Business as usual at Philamlife, says CEO
By Doris Dumlao
Philippine Daily Inquirer
First Posted 03:05:00 09/20/2008
Filed Under: Crisis, Insurance, Financial & Business Services
MANILA, Philippines—It’s business as usual at the country’s biggest insurance firm, the Philippine American Life and General Insurance Co. (Philamlife), its president and chief executive officer said Friday.
In an interview with the Philippine Daily Inquirer, Jose Cuisia Jr. said that despite concern about parent company American International Group Inc. (AIG) in the US, there was no unusual redemption of investments in Philamlife because clients and agents had been fully assured that the company was capable of meetings its commitment.
“Philamlife is separately capitalized ... [it] has its own capital base, its own investment portfolio, and these [investments] are principally in local marketable government securities and prime corporate bonds and a small amount of blue chip stocks,” Cuisia said.
“Of course, we’ve always had a very conservative investment strategy and that has paid off. We have no exposure to Lehman.”
Lehman Brothers, the fourth-biggest investment bank on Wall Street at one time, recently declared bankruptcy—a move that has rocked the financial world.
Cuisia explained that the bulk of Philamlife’s investment portfolio was in fixed income instruments, mostly long-term Philippine government securities with a 10- to 20-year maturity. The company’s total consolidated investments amounted to P164.2 billion as of end-2007.
He said Philamlife and its local subsidiaries would continue to thrive even if parent firm AIG—which has obtained an $85-billion lifeline from the US government—were to sell Philamlife to a new investor. However, he said, there was no decision yet on the matter.
As part of the state-sponsored financial assistance and in line with its restructuring, AIG is widely expected to sell some assets outside the United States.
“Let’s assume it’s sold,” Cuisia said of Philamlife. “Let’s say a bank buys us, which is good, because we can do bancassurance. We’ll still meet all of our contractual obligations. We will remain the largest insurance company, so why would anyone who buys want to shift strategy? They will want Philamlife to grow.”
Bancassurance is the practice of selling life insurance products through bank branches. Under banking regulations, a bank must have an equity interest in the company whose products it will sell.
Philamlife’s affiliate businesses include pre-need plans, healthcare, banking, credit cards, asset management, property and casualty insurance, property management and development and business process outsourcing.
Cuisia, a former central bank governor, said the paranoia that had gripped local financial markets would be temporary and should soon settle down. Even assuming a prolonged turmoil on Wall Street, he said the Philippine financial system was in good position to hurdle the crisis.
Cuisia said he had written to all employees and agents, assuring them that their interests would be protected and they could count on the company’s financial strength.
Philamlife is the country’s largest insurance company with consolidated assets of P170 billion and equity of P49.5 billion as of end-2007. In 2007, it generated P36.7 billion in revenue, up 14 percent from 2006.
No exposure to Lehman
Philamlife’s thrift bank subsidiary, AIG Philam Bank, criticized the Philippine Daily Inquirer for its use of a picture of the bank’s logo and facade alongside a story on some other local banks’ exposure to Lehman.
Philam Savings’ general counsel Edwina Pineda said the bank did not have any exposure to Lehman Brothers and that information was not contained in the article.
The banks mentioned in the Inquirer story about having exposure to Lehman were Banco de Oro Unibank, state-owned Development Bank of the Philippines, Metropolitan Bank and Trust Co., Rizal Commercial Banking Corp., Standard Chartered Bank (Manila branch), Bank of Commerce, and United Coconut Planters Bank.
“Even though the ... article does not include AIG Philam Bank among those with exposures in Lehman, the juxtaposition of the picture of the logo/facade of AIG Philam Bank with the article wrongly and unjustly creates the impression that AIG Philam Bank was indeed one of those banks affected by the Lehman Brothers issue,” Pineda said.
The legal counsel demanded a public apology from the Philippine Daily Inquirer. With editing by INQUIRER.net
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