The Insurance Commission on Tuesday approved the sale of National Life Insurance Corporation of the Philippines to 6762 Holdings Corp. of businessmen Ricardo Cuerva and Ricardo Veloso for P1.05 billion.
The IC said the sale of the insurance company included 1,500 common shares, premium deposit fund, retirement fund, advances from shareholders and related parties, and deposit for the future subscription account of NLIC.
The stocks and liabilities amounting to P2.648 billion fetched a price of P1.054 billion, or a net recovery rate of 35 percent to 40 percent, which could have realized a net liquidation value of just 7 percent, the IC said.
The insurance regulator said it gave NLIC and potential investors enough time to conduct a due diligence of the company.
The rehabilitation plan suggested by the IC-appointed conservator Ermilando Napa and NLIC policyholders included a possible entry of an investor to provide a better option to all affected parties.
6762 Holdings under a sale and purchase agreement signed on May 6 will incorporate a new company to be called Rehabilitated NLIC.
The new company will be allowed to use the corporate name National Life Insurance Company of the Philippines and required to comply with the statutory networth requirements applicable to insurance firms.
The IC recently increased the required minimum paid-up capital of insurance industry companies from P250 million in 2013 to P550 million by the end of this year. The minimum capital is to be further raised to P900 million in 2019 and P1.3 billion by the end of 2022.
“With the execution of the sale and purchase Agreement, we take a major step toward concluding the successful life insurer rehabilitation in the Philippine insurance industry,” Insurance Commissioner Emmanuel Dooc said.
“The Insurance Commission and parties representing various interests have worked together in an unprecedented way starting from the formulation and several modifications of rehabilitation plan until its implementation. I am satisfied that this transaction will enable us to complete the rehabilitation in a very positive fashion taking into primary consideration the best interest of the NLIC’s policyholders,” Dooc added.
The IC placed NLIC under conservatorship in 2006 after accumulated losses eroded its margin of solvency—a measure of ability to pay obligations as they fall due.
The company received a temporary license to operate but was placed under conservatorship again in 2010 and eventually under receivership in 2011.