Insurance firms favor less restrictions on offshore investments

The country’s life insurance companies are lobbying for their unhampered access to offshore investment instruments in a bid to avoid limited growth in their reserves to service claims, a top executive said.

While the Insurance Commission (IC) does not deter the industry from investing funds offshore, it still requires insurers to first submit their proposals for approval.

The insurers are thus urging government to allow them unhampered access to foreign investment opportunities such as foreign-currency bonds as a policy, and not on a case-to-case, after review basis.

Ayala Life president Emilio S. de Quiros said limiting investment options to ROP bonds would slow down or hamper growth in their reserves designed to met future claims.

Insurers must have both peso and US dollar investments since they have insurance products for both currencies.

Limiting investments in ROPs and local commercial papers would result in an over-concentration on Philippine risks which is not favorable for the industry.

In comparison, local and foreign banks invest abroad up to 26 percent of their total assets or investibles.

Nonetheless, De Quiros remains optimistic that Ayala Life would be able to grow by at least 15 percent this year despite such investment limitations. Last year, Ayala Life ranked sixth in terms of premium income amounting to over P1.8 billion. De Quiros said Ayala Life will continue to strengthen its "war chest" and undertake massive training and streamlining.

"2005 will mark the growth era for Ayala Life," he said during the formal launching of the company’s Life Achiever, a new endownment and savings product.

Ayala Life reported a return on equity (ROE) of 15 percent last year with assets of P8.4 billion and equity of over P1.7 billion.

Net investment income improved by 22 percent due to higher interest earned on fixed-income securities.

Ayala Life posted P284 million in net profits for the whole of 2004, from the P242 million the year before and P116 million in 2003.