Article 50p. 50

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

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.

SECTION

198.

The

Commissioner

shall

hold

the

securities,

deposited as required in the immediately

preceding section, for the benefit and security of all the

policyholders and creditors of the company depositing

the same: Provided, That the Commissioner may as long

as the company is solvent, permit the company to collect

the interest or dividends on the securities so deposited,

and, from time to time, with his assent, to withdraw any

of

such

securities,

upon

depositing

with

said

Commissioner other like securities, the market value of

which shall be equal to the market value of such as may

be withdrawn. In the event of any company ceasing to do

business in the Philippines, the securities deposited as

aforesaid shall be returned to the company upon the

Commissioner's

written

approval

and

only

after the

company has duly proven in its application therefor that it

has no further liability whatsoever under any of its

policies nor to any of its creditors in the Philippines.

SECTION 199. Every foreign company doing business

in

the

Philippines

shall

set

aside

an

amount

corresponding to the legal reserves of the policies written

in the Philippines and invest and keep the same therein

in accordance with the provisions of this section. The

legal reserve therein required to be set aside shall be

invested

only

in

the

classes of Philippine securities

described in Section 206: Provided, however , That no

investment in stocks or bonds of any single entity shall, in

the aggregate exceed twenty percent (20%) of the net

worth of the investing company or twenty percent (20%)

of the capital of the issuing company, whichever is the

lesser,

unless

otherwise

approved in writing by the

Commissioner. The securities purchased and kept in the

Philippines under this section, shall not be sent out of the

territorial

jurisdiction

of

the

Philippines without the

written consent of the Commissioner.

TITLE 2 Solvency

SECTION 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.

SECTION 201. No domestic insurance corporation

shall declare or distribute any dividend on its outstanding

stocks unless it has met the minimum paid-up capital

and net worth requirements under Section 194 and

except from profits attested in a sworn statement to the

Commissioner

by

the

president

or

treasurer

of the

corporation to be remaining on hand after retaining

unimpaired:

(a) The entire paid-up capital stock,

(b) The solvency requirements defined by Section

200;

(c) In the case of life insurance corporations, the legal

reserve fund required by Section 217;

(d) In the case of corporations other than life, the

legal reserve fund required by Section 219; and

(e) A sum sufficient to pay all net losses reported, or in

the course of settlement, and all liabilities for expenses

and taxes.

Any

dividend

declared

or

distributed

under the

preceding

paragraph

shall

be

reported

to

the

Commissioner

within

thirty

(30)

days

after

such

declaration or distribution.

If the Commissioner finds that any such corporation

has declared or distributed any such dividend in violation

of this section, he may order such corporation to cease

and desist from doing business until the amount of such

dividend or the portion thereof in excess of the amount

allowed under this section has been restored to said

corporation.

The

Commissioner

shall

prescribe

solvency

requirements

for

branches

of

foreign

insurance

companies operating in the Philippines.

TITLE 3 Assets

SECTION 202. In any determination of the financial

condition of any insurance company doing business in

the Philippines, there shall be allowed and admitted as

assets only such assets legally or beneficially owned by

the insurance company concerned as determined by the

Commissioner which consist of:

(a) Cash in the possession of the insurance company

or in transit under its control, and the true and duly

verified balance of any deposit of such company in a

financially sound bank or trust company duly authorized

by the Bangko Sentral ng Pilipinas.

(b) Investments in securities, including money market

instruments, and in real property acquired or held in

accordance with and subject to the applicable provisions

of this Code and the income realized therefrom or

accrued thereon.

(c)

Loans

granted

by

the

insurance

company

concerned

to

the

extent

of

that

portion

thereof

adequately

secured

by

non-speculative

assets

with

readily realizable values in accordance with and subject to

the limitations imposed by applicable provisions of this

Code.

(d) Policy loans and other policy assets and liens on

policies,

contracts

or

certificates

of

a life insurance

company, in an amount not exceeding legal reserves and

other policy liabilities carried on each individual life

insurance policy, contract or certificate.

(e) The net amount of uncollected and deferred

premiums and annuity considerations in the case of a life

insurance company which carries the full mean tabular

reserve liability.

(f) Reinsurance recoverable by the ceding insurer:

(1) From an insurer authorized to transact business in

this country, the full amount thereof; or

(2) From an insurer not authorized in this country, in

an amount not exceeding the liabilities carried by the

ceding insurer for amounts withheld under a reinsurance

treaty with such unauthorized insurer as security for the

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