With a view of enhancing the capital build up program of insurance companies and to provide a new investment option for non-life insurance companies, the Insurance Commission (IC) allows non-life insurance companies to invest in real properties.

 

IC Circular Letter No. 2017-43 provides the guidelines for non-life insurance companies which will invest in income-producing real properties, other than those utilized as their main place of business or offices. 

 

Only non-life insurance companies with a minimum net worth of Five Hundred Fifty Million Pesos (PhP550,000,000.00) may invest in real properties, provided that the aggregate book value of the investments, including the cost of improvement or development, shall not exceed twenty percent (20%) of their net worth. They are also mandated to adopt a comprehensive liquidity risk management framework, duly approved by the Board of Directors, to ensure that they can fund their obligations.

 

IC Circular Letter No. 2017-43 further provides that the real property should be registered in the name of the company. The request for the approval of the investment shall be accompanied by a five (5)-year projected income including assumptions thereof; intended occupants and period or term of stay; copy of the proposed rental or lease contract; photocopy of the Transfer of Certificate of Title and/or Condominium Certificate of Title of the subject property; and relevant Board Resolutions. A quarterly statement of rental income duly certified by the company's internal auditor is also required.

 

The investments of non-life insurance companies in real properties shall be considered as reserve investments.

 

See IC Circular Letter No. 2017-43 here and the IC’s press release here.