Article 51p. 51

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

payment of obligations thereunder if such funds are held

subject to withdrawal by, and under the control of, the

ceding insurer. The Commissioner may prescribe the

conditions under which a ceding insurer may be allowed

credit, as an asset or as a deduction from loss and

unearned premium reserves, for reinsurance recoverable

from an insurer not authorized in this country but which

presents

satisfactory

evidence

that

it

meets

the

applicable standards of solvency required in this country.

(g) Funds withheld by a ceding insurer under a

reinsurance treaty, provided reserves for unpaid losses

and unearned premiums are adequately provided.

(h)

Deposits

or

amounts

recoverable

from

underwriting associations, syndicates and reinsurance

funds, or from any suspended banking institution, to the

extent deemed by the Commissioner to be available for

the payment of losses and claims and values to be

determined by him.

(i) Electronic data processing machines, as may be

authorized by the Commissioner to be acquired by the

insurance company concerned, the acquisition cost of

which to be amortized in equal annual amounts within a

period of five (5) years from the date of acquisition

thereof.

(j)

Investments

in

mutual

funds,

real

estate

investment trusts, salary loans, unit investment trust

funds

and

special

deposit

accounts,

subject to the

conditions as may be provided for by the Commissioner.

(k) Other assets, not inconsistent with the provisions

of paragraphs (a) to (j) hereof, which are deemed by the

Commissioner to be readily realizable and available for

the

payment

of

losses

and claims at values to be

determined by him in a circular, rule or regulation.

SECTION 203. In addition to such assets as the

Commissioner may from time to time determine to be

non-admitted

assets

of

insurance

companies

doing

business in the Philippines, the following assets shall in

no case be allowed as admitted assets of an insurance

company

doing

business

in

the

Philippines, in any

determination of its financial condition:

(a) Goodwill, trade names, and other like intangible

assets.

(b) Prepaid or deferred charges for expenses and

commissions paid by such insurance company.

(c) Advances to officers (other than policy loans),

which are not adequately secured and which are not

previously authorized by the Commissioner, as well as

advances to employees, agents, and other persons on

mere personal security.

(d)

Shares

of stock of such insurance company,

owned by it, or any equity therein as well as loans secured

thereby, or any proportionate interest in such shares of

stock through the ownership by such insurance company

of an interest in another corporation or business unit.

(e) Furniture, furnishing, fixtures, safes, equipment,

library, stationery, literature, and supplies.

(f) Items of bank credits representing checks, drafts or

notes returned unpaid after the date of statement.

(g) The amount, if any, by which the aggregate value

of investments as carried in the ledger assets of such

insurance company exceeds the aggregate value thereof

as determined in accordance with the provisions of this

Code and/or the rules of the Commissioner.

All

non-admitted

assets

and

all

other

assets of

doubtful

value

or

character

included

as

ledger

or

non-ledger assets in any statement submitted by an

insurance company to the Commissioner, or in any

insurance examiner's report to him, shall also be reported,

to the extent of the value disallowed as deductions from

the gross assets of such insurance company, except

where the Commissioner permits a reserve to be carried

among the liabilities of such insurance company in lieu of

any such deduction.

TITLE 4 Investments

SECTION 204. A life insurance company may lend to

any of its policyholders upon the security of the value of

its policy such sum as may be determined pursuant to

the provisions of the policy.

No insurance company shall loan any of its money or

deposits to any person, corporation or association, except

upon the security of any of the following:

(a) First mortgage or deeds of trust of registered,

unencumbered, improved or unimproved real estate,

including condominiums;

(b) First mortgages or deeds of trust of actually

cultivated,

improved

and

unencumbered

agricultural

lands in the Philippines;

(c)

Purchase

money

mortgages,

lease

purchase

agreements or similar securities executed or received by

it on account of the sale or exchange of real property

acquired pursuant to Sections 206 and 208;

(d)

Bonds

or other instruments of indebtedness

issued

or

guaranteed

by

the

Government

of

the

Philippines or its political subdivisions authorized by law

to incur such obligations or issue such guarantees or of

government-owned

or

-controlled

corporations

and

instrumentalities

including

the

Bangko

Sentral

ng

Pilipinas; or

(e) Obligations issued or guaranteed by universal

banks,

commercial

banks,

offshore

banking

units,

investment houses or other financial intermediaries duly

registered with the Bangko Sentral ng Pilipinas; or

(f) Obligations issued or guaranteed by foreign banks

or corporations, each of which shall have total net worth

of

at

least

One

hundred

fifty

million

US

dollars

($US150,000,000.00) or such other higher net worth as

may be prescribed by the Insurance Commission, as

shown in their financial statements as of the immediately

preceding fiscal year; or

(g) Assignments of monetary instruments such as

cash

deposits,

deposit

certificates

or

other

similar

instruments

of

universal

banks,

commercial

banks,

investment houses or other financial intermediaries duly

registered with the Bangko Sentral ng Pilipinas; or

(h)

Pledges

of

shares

of

stock,

bonds

or other

instruments of indebtedness specified in Section 209; or

(i) Chattel mortgages over equipment not more than

three (3) years old; and

(j) Such other security as may be approved by the

Commissioner.

The loans provided in the preceding subsection shall

be subject to the following conditions:

(1)

The

amount

of

loan

secured

by

real

estate

mortgage over a non-agricultural land shall not exceed

seventy percent (70%) of its appraised value, and in the

case of a loan secured by a real estate mortgage over an

agricultural land, the amount of loan shall not exceed

forty percent (40%) of its market value: Provided, That, in

no case shall such loan have a maturity period in excess of

twenty-five (25) years;

(2) Unless approved by the Commissioner, no loan

may be granted upon the security of a mortgage on

improved real estate if the improvements thereon do not

belong to the owner of the land, and the owner of the

improvements does not sign the deed of mortgage.

However, if the owner of the land is the Government of

the Philippines or any of its political subdivisions and a

long-term lease has been executed in favor of the owner

of the improvements, the owner of the land need not be a

party to the deed of mortgage. The expiration date of the

lease shall not, however, precede the maturity of the loan.

The phrase 'improved real estate' as used herein shall

mean land with permanent building or buildings erected

thereon;

© Compiled by RGL

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