Philamlife being tapped for dev't projects

MANILA, Philippines - Philippine American Life and General Insurance Co. (Philam Life) said it has been receiving more invitations to invest in fixed-income securities and development projects.

Philam Life president and chief executive officer Rex A. Mendoza said they have been invited by a number of groups to put investments in development projects including those in infrastructure, as well as acquire fixed-income papers.

“They know that an insurance company like Philam Life is a long term player,” Mendoza said.

Insurance companies are required by law to place a significant amount of their investments in government securities (GS) to support national development as well as protect both the insurer and the insured public from volatile markets.

Mendoza pointed out that insurers must also make investments in big-ticket items in the face of a prevailing low interest rate environment.

He said big-ticket items require large amounts of investments but offering huge returns to offset low returns in fixed income instruments.

“Of all the insurance companies, we have the biggest asset on investment base. Thus, we have a lot of money sleeping in bonds or fixed income instruments, and the bonds are not giving that much,” the Philam Life chief executive said.

That would keep Philam Life from increasing premiums rates and retain its affordability to the insuring public. The last time it enforced a rate hike was in 2008-2009.

“We are also interested in the PPP (Public-Private Partnership),” Mendoza added.

The local unit of global insurance giant AIA Group Ltd. is also involved in the financing of the Skyway, the Manila-Cavite Expressway, and the South Luzon Expressway.

It has also made significant investments in special deposit accounts (SDAs) as part of its strategy in spreading out the risks of its investments to ensure the availability of funds for claims.

However, Philam Life assured that all investments made will not result in flight of capital.

“There is a directive from AIA to do our own investments. It is not like money is generated here and we bring it out, that is not the AIA way. We are not the type of financial institution that would probably get the investment and mobilize it somewhere else,” Mendoza stressed.

Meanwhile, Philam Life will be moving its executive offices to the Bonifacio Global City next year. It will likewise redeploy its regional offices in better strategic locations in the cities of Cebu and Davao.

Mendoza admitted that they are likewise in a massive campaign to recruit more sales agents as well as launch financial literacy campaigns. The challenge is not to regain its top spot among the country’s insurers but to increase the penetration rate of the country.

The country’s insurance penetration rate from private placements is between 3.5 to four percent, and between 10 to 12 percent including the mandatory coverage from government pension funds.