Not a single Philippine insurance company has exposure to bankrupt US investment firm Lehman Brothers, the Insurance Commission said Monday.
Vida Chiong, deputy insurance commissioner, said in a Senate hearing that regulation of life and nonlife insurance firms in the country was relatively strict compared with that in other countries.
While other governments have allowed insurance firms to place their money in sophisticated investment instruments, insurance firms in the Philippines are limited to invest in instruments that have very low risk, she said.
Chiong said in an interview after the hearing that only a maximum of 10 percent of assets of the Philippine insurance industry had been invested in instruments denominated in foreign currencies. Of that, over 90 percent are placed invested in ROPs.
?So policyholders really have nothing to worry about,? Chiong said.
Yesterday?s Senate hearing was called to assess the country?s vulnerability to the US financial turmoil.
Finance officials, bank and insurance executives and representatives of regulatory agencies turned up at the hearing to allay anxiety over the crisis? effects on the local financial system.
Representatives of the five banks with exposure to bankrupt Lehman Brothers announced that their respective institutions had started to reduce their soured investments in what used to be the fourth largest investment bank on Wall Street.
They said that the loss provisions they had earlier put up would not sharply affect their earnings this year.
According to Standard Chartered Bank chief executive officer Eugene Ellis, ?overregulation? of the banking industry in the past has been helpful in minimizing the risk exposure of local banks.
The seven banks that had invested in Lehman Brothers were Banco de Oro Unibank, Metropolitan Bank and Trust Co., Rizal Commercial Banking Corp., Standard Chartered Bank?s Manila branch, Bank of Commerce, United Coconut Planters Bank and Development Bank of the Philippines.
Also, to dispel fears spawned by talk of Philamlife?s rumored sale, Philamlife president Jose Cuisia Jr. said that even if Philamlife were to be sold, ?we have the strength to meet obligations, so [investors] have no reason to fear.?
Representatives of the Government Service Insurance System (GSIS) was conspicuously absent at Monday?s Senate hearing.
The government pension fund, which has about 1.4 million members, reportedly has invested $600 million abroad under a global investment program.
The GSIS has denied it had funds in Lehman Brothers, and in the embattled insurance giant American International Group (AIG).
But the state pension fund refused to disclose its foreign investments in the face of the collapse of several US financial institutions due to housing loan defaults.
The Social Security System, the pension fund for private employees, on the other hand disclosed that they do not have any funds invested abroad.
