MANILA, Philippines—The pandemic-induced recession that battered financial markets everywhere led to a drop in life insurers’ investment incomes and pulled down the entire domestic insurance industry’s bottom line by 8.6 percent to P41.2 billion in 2020.
The latest Insurance Commission (IC) data showed that the total net income of 126 life and non-life insurance firms, as well as mutual benefit associations (MBAs), i 2020 declined from P45.1 billion in 2019.
Separate IC data showed that life insurance companies’ combined 2020 net income fell 16.4 percent to P30.2 billon from 2019’s P36.1 billion.
Bucking the trend, non-life players, on the other hand, raised their total net income by 65.8 percent to P5.6 billion from P3.4 billion in 2019.
Just like the life sector, MBAs had a smaller total net surplus in 2020 of P5.4 billion, down 3.4 percent from 2019’s P5.6 billion.
“The total insurance industry’s net income decreased primarily due to the life insurance sector—it may have been a combination of factors that drove the decrease,” Insurance Commissioner Dennis Funa told the Inquirer.
“Total premiums of the life industry increased by P13.8 billion or 5.9 percent, and benefit payments decreased by P7.8 billion. Both these factors should have led to an increase in net income,” Funa said.
“However, these were negated by the increase in reserves by P17 billion, decrease in income from VUL [variable universal life] of P2 billion, and increase in other underwriting expenses by P6 billion, bringing an underwriting gain of just P644 million,” Funa said.
“Net investment income decreased by P3.5 billion or 7.6 percent. Loss on sale on investments posted a remarkable decrease of 100.5 percent—from P1.8-billion gain in 2019 to P9.1-million loss in 2020,” he said.
“Add to that the increase in income tax of P1 billion, leading to a decrease in net income of about P6 billion,” Funa added.
Funa said 22 out of the 31 life insurers posted net investment losses ranging from P238,000 to P1.5 billion in 2020, while 20 of these companies also saw their 2020 net income drop compared to 2019 levels.