State run Government Service Insurance System (GSIS) now requires a minimum credit rating of B+ for reinsurers interested in taking part in the pension fund's tender exercise for reinsurance contracts.
“We needed to have a clearer perspective about credit risk because GSIS cedes part of its general insurance business to minimise exposure to risks. Thus, it is vital to set a minimum credit rating as a requirement for potential bidders of reinsurance contracts. In this way, we are confident that our reinsurers can meet their financial obligations when they fall due,” GSIS president and general manager Jesus Clint O. Aranas said.
“Our reinsurance contracts undergo public bidding. This is to ensure that that all potential reinsurers, whether local or foreign, have access to a fair and transparent bidding process. The General Insurance Bidding and Awards Committee (GIBAC) ensures that reinsurance accounts for bidding strictly adhere to the requirements for an open and competitive procurement process,“ Mr Aranas added.
To be eligible, potential bidders are now required to submit a certified true copy of proof of their latest Credit Rating of at least B+ issued by A.M. Best. In case of facultative reinsurance for the portion in excess of its treaty facility, the bidders have to furnish a notarised certification indicating the list of securities/panel of reinsurers and their respective shares. The securities/panel of reinsurers, foreign or domestic, should be rated at least “A” by A.M. Best. The foreign securities/panel of reinsurers must be duly authorised to transact reinsurance business in the Philippines through their appointed resident agent.
GSIS is a social insurance institution that provides a defined benefit scheme under the law. Members are entitled to an array of social security benefits, such as life insurance benefits, separation or retirement benefits, and disability benefits. Under the law, GSIS is also the sole administrator of the Property Insurance Fund, which was established to indemnify or compensate state run agencies or offices for any damage to or loss of their properties due to fire, natural catastrophes, or other risks.