SEC. 194.

188 Except as provided in Section 289, no new domestic life or

non-life insurance company shall, in a stock corporation, engage in business
in the Philippines unless possessed of a paid-up capital equal to at least One
billion pesos (P1,000,000,000.00): Provided, That a domestic insurance
company already doing business in the Philippines shall have a net worth by
June 30, 2013 of Two hundred fifty million pesos (P250,000,000.00).
Furthermore, said company must have by December 31, 2016, an additional
Three hundred million pesos (P300,000,000.00) in net worth; by December
31, 2019, an additional Three hundred fifty million pesos (P350,000,000.00)
in net worth; and by December 31, 2022, an additional Four hundred million
pesos (P400,000,000.00) in net worth.

The Commissioner may, as a pre-licensing requirement of a new insurance

company, in addition to the paid-up capital stock, require the stockholders to
pay in cash to the company in proportion to their subscription interests a
contributed surplus fund of not less than One hundred million pesos
(P100,000,000.00). He may also require such company to submit to him a
business plan showing the companys estimated receipts and disbursements,
as well as the basis therefor, for the next succeeding three (3) years.

If organized as a mutual company, in lieu of such net worth, it must have

available total members equity in an amount to be determined by the
Insurance Commission above all liabilities for losses reported; expenses,
taxes, legal reserve, and reinsurance of all outstanding risks, and the
contributed surplus fund equal to the amounts required of stock
corporations. A stock insurance company doing business in the Philippines
may, subject to the pertinent law and regulation which now or hereafter may
be in force, alter its organization and transform itself into a mutual insurance
company.

The Secretary of Finance may, upon recommendation of the Commissioner,

increase such minimum paid-up capital stock or cash assets requirement
under such terms and conditions as he may impose, to an amount which, in
his opinion, would reasonably assure the safety of the interests of the
policyholders and the public. The minimum paid-up capital and net worth
requirement must remain unimpaired for the continuance of the license. The
Commissioner may require the adoption of the risk-based capital approach
and other internationally accepted forms of capital framework.

For the purpose of this section, net worth shall consist of:

(a) Paid-up capital;

(b) Retained earnings;

(c) Unimpaired surplus; and

(d) Revaluation of assets as may be approved by the Commissioner.

The Commission may adopt for purposes of compliance with capital build up
requirement under this Code the recognition as part of the capital account,
capital notes or debentures which are subordinate to all credits and senior
only to common capital stocks.

The President of the Philippines may order a periodic review every two (2)
years the capital structure set out above to determine the capital adequacy
of the local insurance industry from and after the integration and
liberalization of the financial services, including insurance, in the ASEAN
Region. For this purpose, a review committee consisting of representatives
from the Department of Finance (DOF), the Insurance Commission (IC), the
National Economic and Development Authority (NEDA), the Securities and
Exchange Commission (SEC) and other agencies which the President may
designate shall conduct the review and may recommend to the President to
adopt for implementation the necessary capital adjustment.

____________________________

SEC. 197. No insurance company organized or existing under the

government or laws other than those of the Philippines shall engage in
business in the Philippines unless possessed of unimpaired capital or assets
and reserve of not less than One billion pesos (P1,000,000,000.00), nor until
it shall have deposited with the Commissioner for the benefit and security of
the policyholders and creditors of such company in the Philippines, securities
satisfactory to the Commissioner consisting of good securities of the
Philippines, including new issues of stock of registered enterprises, as this
term is defined in Executive Order No. 226 of 1987, as amended, to the
actual market value of not less than the amount herein required: Provided,
That at least fifty percent (50%) of such securities shall consist of bonds or
other instruments of debt of the Government of the Philippines, its political
subdivisions and instrumentalities, or of government-owned or -controlled
corporations and entities, including the Bangko Sentral ng
Pilipinas: Provided, further, That the total investment of a foreign insurance
company in any registered enterprise shall not exceed twenty percent (20%)
of the net worth of said foreign insurance company nor twenty percent (20%)
of the capital of the registered enterprise, unless previously authorized in
writing by the Commissioner.

The Commissioner may, as a pre-licensing requirement of a new branch

office of a foreign insurance company, in addition to the required asset or net
worth, require the company to have an additional surplus fund in an amount
to be determined by the Insurance Commission.

For purposes of this Code, the net worth of a foreign insurance company
shall refer only to its net worth in the Philippines.

_____________________

SEC. 200. An insurance company doing business in the Philippines shall at

all times maintain the minimum paid-up capital, and net worth requirements
as prescribed by the Commissioner. Such solvency requirements shall be
based on internationally accepted solvency frameworks and adopted only
after due consultation with the insurance industry associations.

Whenever the aforementioned requirement be found to be less than that

herein required to be maintained, the Commissioner shall forthwith direct the
company to make good any such deficiency by cash, to be contributed by all
stockholders of record in proportion to their respective interests, and paid to
the treasurer of the company, within fifteen (15) days from receipt of the
order: Provided, That the company in the interim shall not be permitted to
take any new risk of any kind or character unless and until it make good any
such deficiency: Provided; further, That a stockholder who aside from paying
the contribution due from him, pays the contribution due from another
stockholder by reason of the failure or refusal of the latter to do so, shall
have a lien on the certificates of stock of the insurance company concerned
appearing in its books in the name of the defaulting stockholder on the date
of default, as well as on any interests or dividends that have accrued or will
accrue to the said certificates of stock, until the corresponding payment or
reimbursement is made by the defaulting stockholder.

_________________________

SEC. 289. Any partnership, association, or corporation authorized to

transact solely reinsurance business must have a capitalization of at least
Three billion pesos (P3,000,000,000.00) paid in cash of which at least fifty
percent (50%) is paid-up and the remaining portion thereof is contributed
surplus, which in no case shall be less than Four hundred million pesos
(P400,000,000.00) or such capitalization as may be determined by the
Secretary of Finance, upon the recommendation of the
Commissioner: Provided, That twenty-five percent (25%) of the paid-up
capital must be invested in securities satisfactory to the Commissioner
consisting of bonds or other instruments of debt of the Government of the
Philippines or its political subdivisions or instrumentalities, or of government-
owned or -controlled corporations and entities, including the Bangko Sentral
ng Pilipinas, and deposited with the Commissioner, and the remaining
seventy-five percent (75%) in such other securities as may be allowed and
permitted by the Commissioner, which securities shall at all times be
maintained free from any lien or encumbrance: Provided, further, That the
aforesaid capital requirement is without prejudice to other requirements to
be imposed under any risk-based capital method that may be adopted by the
Commissioner: Provided, finally, That the provisions of this chapter
applicable to insurance companies shall as far as practicable be likewise
applicable to professional reinsurers.