Nat’l Life mulls two rehab proposals

MANILA, Philippines - The fate of National Life Insurance Co. (NLIC) is now in the hands of policyholders and premium deposit fund (PDF) owners, who have to choose between two “rehabilitation” plans.

A fourth version of its rehabilitation plan has been submitted to the Insurance Commission (IC) while a group of agents, policyholders and PDF owners presented an alternative plan.

NLIC is asking for an extension from the May 1 deadline set by the IC to present an investor that would infuse capital to address the troubled life insurer’s deficiency in its margin of solvency amounting to P2.1 billion.

IC Commissioner Emmanuel F. Dooc said he was inclined to grant the new extension since both parties were asking for one, although with varying conditions. 

However, there are still several challenges in making the new extension productive, since it is now a tug-of-war for the approval of the policyholders, agents and PDF owners.

The NLIC rehabilitation plan calls for the conversion of the policies and PDFs into equity, thus making the same part owners. It also retains the present ownership although this would reduce their equity stake to 15 percent.

The alternative plan places the insurer under receivership, which allows policyholders and PDF holders an option to remit investments. A state of receivership allows the sale of the insurer to a “credible investor.”

Dooc said any regulatory decision will be hinged on the majority sentiments of the policyholders and PDF owners. “After all, that is the mandate of the IC, to make sure that our decisions favor the majority of the insuring public.”

But the “majority” may be another issue with the future of NLIC. There are over 9,000 policyholders, roughly 500 are PDF owners, and the rest are traditional protection insurance policyholders. The combined value of the PDFs is worth P2.2 billion.

NLIC has been in and out of a state of conservatorship since 2008, and it could be the first life insurance company in the Philippines that would face liquidation.