Philam Life plans P28-B investments

MANILA, Philippines - The Philippine American Life and General Insurance Co. (Philam Life) is prepared to invest up to P28 billion in long-term projects, including those offered under the government’s public private partnership (PPP) program.

Philam Life president and chief executive officer Rex A. Mendoza said life insurance companies are always looking for long-term investment opportunities to further boost growth.

Philam Life has been one of the few insurance companies that has been investing heavily in government securities, corporate bonds, fixed income, and other long-term debt instruments. It may also invest in strategic infrastructure projects with a rate  of return of at least 10 years.

 â€œWe are willing to take part in long-term investments,” Mendoza said, noting however that it may be more practical to join a consortium or a pool of investors rather than enter as an exclusive investor given the huge amount of investment required.

 â€œOur portfolio is always about 15 to 20 percent of the total base,” Mendoza said. As of end-2012, Philam Life had a total asset base of P140-P150 billion.

The low interest rate environment has forced life insurers to explore all possible areas for investment to ensure that all their policies are covered in terms of reserves. Under the law, life insurers must place a considerable amount of investments in fixed-income instruments such as government securities.

Mendoza, however, noted that the low interest rates may not result in considerable earnings that ensure adequate cover for future claims of policies option.

Meanwhile, Mendoza said the outlook for the country’s life insurance industry remains rosy.

Gross premium income is expected to expand between 30 and 40 percent this year, Mendoza said.

With the depressed interest rates on bank savings, time deposits and the once-popular special deposit accounts (SDAs), people are looking for other forms of investment outlets to diversify.

Life insurers have over the past years been introducing variable or unit-linked products, a combination of investment/savings and protection.

For Philam Life, the emphasis is investment with a considerable protection cover. The company has unit-linked products that offer up to 95 times protection or for every P1-million in investments, the policy holder can get up to P95 million protection.