NO SINGLE domestic insurer can afford to buy Philippine American Life Insurance Co. (Philamlife) and any taker will need the help of a foreign financier, analysts said, unless Manila’s top financial companies opt to expand their own insurance businesses.
And while the country’s conglomerates may have the ready cash to match Philamlife’s P170 billion in assets and net worth of P49.5 billion, the question is whether they would be willing to dip their hands into a non-core business, they added.
Even the Yuchengco Group of Companies, which has launched an offer, may need to find a partner, and an outside one at that, to purchase Philamlife, put up for sale by its parent firm in the US in the wake of a worsening financial crisis.
American International Group, Inc. (AIG) on Friday announced that it would be selling assets, Philamlife included, to repay an $85-billion lifeline extended by the US government. Philamlife, a wholly-owned unit, will be sold with some local affiliates.
Yuchengco group officials declined to comment when asked on the progress of talks following AIG’s announcement. Lorenzo V. Tan, president and CEO of Yuchengco-owned Rizal Commercial Banking Corp. (RCBC) said there was "no word at this time".
Philamlife has eight subsidiaries whose businesses include pre-need plans, bancassurance, healthcare, banking, credit cards, asset management, property and casualty insurance, property management and development, and business process outsourcing.
These subsidiaries are Philam Equitable Life Assurance Company, Philam Plans Inc., Philam Care, AIG Philam Savings Bank, Philam Asset Management Inc., Philam Properties, AIG Business Processing Services, Inc. and Philam Insurance.
"Philamlife is a very good candidate for acquisition. The ones interested in the financial assets would be foreign institutions," Astro C. del Castillo of First Grade Holdings, Inc. said.
"They [Yuchengcos] can get a good partner and sweetener and be part of a consortium and at the end of the day, they’ll have the controlling stake," another analyst said, noting how the Yuchengcos were able to buy Nippon Life’s insurance business. Nippon Life, a joint venture of the Yuchengco group and a Japanese firm, has been renamed Great Life Financial Assurance Corp.
The Yuchengco’s insurance business includes Great Pacific Life Assurance Corp. (Grepalife), unlisted non-life insurer Malayan Insurance Co. Inc., and Great Life Financial Assurance Corp. It also lists Funeraria Paz Sucat, Inc. and Lifetime Plans as insurance businesses.
Industry officials doubt the possibility of local insurers forming a consortium as a majority of Philippine insurance firms are mainly family-owned.
"I would discount forming a consortium. Who would have the controlling stake would be an issue," said Peter G. Coyiuto, former chief of the 34-strong Philippine Life Insurance Association and president of First Life Insurance.
Despite Philamlife being AIG’s "crown jewel" in Asia, analysts said prospective foreign buyers may cherrypick from the American financial giant’s insurance units in Taiwan, China and Hong Kong where the business is more lucrative.
"If you buy a company, you look at the future stream of income. AIG’s peak operation is in China, Hong Kong and Taiwan," Mr. Coyiuto said.
Conglomerates owned by the Gokongwei family, tobacco magnate Lucio Tan and retail tycoon Henry Sy would have the liquidity AIG needs but insurance may not be their cup of tea, analysts said.
The banking industry’s big players Metropolitan Trust and Bank Corp. (Metrobank) and Bank of the Philippine Islands (BPI) are unlikely takers with each already having their insurance affiliates, analysts said. Metrobank has Axa Philippines, while BPI has Ayala Life. - source
And while the country’s conglomerates may have the ready cash to match Philamlife’s P170 billion in assets and net worth of P49.5 billion, the question is whether they would be willing to dip their hands into a non-core business, they added.
Even the Yuchengco Group of Companies, which has launched an offer, may need to find a partner, and an outside one at that, to purchase Philamlife, put up for sale by its parent firm in the US in the wake of a worsening financial crisis.
American International Group, Inc. (AIG) on Friday announced that it would be selling assets, Philamlife included, to repay an $85-billion lifeline extended by the US government. Philamlife, a wholly-owned unit, will be sold with some local affiliates.
Yuchengco group officials declined to comment when asked on the progress of talks following AIG’s announcement. Lorenzo V. Tan, president and CEO of Yuchengco-owned Rizal Commercial Banking Corp. (RCBC) said there was "no word at this time".
Philamlife has eight subsidiaries whose businesses include pre-need plans, bancassurance, healthcare, banking, credit cards, asset management, property and casualty insurance, property management and development, and business process outsourcing.
These subsidiaries are Philam Equitable Life Assurance Company, Philam Plans Inc., Philam Care, AIG Philam Savings Bank, Philam Asset Management Inc., Philam Properties, AIG Business Processing Services, Inc. and Philam Insurance.
"Philamlife is a very good candidate for acquisition. The ones interested in the financial assets would be foreign institutions," Astro C. del Castillo of First Grade Holdings, Inc. said.
"They [Yuchengcos] can get a good partner and sweetener and be part of a consortium and at the end of the day, they’ll have the controlling stake," another analyst said, noting how the Yuchengcos were able to buy Nippon Life’s insurance business. Nippon Life, a joint venture of the Yuchengco group and a Japanese firm, has been renamed Great Life Financial Assurance Corp.
The Yuchengco’s insurance business includes Great Pacific Life Assurance Corp. (Grepalife), unlisted non-life insurer Malayan Insurance Co. Inc., and Great Life Financial Assurance Corp. It also lists Funeraria Paz Sucat, Inc. and Lifetime Plans as insurance businesses.
Industry officials doubt the possibility of local insurers forming a consortium as a majority of Philippine insurance firms are mainly family-owned.
"I would discount forming a consortium. Who would have the controlling stake would be an issue," said Peter G. Coyiuto, former chief of the 34-strong Philippine Life Insurance Association and president of First Life Insurance.
Despite Philamlife being AIG’s "crown jewel" in Asia, analysts said prospective foreign buyers may cherrypick from the American financial giant’s insurance units in Taiwan, China and Hong Kong where the business is more lucrative.
"If you buy a company, you look at the future stream of income. AIG’s peak operation is in China, Hong Kong and Taiwan," Mr. Coyiuto said.
Conglomerates owned by the Gokongwei family, tobacco magnate Lucio Tan and retail tycoon Henry Sy would have the liquidity AIG needs but insurance may not be their cup of tea, analysts said.
The banking industry’s big players Metropolitan Trust and Bank Corp. (Metrobank) and Bank of the Philippine Islands (BPI) are unlikely takers with each already having their insurance affiliates, analysts said. Metrobank has Axa Philippines, while BPI has Ayala Life. - source
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To all Philamlife Policyholders: FYI
PHILAMLIFE INSURANCE COMPANY
PRESS RELEASE
AIG to refocus on Worldwide Property and Casualty; Philamlife assures policyowners and partners
MAKATI CITY, October 4, 2008 – AIG announced today it will refocus the company on its core property and casualty insurance business to repay its loan from the Federal Reserve Bank of New York. AIG further announced its intention to sell a range of companies and assets. The Philippine American Life Insurance Company has been identified for possible divestment along with some of Philamlife’s affiliates.
Philamlife is the largest and most profitable insurance company in the country and the undisputed market leader for over sixty years.
Independently, Philamlife is a strong business with a solid future. It is well capitalized with the strongest balance sheet in the life insurance industry. As of December 31, 2007, Philamlife has consolidated assets of P170 billion and consolidated stockholders’ equity of P49.5 billion. In 2007, revenues amounted to P36.7 billion reflecting a 14% growth while New Business from Life Insurance Operations of P7.4 billion was higher by 57.6% versus the previous year. Benefits payments totaled P6.6 billion. The bulk of the company’s invested assets are concentrated in marketable Philippine government securities, corporate bonds and blue chip equities.
In a statement, Philamlife President and CEO Jose L. Cuisia Jr., said that “Philamlife remains to be a stable and strongly capitalized organization. Our policyowners and clients can be assured that their interests are protected because of the company’s financial strength. A change of ownership will not in anyway diminish policyowners’ benefits and security. We will remain focused on daily execution of our business and continue to provide our policyowners and clients with the highest levels of service.”
AIG’s divestment decision is not a reflection of their subsidiaries’ business or historical performance. AIG’s subsidiaries in the Philippines remain financially strong, and comply with local regulatory capital requirements.
Philamlife and its affiliates provide a full range of financial services and are leaders in their respective industries. Given their vast resources, Philamlife and its affiliates are capable of meeting obligations to their clients and providing them with quality service.
# # #
The Philippine American Life and General Insurance Company is the largest and most diversified insurance company in the Philippines and the undisputed market leader for over half a century. It offers the most comprehensive range of life and general insurance products that provide protection, savings and investments, education, accident and health, property and casualty coverage. Philamlife has more than a million individual and corporate policyholders, and maintains the most extensive network of offices and sales agencies nationwide.
Philamlife’s affiliate businesses include a wide range of diversified financial services in pre-need plans, bancassurance, healthcare, banking, credit cards, asset management, property and casualty insurance, property management and development, and business process outsourcing.
Philamlife OFW Market
UN Ave, Ermita, Manila
PHILAMLIFE: STILL THE MOST TRUSTED BRAND
Stability & Strength Confirmed by Third Party Testimonials
Department of Finance Secretary Gary Teves (TV Patrol World, Oct 6)
“Philamlife as market leader can very well pay claims and underwrite new policies given its capital strength. The sale of Philamlife would have a net positive impact on the domestic insurance industry.”
Department of Finance Secretary Gary Teves (BusinessWorld, Oct 7)
“Philamlife as a market leader can very well pay claims and underwrite new policies given its capital strength and fiscal prudence in line with reforms that we have instituted in the local insurance industry.”
Department of Finance Secretary Gary Teves, (DZRH, Sept 24)
“Kaya itong mga bangkong ito pati na rin yung subsidiary ng AIG yung Philamlife, merong sariling capital yan sabi nga ni Joey Cuisia presidente dito at hindi sila nagdedepend sa supporta ng parent company.” (These banks [pertaining to the banks that may be affected by the US crisis] including the subsidiary of AIG which is Philamlife has their own capital said Joey Cuisia, president of Philamlilfe and they are not dependent on the support of the parent company)
Insurance Commissioner Eduardo Malinis (PDI, Oct 7)
“We are on top of this. We will see to it that the rights of policyholders will be properly enforced”
Insurance Commission Deputy Commissioner Vida Chiong (PDI, Sept 26)
The mother company can’t just get the assets of Philamlife and the company cannot be sold to anybody that is not approved by the local regulator. The Insurance Commission will make sure that every policy that is in force will be serviced.”
Insurance Commission Deputy Commissioner Vida Chiong (PDI, Sept 30)
“So policyholders really have nothing to worry about.”
United States Ambassador to the Philippines Kristie Kenney (Mla Times, Sept 19)
“According to the ambassador, she was ‘glad that Philippine companies remained strong enough to withstand this crisis’ apparently referring to one of them, Philamlife.”
Senator Ed Angara, Chair of Senate Committee on Banks, Financial Institutions and Currencies (People’s Journal, Oct 7)
“We should assure all Philam Life policy and plan holders that their investments are safe and are not affected by the pending change of ownership.”
Senator Mar Roxas (Abante, Oct 7)
“Hiwalay ang libro ng Philamlife kesa sa AIG. Ang Philamlife ay regulated ng Philippine Insurance Commissioner at di basta basta silang pinapayagan mag-invest kung saan-saan lang. Matatag ang kumpanyang ito.” (The books of Philamlife are separate to that of AIG. Philamlife is regulated by the Philippine Insurance Commissioner and they are not quickly allowed to invest on anything. This company is solid.)
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