|
TO help raise their capitalization requirements,
three locally based insurance companies have expressed their
intention to go public this year, the Insurance Commission said on
Tuesday.
On the sidelines of the
Philippine Life Insurance Association Inc. (PLIA) event, IC
Commissioner Evangeline Escobillo said three insurance companies
have indicated their interest in an initial public offering this
year with the encouragement of the commission.
Escobillo said “the market now
[is] very prolific” and although an IPO takes at least six months
to accomplish, she added that the companies are encouraged because
“that’s another way to raise capitalization.”
The three companies, however,
have not yet submitted their respective applications but the
commissioner reiterated they are “serious” about their plan.
Escobillo also announced two
possible mergers in the industry, one may take place in the first
quarter and the other will be announced within the first half this
year.
She said more mergers and public
offerings in the industry are in the cards as the Department of
Finance has mandated the insurance companies to raise their
capitalization. “We imagine that more nonlife would have to
consolidate or merge,” Escobillo said.
Besides boosting the financial
position of the company, she said mergers would also strengthen the
infrastructure, technology and business processes of the newly
merged company.
According to Escobillo, if 80
percent of the industry would be able to reach the risk-based
capitalization (RBC) ratio of 150 percent then the increase in
capitalization would be suspended for the next year. “But if the
compliance is less than 80 percent of the industry, the players will
get 150 percent and over then that means everybody has to move its
capitalization to 150 percent in December of 2007,” she explained.
The commission issued the first
directive that requires insurance companies to raise the
capitalization by P100 million every year until it reaches P500
million by 2010. The second directive requiers them to maintain an
amount of capital depending on the amount of risks they carry.
--Likha C. Cuevas
|
