Double cross my heart
It is time now for another true story bordering on the stuff of urban legends.
Word from the business sector has it that a large local insurance company, which we shall hide under the name of Prudential Guarantee and Assurance, or PGA, expects a huge out-of-court settlement.
The amount comes up to about nine figures! There—no wonder it is the talk of the business town.
Now, while the case may have nothing to do with the peace talks being pursued by the administration of the motorbiking Duterte Harley in The Netherlands, it also comes from abroad—in particular, the United Kingdom.
Not so long ago, from what I gathered, the big UK-based reinsurance broker tried to double cross PGA, despite their more than 20 years of doing heart-to-heart business together.
All those years, PGA held a valued corporate account, a well-known aviation company, led by a dynamic young tycoon.
In the past 20 years or so, PGA tapped the services of the UK reinsurance broker.
After all, Philippine laws require insurance companies like PGA to spread the risks, through reinsurance, and the standard practice remains the reinsurance of about 90 percent of the payout amount.
All seemed well in the three-way business relationship among PGA, the UK broker, and the local airline.
Well, until the UK broker pulled off an amazing double cross, going straight to the airline, badmouthing PGA in the process!
By the way, PGA was the same company that, just about 10 years ago, made the biggest aviation insurance payout in the country.
Reports said then that PGA settled more than P7.5 billion in claims of the heirs of the victims of the ill-fated Air Philippines Flight 541 in Davao, who sued in the United States the lessors of the Boeing 737 planes used by Air Philippines.
The heirs of the victims joined the suit in the US against AAR Aircraft and Fleet Business Credit, which also went for an “amicable settlement.”
Come to think of it, the US court actually dismissed the supposed “findings” of the Philippine aviation authority that the accident was caused by pilot error, in effect, clearing the airline or the US aircraft lessor of any liability.
As for the reinsurance business, it also became a controversy of sorts in the biggest insurance company in the country: the GSIS, the Government Service Insurance System.
Originally, the GSIS was created as a pension fund for government employees, but its mandate eventually covered all the insurance needs of the government.
That meant the GSIS would have a monopoly of all the insurance needs of the government such as fire, engineering, marine hull and cargo, aviation, contract risk, bonds, motor car and personal accident.
Not only that, government in corporations—the so-called GOCCs—would have to insure all their transactions with the GSIS, including loan, credit guarantee, tax incentives, discounts, donations, investments and financing.
Reports had it that, for the longest time, only around six companies divided among themselves the huge reinsurance business of the GSIS. In other words, that would entail sizable commissions and fees.
But back to our “double cross” story, it seemed that PGA actually had to part ways with the UK broker, because its aviation experts here and in London left the broker.
Apparently to retain the business with the local airline, as PGA already dropped it, the UK broker went straight to the CEO of the aviation company.
And the broker supposedly revealed to him the secrets of the PGA trade, apparently with supporting facts and figures showing that PGA overcharged the aviation company all those years.
PGA got back at the UK broker, of course. For one, the records that the broker supposedly revealed to the client some highly confidential information, legally owned by PGA, complete with non-disclosure agreements and all.
Also, PGA discovered that the facts and figures were doctored, apparently to show that PGA was almost robbing the airline company.
This time the story did not end well for the foreign company.
From what I gathered, Robert Coyuito, CEO of PGA, enlisted a team of high-powered lawyers to file a case against the UK broker in the UK High Court in London.
The high and mighty broker had no choice but to agree to an out-of-court settlement. How much? As I said, it was in the nine figures.
