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WHEREAS, Section 437 of Republic Act No. 10607, also known as the Amended Insurance Code, provides that the Insurance Commissioner may issue such rulings, instructions, circulars, orders and decisions as may be deemed necessary to secure the enforcement  of the provisions of said Code, to ensure the efficient regulation of the insurance industry and other regulated entities in accordance with global best practices and to protect the insuring public;

WHEREAS,  in  the  exercise  of  such  power,  the  Insurance  Commissioner issued  Circular  Letter  No.  2015-11  dated  18  March  2015,  which  provides  for “Rules and Regulations on Consolidation and Merger of Insurance Companies”;

WHEREAS, this Commission notes that existing insurance companies have resorted to mergers and consolidation as a way of complying with the increasing in statutory net worth requirements under the Amended Insurance Code;

WHEREAS, the pendency of the merger and consolidation process under Circular  Letter  No.  2015-11  dated  18  March  2015  does  not  suspend  the continuing  requirement  of  a  Certificate  of  Authority  under  Section  193  of  the same Code; and said Certificate is required in order for the merging and consolidating companies to be able to transact insurance business during such pendency;

NOW, THEREFORE, the following rules and regulations concerning the licensing requirements for domestic insurance companies doing business in the Philippines  pending  the  merger  and  consolidation  process  are  hereby promulgated as and by way of supplement to the provisions of Circular Letter No.
2015-11 dated 18 March 2015:

1.     Licensing      Requirements      During     Pendency      of     Merger     and Consolidation.  - From the notification of the intent to merge or consolidate until such time that the existing Certificates of Authority of the concerned domestic insurance companies are surrendered pursuant to Section 13 of Circular Letter No. 2015-11 dated 18 March 2015, the concerned companies shall maintain their respective Certificates of Authority in order to be able to transact insurance business during the pendency of the merger and consolidation process.

If either of the concerned merging or consolidating companies is found to be non-compliant with the statutory net worth requirements under the Amended Insurance Code of the Philippines during the pendency of the merger and consolidation   process,   said  company   shall  be  deemed   as  a  servicing company and its license shall be converted into a Servicing License under pertinent rules and regulations issued by this Commission, if applicable.

If both of the concerned merging or consolidating companies are found to be non-compliant with the statutory net worth requirements under the Amended Insurance Code of the Philippines during the pendency of the merger and consolidation   process,   both   companies   shall   be  deemed   as  servicing companies and its licenses shall be converted into Servicing Licenses, respectively,  under  pertinent  rules  and  regulations  issued  by  this Commission, if applicable.

This is without prejudice to any and all other regulatory actions that this Commission may take by reason of the companies’ non-compliance  with the statutory net worth requirements during the pendency of the merger and consolidation process, if warranted; such as, but not limited to, the issuance of cease and desist orders and/or placement of the concerned company/ies under conservatorship.

This Circular Letter shall take effect immediately. For your information and guidance.