GOVERNMENT SERVICE Insurance System (GSIS) is now requiring firms wishing to join the pension fund’s bidding for reinsurance contracts to carry a minimum credit rating of B+.
In a statement, the state pension fund said potential bidders are now required to submit a proof of a credit rating of at least B+ from rating firm A.M. Best.
“[I]t 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 was quoted as saying in the statement.
According to A.M. Best’s Financial Strength Rating guide, a “B” rating is assigned to firms that have “a fair ability to meet their ongoing insurance obligations.”
Aside from this, the securities or panel of reinsurers, whether foreign or local, should be rated at least “A” by A.M. Best. The foreign securities or panel of reinsurers must be authorized to transact in the Philippines through their resident agent.
Mr. Aranas said the pension fund’s reinsurance contracts undergo public bidding to ensure that all potential reinsurance companies have access to fair and transparent bidding process.
Under Republic Act No. 656 or the Property Insurance Law, government units, agencies, commissions and state owned and controlled firms are required to insure their properties with GSIS against an insurable risk and pay the corresponding premiums. — KANV