SINGAPORE, Nov 9 (Bernama-BUSINESS WIRE) — AM Best believes local companies in the Philippine insurance industry will still face significant pressure on underwriting growth and profitability amid the ongoing COVID-19 pandemic with the recent rejection of a proposal to relax minimum capital requirements.
A new Best’s Commentary, titled, “Philippine Insurance: Dropped Proposal to Amend Minimum Capital Rule May Have Mixed Impact,” notes that the government has stood firm on the capitalisation requirement, which is to be met by 2022. According to the commentary, the requirement not only prompted capital injections in the market to strengthen the insurers’ capitalisation, but also led to increased merger and acquisition (M&A) activity in Philippines’ highly fragmented insurance market. However, in view of the economic fallout from COVID-19, AM Best notes that there is a possibility that M&A momentum and the impetus to shore up capital positions may falter over the near term.