The former insurer of assets of the Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP) has surrendered its license as it could no longer operate as a non-life insurance firm due to lack of additional capital, the Insurance Commission said.
In a statement on Tuesday, Oct. 8, Insurance Commissioner Dennis B. Funa said Armed Forces and Police General Insurance Corp. (AFPGen) not only voluntarily ceased its operations but also applied for a servicing license.
Funa said AFPGen admitted that it will be “unable to meet the minimum net worth requirement mandated by the Insurance Code by the end of the year.”
Funa said although AFPGen’s net worth by end of 2018 was “compliant” with the minimum requirement of P500 million the company admitted “it is no longer viable to maintain its insurance business considering that its financial health continuously eroded in the last six years.”
The Amended Insurance Code mandated the increase in all insurers’ minimum net worth to P900 million by end-2019, and a further jump to P1.3 billion in 2022.
Funa said that all of the policies earlier issued by AFPGen were still “valid, existing and binding.”
As a servicing company, AFPGen operations would be limited to servicing existing policy holders.
Funa said an “overseer” has been named to ensure that all outstanding liabilities to policy holders “are addressed.”
AFPGen would now be prohibited from entering into new insurance contracts, said Funa.
According to the commission, AFPGen used to cater to non-life insurance policies of the AFP and PNP. In 2014, however, it was prohibited by the Commission on Audit from continuing its transactions with the military and police as the Government Service Insurance System was the rightful insurer of the uniformed services./TSB