(NAR) VOL. 29 NO. 2/ APRIL - JUNE 18
NOW THEREFORE, by virtue of the powers vested in the undersigned in accordance with Section 437 of the same Code, the following rules and regulations as regards reinsurance of outstanding policies of companies under conservatorship, receivership, or liquidation are hereby prescribed and adopted, viz;
1. In cases of Conservatorship or Receivership. - The duly appointed Conservators and Receivers may opt to reinsure or increase the reinsurance coverage of the outstanding policies issued by the respective insurance companies’ respective financial positions and/or strategic considerations.
Said Conservators and Receivers shall include the proposal to reinsure or increase said reinsurance coverage in their respective Rehabilitation Plans to be submitted for consideration and approval by the Insurance Commissioner.
2. In cases of Liquidation. - All duly appointed Liquidators of insurance companies or MBAs under liquidation are required to reinsure or increase the reinsurance coverage of the companies’ outstanding policies; provided, that, the respective financial circumstances of said companies permit said reinsurance or increase of reinsurance coverage.
Said Liquidators shall include the proposal to reinsure or increase said reinsurance coverage in their respective Liquidation Plans to be submitted for consideration and approval by the Insurance Commissioner.
3. Assumption Reinsurance Agreements. - In the alternative, Conservators, Receivers and Liquidators, representing the companies under conservatorship, receivership, or liquidation, may enter into Assumption Reinsurance Agreements (ARAs) or similar contracts, with reinsurer/s.
Said Conservators, Receivers, or Liquidators shall include the proposal to enter into ARAs or similar contracts in their respective Rehabilitation or Liquidation Plans to be submitted for consideration and approval by the Insurance Commissioner.
No ARA or similar contract shall bind the Conservator, Receiver, or Liquidator; the company under conservatorship, receivership or liquidation and its policyholders; and/or the reinsurers, unless said ARA or similar contract is duly approved by the Insurance Commissioner.
4. Supplemental Guidelines. - This Commission shall issue supplemental guidelines to explain or complement the provisions of this Circular Letter, if later found to be necessary under the circumstances and upon industry consultation.For guidance and strict compliance of concerned parties.
5. Effectivity. - This Circular Letter shall take effect immediately.