Five non-life insurance firms are set to merge before year-end due to their inability to meet the higher paid-up capital requirements of the Insurance Commission (IC), a highly placed industry source said.
The source named two of the companies involved in merger discussions as Stronghold Insurance Co. and Milestone Guaranty and Assurance Corp.
“[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, and already submitted documents to the IC; now they are in talks with Premiere and Country Bankers, which also wanted to sell the whole life and non-life business. They are already talking,” the source added.
The source said the merger is meant to help the named non-life players to reach the minimum capital stock of P550 million imposed by the IC.
Regulators earlier issued a circular letter to clarify the minimum capital, net worth, and additional requirements for all insurers in the country in compliance with Republic Act 10607 or the Amended Insurance Code.
According to the IC’s guidelines, life 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 further increase to P900 million in 2019, and P1.3 billion by the end of 2022.
The IC earlier announced possible mergers of several firms because there are a number of insurance players who are still below the paid-up capital.
The regulator then said that five to eight companies expressed interest in mergers or acquisitions, but to date the IC is still waiting for official papers from the insurers.