Lucio Tan-led insurer seeks more palatable infra projects

Lucio Tan-owned Allianz PNB Life Insurance Inc. is interested to invest in infrastructure, but only if life insurers could also join big-ticket, long-term projects not being made available to them now.

New Allianz PNB Life Insurance president and chief executive Alexander Grenz told reporters projects available so far were short term in scope and might be unsuitable for life insurers. These firms usually prefer long-term investments to match their long-term liabilities.

“For life insurance companies it can be sometimes tough, because what we can provide and what the government should leverage better is long-term investments. So we are looking for vehicles which give us possibility to hedge basically our risk and hedge our investments,” he said.

Last year, the industry regulator Insurance Commission (IC) issued Circular Letter (CL) No. 2018-74, under which insurance and reinsurance firms were allowed to invest either through debt or equity instruments for projects covered by the Philippine Development Plan (PDP), the country’s medium-term socioeconomic blueprint.

The PDP included the following types of infrastructure: airports, highways, nonrail-based transit facilities, port infrastructure, railways, as well as environmental and solid waste management-related facilities and climate change mitigation and adaptation projects.

Under this circular issued by Insurance Commissioner Dennis B. Funa, insurers may participate as the project proponent, financier/sponsor or operations and maintenance firm.

And in May, Funa also issued CL 2019-19, which made it easier for insurance companies to invest in infrastructure projects by setting lower capital charges.

Grenz said that with regard to the pipeline of infrastructure projects being presented as potential investment opportunities for insurers, “there’s still a possibility to improve.”

Grenz said they wanted projects that would span 20-30 years, instead of just five to 10 years.

“I think it’s a missed opportunity that such vehicles and financial instruments are not catering to life insurance, particularly. However, it’s still, of course, interesting” to invest in infrastructure, Grenz said. —BEN O. DE VERA