In early January the Ministry of Planning and Finance (“MOPF”) issued Announcement 1/2019 through which foreign companies were permitted “to operate the business of insurance, underwriting agency or insurance broking with foreign investment” in Myanmar.
Further to this announcement, the Financial Regulatory Department (“FRD”) has now published an Request for Proposal (“RFP”) for 100% foreign life insurance and Expression of Interest (“EOI”) letters for life and non-life insurance joint ventures (“JVs”). The respective EOIs invite local life/non-life insurers (applicants) that are interested in forming JVs with foreign partners to apply to the FRD. The EOIs also mention that the foreign JV partner is required to have a local representative office registered for life/non-life/composite insurance activities as of 31 December 2018 to be eligible to form a JV with local life/non-life insurers.
As per the EOIs, necessary information must be submitted and the forms must be duly completed by the applicant. Details include the applicant’s basic information, business activities of the foreign JV and its group, and level of equity contribution by the foreign JV partner. It must also be stated whether the JV foreign partner is individually able to meet existing capital requirements of MMK 40 billion (for non-life insurance) and MMK 6 billion (for life insurance) under the Insurance Business Law (“IBL”). The application also must come accompanied with a certified true copy of the license issued by the relevant insurance supervisory authority in the foreign JV partner’s country and audited financial statements for the last three years of the foreign JV partner and its group.
The EOI specifies that the MOPF permits one local life/non-life insurer to partner exclusively with one foreign life/non-life/ composite insurer JV partner, and vice versa. Both the applicant and foreign JV partner (if identified) are permitted to respond to only one Invitation and to participate in only one EOI at any given time.
Of particular importance is that the maximum permitted shareholding for foreign insurers in each JV is capped at 35%.
The submission of completed forms as per the EOIs must be made by 26 April 2019 and the shortlisted applicants will be announced on 17 May 2019.
The RFP for 100% foreign life insurance licenses that was also published specifies that the applicant must intend to set-up a 100% wholly-owned life insurance subsidiary in Myanmar to qualify as an applicant under the RFP. The applicants may be foreign life/composite insurers with or without an existing representative office registered for life insurance activities in Myanmar. They still need to meet the minimum capital requirement of MMK 6 billion pursuant to the IBL. In line with the RFP, certain details need to be provided by the applicant. These include: filling out the application form, providing all necessary information of the authorized contact person, issuing a proposal bond in favor of the FRD, providing a statement of deviation from stipulations of the RFP, issuing a capital commitment letter, a statement on whether the applicant has received necessary approvals from its home jurisdiction, financial position, business volume, staff projections, and financial projections.
The RFP submission deadline is 1 March 2019. The FRD will thereafter announce the shortlisted applicants. The FRD may additionally consider giving an option to unsuccessful RFP applications to form a joint – venture with a local insurer through an EOI.
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This article is written by DFDL Lawyers.
This article was first published on the DFDL website.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.