued a cease and desist order (CDO) barring them from continuing business such as issuance of bonds, sale of non-life insurance products like fire insurance, motor or vehicle insurance.

The insurers that were ordered for liquidation are: Citadel Insurance Corp., Reinsurance Company of the Orient; Philippine Reinsurnace Corp.; General Insurance and Surety Corp.; Afisco Insurance Corp., Mantrustee Insurance Corp., and TICO Insurance Co. Inc.

Under receivership are: First Integrated Bonding & Insurance Co. Inc.; The Imperial Insurance Co. Inc.; and, First Quezon City Insurance Co. Inc.

Incidentally, the IC had earlier liquidated Worldwide Insurance & Surety Co. Inc.

Based on data gathered, First Quezon City Insurance Co. had a capital impairment and margin of solvency deficiency of P10.3 million. Capital impairment and margin of solvency deficiency simply means the insurer does not have sufficient funds to cover possible claims.

Formerly known as Tabacalera Insurance Co., TICO Insurance Co. Inc. is reportedly controlled by the Wellex Group Inc., which in turn is owned by plastic king William Gatchalian.

In November 2000, the commission issued a cease-and-desist order (CDO) on TICO after it failed to cover up its capital impairment and margin of solvency worth nearly P50 million as well as failing to report its financial status in 2000.

IC issued the CDO for capital impairment worth P115.6 million, and margin of insolvency worth P115.2 million.

Earlier, the IC also issued CDOs for four non-life insurers for failure to meet the minimum paid-up capital requirement.

The IC said that putting inefficient insurers under receivership or for liquidation protects the insuring public from inconvenience or losses while allowing the efficient and reliable insurers to continue operations unhampered.

Strict compliance of regulations, including the new minimum paid-up capital requirement of P50-million, should lead to further consolidation of the industry, they said.

In the life insurance sector, there had been a number of acquisitions as it likewise underwent consolidation.

Canadian insurer Manufacturers Life Insurance Company Philippines Inc. (Manulife Philippines) acquired the Philippine operations of CMG Life Insurance Co. Inc. (CMG Life). Manulife Phils. ranked fifth among the life insurance companies in the Philippines last year while CMG Life placed 11th overall.

Early this year, Manulife Phils. acquired the life insurance policies in force of defunct US-based Metlife Insurance Company of the Philippines (Metlife Philippines).

At the end of 2001, a total of 42 life insurance companies were operating. However, this was reduced to 38 this year after a number of mergers and acquisitions.