Asia

Period to comply with capital requirements extended

Insurance companies in the Philippines have been given one more year to increase their paid up capital to the required levels. The capital increases for non-life, life and reinsurance companies, initially envisaged as taking place over two years, have now been increased to three years. According to the new schedule, life companies, for example, will be required to increase their paid-up capital from P50mn to P150mn by the end of 2005, to P300mn by the end of 2006, and to P600mn by the end of 2007. The Philippine Life Insurance Association (PLIA), however, continues to lobby for more time saying that many of its members will not be in a position to meet the new requirement, even by 2007. But part of the government's plan is for the smaller, under capitalised companies to merge with bigger companies in the market. In 2002, life insurers were required to raise their minimum paid up capital from P10mn to P50mn. Non-life insurers are required to increase their minimum paid-up capital from P50mn to P100mn by the end of 2005, to P200mn by the end of 2006, and to P300mn by the end of 2007 while reinsurers will raise their capital from the currently required P75mn to P350mn by the end of 2005, to P450mn by the end of 2006, and to P900mn by the end of 2007. The minimum capital requirements are higher for companies with foreign equity.