MANILA, Philippines - The AIA Group is investing heavily on real estate and property, infrastructure, power, water resources, as well as the bond and equity markets in the Philippines, top executives said.
In fact, it brought in fund managers, chief finance officers and investment managers representing 17 markets it operates in within the Asia Pacific region, in a bid to attract investments into the fastest growing economy in Southeast Asia.
No less than Finance Secretary Cesar Purisima took time to brief the investors last week of the potential investments in the country.
AIA Group is the largest independent publicly-listed pan-Asian life insurance group worldwide. The Philippine American Life and General Insurance Co. (Philam Life) is a subsidiary of the AIA Group.
AIA Group chief executive and president Mark Edward Tucker explained that insurers are looking for long-term investments to match the quality and duration of its protection products across Asia.
‘The (Philippine) economy remains strong with a fundamental need to invest in infrastructure. But our valuations (towards the economy) are strong,†Tucker said.
He said the AIA Group has been investing in infrastructure for the longest time across Asia due to its long-term liabilities and assets matching.
In Thailand, it invested 10.5 billion bahts in two large-scale real estate properties. AIA Capital Center is a 35 story commercial office complex or corporate center in Bangkok slated for completion next year.
The AIA Sathorn Tower is due for completion in 2015 at the Sathorn district also in Bangkok.
Tucker said that Asian economies continue to present AIA with more resilient fundamentals than other parts of the world and the demographic drivers of the life insurance industry remain robust.
“The significant potential from the rapid growth in the urban population, increasing household disposable incomes, the lack of social security support and the significant levels of underinsurance provide opportunities for profitable expansion across the region,†he added.
Meanwhile, AIA Group chief investment officer John Chu said insurers want to make sure each type of assets generate optimum return to support the different products sold.
Chu said that the Philippines is in a positive business investment cycle.
“This country has negative output gap what it means is that the country needs to build a lot of capacity for a lot more investments to be made by the business side and by the government. The entire economy is well positioned to take on more leverage and support for growth,†he added.
The AIA investment chief said that the Philippine stock market was the number one performer in Asia last year, and year-to-date it is also the best performer in the region.
Valuations of the companies listed in the bourse offer lower discount rate, i.e. lower cost of equity, which is very positive for companies, despite high price to equity ratios.
Chu stated that the recent credit rating upgrade to investment level meaning when the country is rated investment grade the implication is extremely positively.
Global mutual and pension fund can now move in aggressively for earnings options supportive of economic development. Funds will spillover to the bond and equity markets thus offering working capital for existing and potential domestic firms.
“There is also a very positive element as induces more bond investors to come in the country buying fixed rate treasury notes and corporate bonds by the corporate sector,†he added.
AIA has total assets of $134.4 billion end calendar year 2012.
Meanwhile, Philam Life president and chief executive officer Rex Mendoza said that it is investing heavily in the corporate property sector, eyeing areas outside Metro Manila.
Aside from the Philam Tower in Makati, another Philam Life corporate center is emerging in the Ayala Center in Cebu while Davao and Pangasinan remains in the pipeline.
It has likewise invested directly or through loan consortiums to the tune of over P1 billion. “We are always looking for long-term investment opportunities to support maturing businesses,†he added.