CICI may lose license due to capital deficiency

The CICI General Insurance Corp., a Filipino-owned non-life insurance company, stands to lose its license if its fails to fill a capital deficiency of P59.426 million by the end of the month.

CICI General Insurance is a subsidiary of Westmont Investment Corp. (Wincorp), which was established by former Finance Secretary Edgardo B. Espiritu. The non-life insurance company had a net worth of P90 million in 1999.

At the start of 2000, however, it had a capital impairment and margin of solvency deficiency of P59,426-million prompting the Insurance Commission (IC) not to renew its license.

IC officials said failure to meet the deadline could result to a suspension of all operations in which all existing policies may be transferred or auctioned off to other healthy nonlife insurance companies.

Without a license, CICI is not allowed to solicit new policies although it is required to continue servicing its existing policies until maturity. The Wincorp subsidiary sells non-life insurance policies in such areas as marine cargo, fire, typhoon, aviation, and marine hull.

Industry sources told The STAR that the capital impairment was a result of the withdrawal of some P60 million by Wincorp from CICI in the first quarter of 2000. Wincorp then was headed by Espiritu’s son John Anthony.

However, Wincorp could not return CICI’s capital leading to a deficiency which coincided with the IC’s standard inspection. To cover up these deficiencies and to stave off suspension, Wincorp pledged its various time deposits amounting to P61.130 million. It was however rejected by the IC as it turned out these time deposits had either matured or CICI could not show proof of their existence.

In April, the IC order CICI president and chief executive officer Edwin B. Celino to cover its "capital impairment and margin of solvency deficiency in the total amount of P59,426,844.26 in cash in accordance with Section 194 of the Insurance Code."

After a series of meetings, Wincorp and CICI offered to condominiums allegedly worth nearly P70 million. These properties were dacion en pago payments for default accounts of CICI. One is owned by ACL Development Corp. located in Binondo while the other is in Gil Puyat, Makati.

Government sources said CICI is actually doing well in the industry but that the problem is its parent company. It ranked 67th overall out of 114 non-life insurance companies in the country. It registered a gross premium income of P54.2-million last year.