Purisima stands pat on hiking minimum capital for insurers

MANILA, Philippines - Finance Secretary Cesar Purisima reiterated yesterday government’s position that it will increase the minimum capital requirement for insurance companies.

“The P175 million minimum paid-up capital required on insurance companies is very small when compared to the (Asia Pacific) region,” Purisima said on the sidelines of the formal opening of the Sun Life Center at The Fort.

The finance secretary was referring to the lifting of all trade and tariff barriers under the Association of Southeast Asian Nations (ASEAN) Free Trade Agreement (AFTA) by 2015.

AFTA is a regional integration effort by ASEAN member countries, which signed an agreement in 1992 to enhance economic cooperation. The accord covers Brunei, Indonesia, Malaysia, Thailand, Singapore, Myanmar, Laos, Cambodia, Vietnam and the Philippines.

In effect, it may result in the unhampered entry of regional players in the insurance industry, which are both superior in both capital, resources and products.

The present minimum paid-up capital requirement covering the period 2010 is P125 million and will increase to P175 million. By 2015, the minimum paid-up capital for life and non-life insurance should amount to P250 million.

There are 120 insurance companies, 34 life and another 86 non-life insurance companies, including one re-insurer.

Meanwhile, Sun Life Financial Philippines reported a 34 percent increase in first year premiums in the first quarter of 2011 to P3 billion. The life insurance company reported consolidated assets of P140 billion, including its asset management unit.

At the end of 2010, Sun Life Financial reported P10.6 billion in total premiums, the second biggest in the industry..

Sun Life Financial also entered into a bancassurance agreement with Rizal Commercial Banking Corp. (RCBC) in February. That will allow Sun Life Financial to market its life insurance policies within the branch network of the commercial bank of the Yuchengco Group of Companies.

The 14-story Sun Life Centre is classified as a green building, or one that applies environment-friendly technology such as energy savings, water efficiency, carbon emission reductions, improved indoor environmental quality, stewardship of resources and education on sustainability practices.

It will provide a five-level basement parking with a 25,000 square meter gross floor area; 1,800 square meters typical gross floor plate; double-glazed glass window system; vehicle drop – off facility 100-percent back-up power; automated security system and a building management system.