Monday, October 06, 2008

On Philamlife

Philamlife is not closing down. It's just being sold. AIG thinks that Philamlife is a good asset so they sell. It's like a big ship with a replacement Captain. Everything's gonna be just fine.

I try to avoid entries about my company, but I feel that it's about time that I somewhat contribute to spreading the word about Philamlife's situation. For Philamlife employees and agents, it is business as usual. Philamlife remained market leaders for the past 60 years, they're still market leaders now, and will be market leaders even after the sale. The employee force is strong, the agency force is diverse, the market base is deep. Just like what Mr. Cuisia has mentioned, the winning bidder will definitely be an instant market leader in the insurance industry.


10 groups keen on Philamlife
By Ted P. Torres
Tuesday, October 7, 2008

The Philippine American Life Insurance Co. (Philamlife) said yesteday it has received offers from about 10 groups after the firm was identified as among the assets to be sold by American International Group (AIG) to pay off its debts.
At the same time, the company sought to dispel concerns that the sale of the country’s largest insurer would affect its ability to pay claims.
Offers to buy Philamlife, the country’s biggest insurer, have come in from both local and foreign firms, some of which were private equity funds, Jose Cuisia, company chief executive told reporters.
“Closer to 10,” Cuisia said when asked about the number of interested buyers. He said he was not aware if there were others who had separately approached AIG’s advisers Blackstone Group LP and J.P. Morgan Chase & Co with an offer.
“I would say these are very respectable groups, also successful groups, which is why it is very encouraging for us,” he said.
But some of the interested buyers were unlikely to meet AIG’s criteria, Cuisia said, adding a strong reputable brand name, financial strength, and a strategic fit were the three key ingredients the US parent required for a successful sale.
“Some will immediately be crossed out,” Cuisia said.
A few of the buyers expressed interest to acquire AIG PhilAm Savings Bank alone while most were keen on buying the whole group, Cuisia said.
The Philamlife Group, the Philippines’ largest insurer, has an asset base of P170 billion and consolidated stockholders equity of P49.5 billion, policies-in-force worth P143 billion, and a work force of over 1,500.
Going by the AIG’s criteria, mega conglomerates like the San Miguel group, and the Ayala Group, are among a few local groups that are in a position to make an acceptable offer.
The San Miguel group has the money and an infrastructure for a financial arm, but not the expertise while the Ayala group has both the money and the expertise. The Ayala group has Ayala Life Assurance Corp., ranked in the top 10 players in the life sector, and BPI/MS, one of the biggest non-life firms in the country.
Valuation is likely to be a crucial issue. The question is how much a premium to add considering the fact that Philamlife has been the leader in the life insurance industry for almost six decades now.
“Whoever buys Philamlife automatically becomes the leader in the Philippines, what greater premium is that?” industry experts said.
Philamlife has over one million policyholders or roughly one third of all the life insurance policyholders in the Philippines. It has a sales force of over 8,000 against a little over 2,000 for its nearest competitors.
Cuisia said he does not know if the sale will be as a block or by company.
So far, he said several local banks have approached him for AIG Philam Savings Bank. Philamlife holds a 45-percent equity in the bank, while AIG holds another 45 percent. The remaining 10 percent is held by the Philamlife Employees Retirement Fund.
Based on 2007 data from the Insurance Commission, the other members of the top 10 life insurers in the Philippines in terms of assets are Sun Life of Canada (Philippines), Insular Life Assurance Co., AXA Philippines, Manufacturers Life Insurance (Manulife), Ayala Life, Pru Life Insurance of UK, Great Pacific Life Assurance (Grepalife), Generali Pilipinas Life Assurance, and Pioneer Life.
SunLife of Canada is affiliated with Sunlife Financial of Canada, Insular Life is a domestic mutual company, AXA is affiliated with AXA of France and reportedly among the biggest in Europe, Manulife is affiliated with Manulife Financial said to be among the biggest in Canada and the US, Ayala Life is of course an affiliate of the Ayala Group, Grepalife is a member of the Yuchengco group, Generali Pilipinas is affiliated with Generali Spa of Italy, and Pioneer Life has connections with Allianz of Germany.
Experts say that whoever bids for Philamlife and subsidiaries must be ready to commit huge, long-term capital.
“But they will be rewarded with a true-jewel of Philippine financial institutions, and the top slot overnight,” they added.
According to Cuisia, the company remains “strongly capitalised” and would be able to meet all its commitments to depositors, investors and policy holders.
He said most of Philamlife’s investments were tied to government securities and bonds, and that the firm did not have any offshore exposure to troubled American financial institutions.
“We would like to assure our policy holders there is no reason for them to worry, to feel their investments are at risk,” he said.
“We have managed our investment portfolio prudently and conservatively.”
Philamlife deputy president and chief operating officer Michel Khalaf said the company has for decades remained a “net contributor” to AIG.
While the company will seek to retain all its employees, he said there could be some “rationalisation” if a buy-out led to duplication of jobs.

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