By Chino S. Leyco The Insurance Commission (IC) ordered the closure of five non-life insurance companies and placed them under conservatorship for failure to meet the statutory capital requirement. In a statement, the commission said that it has put First Integrated Bonding & Insurance Co., Inc., Investors Assurance Corp., Metropolitan Insurance Co., Inc., Plaridel Surety & Insurance Co., and Premier Insurance & Surety Corp. under conservatorship. Insurance Commissioner Dennis B. Funa said the regulatory action to close down these companies is due to inability of the insurance firms to comply with the statutory minimum net worth requirement. Funa said the companies were ordered to cease from issuing new and renewing any kind or character of insurance business and were placed under conservatorship after the IC’s verification that they failed to comply with mandated increase in net worth requirement of P550 million. “These companies are not operating on net losses. Based on the respective 2016 annual statements of these companies, all have positive net worth but short of the minimum amount required under the Insurance Code,” Funa said. As a result, Funa appointed a conservator for each of these companies who are mandated to take charge of the management of the company and its assets and liabilities. “The process of placing a company under conservatorship is primarily aimed at restoring the viability of the company and allows the Commission, through the appointed conservator, to become more directly involved in the management of the company,” Funa said. A conservator is empowered by law to exercise all powers necessary to preserve the assets of the company, Funa said. Under the regime of conservatorship, the operations of the company will be business as usual under the management of the IC-appointed conservatorship, including the processing of claims and payment of valid claims, except that it cannot sell new insurance business. This means all insurance contracts issued before the conservatorship order remain valid and the obligation of the company towards its policyholders still exists until the expiration of their policies. Funa clarified that the placing of these companies does not necessarily mean that they will close shop. He explained the purpose of placing a company under conservatorship is to preserve the going concern value of the company returning it to health or ultimately resulting in a receivership. “There are several routes that may result in the lifting of the conservatorship order including entering in a merger or consolidation with an existing insurer or a purchase and assumption agreement with an investor,” Funa said. “This does not also prevent the company from infusing fresh capital either from its existing shareholders or from a new investor in order to meet the minimum net worth requirement,” he added. Earlier, six non-life insurers were also issued with individual Servicing Licenses as a consequence of the voluntary surrender of their licenses due to their inability to comply with the P550-million minimum net worth requirement.