Breaktime
Food loose
By Conrado Banal III
Philippine Daily Inquirer
First Posted 01:14:00 09/23/2008
Filed Under: Insurance, Crisis, Agriculture
Word is out in business circles that some big local firms have broken off with the Philippine-American Life and General Insurance (Philamlife) group.
Most of them, sources said, have real estate insurance covers with Philamlife’s non-life insurance arm, General Insurance Co.
Thus it seems that Philamlife is the first local victim of the restlessness here arising from the US financial crisis.
As everybody knows, the US government bailed out Philamlife group parent firm American International Group Inc., or AIG.
Some local companies must have thought that if AIG’s finances are wobbly, the Philamlife group’s ability to pay claims may also be impaired. And in case anything happens, the local companies are also answerable to their stockholders.
In short, it was a CYA move—you know, “cover you’re a--.”
But I think it was all knee-jerk reaction from the local boys, and it has everything to do with the fear of the unknown. For nobody can really say how the AIG crisis will affect Philamlife, despite the assurance of Insurance Commissioner Eduardo Malinis.
The commissioner went on record on the following statement:
“Philamlife remains to be the largest insurance company in the Philippines with the strongest balance sheet in the industry.
“Philamlife is adequately capitalized and its customers’ and policyholders’ interests are protected with the company’s financial strength.
“With its vast resources, Philamlife is capable of meeting its commitments and obligations to its clients.”
The entire Philamlife group last year reported assets of about P170 billion and stockholders equity of P50 billion.
Its investments are mostly in government securities, meaning, they are easily convertible into cash.
I seriously doubt if the Philamlife group would fail to meet any insurance claim.
* * *
Definitely, the US financial crisis will hit Asia, particularly China, if only because the crisis will most certainly lead to a US economic recession.
Thus, government officials are fooling us by telling us it is all … well, under control!
Okay, so local banks suffered only minor hits from the collapse of US investment house Lehman Brothers.
Still, the whole world will feel the impact of the US recession. Hello, the United States is everybody’s favorite export market.
How will the global economic slowdown affect us then? Off hand, the local think tanks are looking at the possible drop in commodity prices. We are already seeing it in the international price of oil.
In business circles, they are saying commodity prices are soon to follow in a big way.
Now, as for the mining companies newly listed on the Philippine Stock Exchange (PSE), they are insulated from any commodity price downturn. This is because they are mostly paper companies.
The PSE board saw to it that newly listed mining firms have no production of any mineral in any mine site. Their market attraction is all on paper—i.e., their IPO prospectus.
* * *
Some groups are making a lot of noise over the P4.5 billion in additional funds that the administration of President Gloria Macapagal-Arroyo released to the Department of Agriculture (DA) last year.
Let me see if I get what this loose talk is all about: You mean, guys, you’d rather that the Senate or the House of Representatives got those funds instead of the farm sector?
Anyway, we are talking about food here, and the prices of food already went up to the stratosphere because of, primarily, insufficient production which, in turn, was caused by the high price of farm inputs.
I mean, in this thing called food security, we already hit the emergency button.
And that was why the Arroyo administration released the P4.5 billion for agriculture.
Media reports noted that the DA needed all the money in the world to rehabilitate our rice farms. And so, the Arroyo administration released P1.5 billion more for the rehabilitation of 7,250 hectares of rice fields.
Come on, and that was so bad that the DA must be fried in media?
Now, I am not sure if those groups attacking the P4.5-billion release only wanted this country to import more food, instead of raising our production here.
I remember that everybody has been clamoring for the government to put more money in agriculture for the longest time now.
Fortunately for the administration, media is flogging the DA for doing precisely that! Wow!
Previous columns:
SLEx in the city - 9/16/2008
A way in a merger - 09/09/2008
Sewer RATS - 09/02/2008
License to till - 08/26/2008
Oldest procession - 08/12/2008
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