Insurance sector upbeat on prospects

MANILA, Philippines - Insular Life Assurance Corp. said the growing optimism in the Philippine economy is boosting the sales forecast of the country’s life insurers.

The country’s gross domestic product (GDP) grew by an impressive 7.9 percent in the first six months of 2010, with the life insurance industry posting strong growth.

Insular Life president and chief operating officer Mayo Jose B. Ongsingco said the major life insurers had reported strong growth in first year premiums.

“Unofficial numbers based on data sharing of major life insurers show strong growth,” Mayo said. The top 10 life insurers account for more than 80 percent of total premiums.

The total premium income of the country’s life insurance industry amounted to over P57.2 billion in 2009, or a one percent growth from P56.8 billion in 2008.

First year premiums in 2009 stood at P21.5 billion, lower than the P21.8 billion in 2008.

“Coming from a difficult 2009, the life industry now shows strong signs of life, with stronger numbers in 2010,” Ongsingco said.

Insular Life reported P1.4 billion in first year business as of August, roughly 14 percent better than the comparable period in 2009.

“We did very well in 2009, with strong top line despite the relative poor conditions and the relative poor performance of the industry. In the past two years, we have shown an average net income of P2.5 billion, and we will surpass that in 2010,” Ongsingco said.

Insular Life, the only domestic life insurer ranked among the top five players in the industry, reported total premiums of P6.3 billion in 2009 from P5.8 billion in 2008. Target premiums are expected to expand by 20 percent to P7.5 billion.

Other leading insurers interviewed by The STAR also expect double-digit growth in first year business, with better balance between traditional and non-traditional life insurance products.

Insular executive vice president Jesus Alfonso G. Hofileña explained that non-traditional products, like the investment-laced variable life and single-pay premiums, dominated the industry’s sales in 2007.

Hofileña further explained that 2008 results reflected the full impact of the crisis, and that 2009 was a year of consolidation of the industry. That likewise meant a reduction of non-traditional products and a return to the traditional life products.

“Today, there is a better balance between traditional and non-traditional products. Insular Life saw its traditional products expand by 20 percent in the first semester of 2010,” he added.