NLIC rehab plan to ‘equitize’ policies, PDF

MANILA, Philippines - The National Life Insurance Co. (NLIC) is expected to submit this week its official rehabilitation plan to the Insurance Commission (IC) amid demands from agents and policyholders for a public consultation prior to any changes in the insurer’s status.

NLIC is under conservation with the IC, and its present appointed conservator is Emilando Napa.

According to Napa, the rehabilitation program would first make NLIC competitive and profitable before any investor would be officially entertained.

“My optimistic timetable is that it may take two to three years before the company can be attractive to any investor,” he said.

He explained that it was unrealistic to expect an investor to acquire or participate in NLIC with a P2.1-billion deficiency in its margin of solvency.

“An investor can not be expected to put in the money, with the company experiencing a large amount of deficiency and expect the company to be given the authority to operate,” the conservator said, adding that debts amounting to millions of pesos have still to be paid.

The IC had demanded that for it to issue a license to operate, the NLIC must make additional capital infusions as well as identify the so-called investors.

For the meantime, the rehabilitation plan calls for the conversion into equity of all the policies and premium deposit fund (PDF) at a conversion rate of one share for every P1 worth of investment, with each common share valued at P100.

The conversion to equity of all policies and PDF was prompted by the existing P2.1 billion margin of solvency.

The proposed plan also states that some of NLIC assets must be liquefied.

That would make policy- and PDF holders into equity owners of the insurer.

Napa said that a six-member board of directors would be formed composed of three representing the policy and PDF holders, one representing the present owners, two independent directors, and one board chairman to be appointed by the IC.

The plan also seeks the issuance of a certificate of authority (CA) to once again operate. NLIC has been in various stages of conservation since 2006.

“We may have to hire a experienced and reputable insurance executive to assume the presidency of NLIC to ensure its profitability,” the fifth NLIC conservator said. “We can do this on our own.”

The conservator has been given up to May 2013 to implement the rehabilitation program.

More than a thousand policyholders holding some 9,000 policies and PDFs, and roughly 60 agents, will be affected by the rehabilitation or liquidation of NLIC. In fact, it could be the first domestic life insurance company, in recent memory, to be liquidated.