Filinvest Development Corp. (FDC) plans to establish a captive insurance company in the Cayman Islands that would provide insurance coverage for businesses across the Filinvest Group, pending regulatory approval.

In a disclosure to the Philippine Stock Exchange on Wednesday, the Gotianun-led conglomerate said its board of directors had approved expanding the business activities of its wholly owned subsidiary, Filinvest Development Cayman Islands (FDCI), to include captive insurance operations.

A captive insurer is an insurance company formed to cover the risks faced by its parent company and affiliated businesses, rather than primarily selling policies to outside customers. The structure is widely used by corporate groups to keep premium payments and underwriting results within the organization while tailoring coverage to their own risk profiles, and the Cayman Islands ranks among the leading international domiciles for such entities.

“This change is subject to completion of regulatory filings and approval, including licensing by the Cayman Islands Monetary Authority (CIMA),” FDC said.

According to the company, the proposed arrangement is intended to strengthen its risk management capabilities, particularly in identifying potential exposures, preventing losses, and securing insurance coverage for its power business.

Under the proposed structure, the group would meet its insurance requirements through a combination of risks retained by its businesses, coverage purchased from commercial insurers, and insurance provided by its captive insurer. The setup would allow FDC to manage its overall risk costs, although the group would remain financially exposed to losses covered by the captive entity.

FDC’s board also authorized management to undertake the necessary steps to establish and implement the proposed insurance operations.

The company did not disclose the planned capitalization of the captive insurer, the amount of insurance coverage it would provide, or a timetable for securing regulatory approval. Further disclosure of those details, along with progress on the CIMA licensing process, will be the key points to watch as the plan advances.

FDC shares closed unchanged at P3.81 apiece at the local bourse on Wednesday.

Source: BusinessWorld, reporting by Alexandria Grace C. Magno — Original article