THE non-life insurance firm Armed Forces and Police General Insurance Corp. (AFPGen) has voluntarily surrendered its license as the company could no longer raise the net worth required by the Insurance Commission (IC) by the end of the year, the commission announced on Tuesday.
“While the company’s net worth as of end 2018 is compliant with the existing P550- million net worth requirement, the company said that it is no longer viable to maintain its insurance business considering that its financial health continuously eroded in the last six years,” Insurance Commissioner Dennis Funa said in a statement.
Under the amended Insurance Code, existing insurance companies need to have a net worth of at least P900 million and P1.3 billion by 2022.
Citing its existing rules, the IC said withdrawal and cessation of AFPGen would only be approved once found the company has settled all its outstanding liabilities to its policyholders and creditors.
Funa added that an overseer has been appointed to determine and monitor the company’s compliance to ensure that its outstanding liabilities to its policyholders are addressed.
He also clarified that all existing policies issued by AFPGen before the surrender of its license were still valid, existing and binding.
“Now as a servicing insurance company, AFPGen’s operation is limited to servicing its existing policyholders. All insurance contracts and policies issued by AFPGen shall remain to be valid, and AFPGen is required to fulfill its obligation under these contracts,” the IC chief said.
The IC also said AFPGen has issued 65,568 non-life insurance policies as of end 2018. The bulk of the policies issued are insurance for migrant workers and motor cars, which is equivalent to 46 percent and 33 percent, respectively, of the total insurance policies issued by the company.
As a servicing insurance firm, AFPGen is now prohibited from entering into new insurance contracts, and the licenses granted to its agents are considered revoked, the IC stressed.
AFPGen was established in 1977 to cater to non-life insurance needs of the country’s military and police organization. It was incorporated in 1979 as an independent entity wholly-owned by Armed Forces and Police Mutual Benefit Association Inc.